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The government has imposed 1% for filers and 3% for non-filers advance tax on all foreign transactions made via debit, credit or prepaid cards targeting online shopping.

It was earlier in May it was reported that FBR may collect advance tax on online shopping, transactions made through debit, credit or prepaid card from Pakistan. The proposal was submitted in Finance Bill 2018-19 before the standing senate committee on Finance on May 5.

FBR proposed advance tax 1% for filers and 3% for non-filers on all transactions made via debit, credit or prepaid card. However, the proposal was outrightly rejected by the Standing Senate Committee on Finance soon after it was submitted.

But now the government has imposed the advance tax which was rejected by the previous government PMLN.

The banks are circulating the notifications to all their customers that 1% advance tax for filer and 3% for non-filer is effective from July 1 on all debit, credit or prepaid cards foreign transactions.

This means if you buy products or services from abroad and pay via debit, credit or prepaid cards you have to pay 1% advance tax on the amount of transaction if you are a filer, but you will pay more than double 3% advance tax on the transaction amount if you are a non-filer.

People who do a lot of purchases from abroad or do online shopping from Amazon, eBay, Ali Express or any other shopping websites would be affected by this tax.