Punjab has introduced a new tax deduction system for digital payments, offering a 50% tax concession on credit card and digital transactions in the restaurant sector.
According to a spokesperson for the Punjab Revenue Authority (PRA), tax deducted through electronic payments or card transactions will now be transferred directly to the government.
Under the new tax structure, services provided by beauty parlours, salons, and fashion designers will be subject to a 5% tax. The same 5% tax will also apply to cosmetic surgery, plastic surgery, skin treatments, and laser procedures.
Meanwhile, event management services, tour operators, gyms, and laundry services will be taxed at 8%.
For the hotel and restaurant sector, cash payments will be subject to a 16% tax, while digital and credit card payments will attract only an 8% tax, effectively providing a 50% tax reduction for customers using digital payment methods.
The Punjab Revenue Authority has also urged the public to report restaurants and food outlets that fail to issue proper receipts, as part of efforts to improve tax compliance and promote a cashless economy.
Digital financial transactions surge under cashless Pakistan initiative
Pakistan has recorded significant growth in digital payments during the first year of its Cashless Pakistan initiative, with the number of active digital payment merchants surpassing 2 million and annual digital transactions increasing from 6.9 billion to 11.3 billion.
The progress was reviewed during a high-level meeting chaired by Minister of State for Finance and Railways Bilal Azhar Kayani, according to a statement issued by the Finance Ministry.
The number of digital banking users has exceeded 135 million, while merchant adoption expanded rapidly through the government’s Raast QR Code initiative. Launched in June 2025 under Prime Minister Shehbaz Sharif, the programme aims to improve public convenience, enhance transparency, and promote a documented economy through digital payments.
Officials also said financial inclusion has reached 69 per cent, with continued efforts to reduce the gender gap. The government is working to fully digitise 25 major federal and provincial institutions through Raast by December 2026, while around 75 per cent of government entities now accept digital payments.
Also read: Pakistan moves toward smart motorways with cashless toll collection
