Registering an online business in Pakistan: NTN, sales tax and the new e-commerce withholding

Before anything else: this is a plain-language explainer written by software people, not tax advice. Rules here change with every Finance Act and with FBR circulars in between. Use this to understand the shape of what applies to you, then confirm the current detail with a tax practitioner or directly with the FBR before you act on it.

With that said — this stopped being optional reading in 2025, and most sellers still find out about it the hard way.

What changed, and why your courier suddenly cares

For years, a small online seller in Pakistan could operate informally. Orders came through Instagram, cash came back through the courier, and nothing in that chain ever asked for a tax number.

The Finance Act 2025 rebuilt that chain deliberately. Rather than trying to find thousands of individual online sellers, the law made the parties that already sit between you and your money responsible: couriers, banks, payment intermediaries and marketplaces. Those parties now have to withhold tax on what they collect for you, report it, and — the part that catches people — decline to onboard sellers who are not registered.

That is why the question arrives from your courier rather than from the FBR. Registration is no longer just a compliance matter; it is a prerequisite for having anyone ship your parcels.

What you are actually being asked to have

Three separate things that get muddled together in conversation:

• An NTN (National Tax Number) — your income tax registration. For a sole proprietor this is tied to your CNIC and obtained through the FBR's IRIS portal. This is the easy one.
• Sales tax registration (an STRN) — a separate registration, with more requirements: business bank account details, proof of business premises, utility bill, and biometric verification. It also brings an ongoing obligation to file monthly returns, whether or not you sold anything that month.
• Being on the Active Taxpayer List — the FBR's published list of people who have filed. Being on it typically means lower withholding rates on transactions across the board; being off it is expensive in ways that show up everywhere.

A sole proprietorship is the usual starting structure and needs no SECP involvement — you are the business. A private limited company is an SECP registration and a bigger commitment; it makes sense when you have partners, outside investment, or a real reason to separate liability. Do not incorporate because it sounds more professional.

How the withholding works

The mechanism is simpler than the paperwork suggests: whoever hands you the money takes a slice first and deposits it against your registration.

• When a customer pays digitally — card, wallet, bank — the payment intermediary handling the settlement withholds a percentage of the gross amount.
• When a customer pays cash on delivery, the courier withholds a percentage of what it collected before remitting the rest to you.

As introduced in 2025, the headline rates were 1% on digitally-settled payments and 2% on cash collected by couriers, with the tax treated as final on those supplies for the sellers it covers. Marketplaces have parallel obligations of their own, with their own reporting forms and monthly deposit deadlines.

Rates and thresholds are exactly the sort of thing that moves, and unregistered persons are generally treated worse than registered ones. Check the current figures before you build them into a pricing model.

What it does to your margin — and why COD is the expensive one

Note which way round the rates run. The cash-on-delivery rate is the higher one, and it lands on the channel that carries most of the orders in this market. Combined with the COD service charge your courier already deducts, cash collection is meaningfully more expensive than a digital payment for the same sale.

That does not mean stop offering COD — refusing it costs far more in lost orders than any withholding rate. It does mean two practical things:

• Price with the deduction included. If your margins were set before this, they are now thinner than you think.
• A discount for advance payment now pays for itself twice — a lower withholding rate, no COD service charge, and a parcel that almost never comes back refused. Our COD guide covers that trade in detail.

Also make sure you actually receive what has been withheld. It is deposited against your registration and appears in your tax record, which means it is only useful to you if you are filing. Money withheld from a seller who never files is simply gone.

The records that make this survivable

Compliance is mostly a bookkeeping problem, and it is much easier if the store is doing the bookkeeping for you. What you want to be able to produce without a weekend of spreadsheet work:

• Every order, with the date, the amount and the payment method
• What was actually collected against each order, and when
• Refunds and cancellations, separated from sales
• Courier statements showing charges and deductions, kept month by month
• A monthly total you can hand to whoever files your returns

Keep the courier statements. When a deduction on a statement does not match what appears in your tax record, those statements are the only evidence you have.

Getting registered, roughly

The sequence most small sellers follow — confirm the current steps, they do change:

1. Register for an NTN on the FBR's IRIS portal using your CNIC.
2. Open a business bank account in the name you trade under.
3. Apply for sales tax registration, with the documentation for your premises, and complete biometric verification.
4. File on time, every period, so you stay on the Active Taxpayer List.
5. Give your registration details to your courier and to any marketplace you sell on.

If your volumes are small, an accountant to handle the monthly filing usually costs less than the penalties and the hours. This is the one part of running an online store where paying someone else is nearly always the right call.

What LaunchLancer gives you for this

Your store keeps a complete record of every order with its date, currency and payment method, and a transactions ledger that shows money in and money out — including refunds — which you can export as a CSV and hand to your accountant. Orders snapshot their currency and totals at the moment they are placed, so a historical month does not change when you edit a price today.

What we do not do is calculate your tax or file anything for you. Nobody selling you store software should be telling you what your liability is.

If you are earlier in the journey than this, start with the launch guide, or the honest comparison of selling on Instagram, a marketplace, or your own store. If you are already shipping, the courier guide covers the other half of what comes out of a COD remittance.

Last reviewed against the Finance Act 2025 and FBR guidance issued alongside it. This is general information, not tax advice — verify the current position before acting on it.