ISLAMABAD – The Asian Development Bank (ADB) has recommended that Pakistan impose a reduced 5% General Sales Tax (GST) on digital transactions to encourage the use of online payments and support a cashless economy.
Currently, digital services such as broadband face higher tax rates—up to 19.5% in some cases—making them costly for users. ADB believes lowering this rate would make digital platforms more affordable, especially for women, youth, and underserved communities.
The recommendation is part of a broader push to modernise Pakistan’s tax system and boost its low tax-to-GDP ratio. The ADB also suggested fixing tax rates on digital services for the next ten years to ensure stability for investors and promote long-term growth in the sector.
According to the report, Pakistan’s heavy reliance on cash-based transactions slows down economic progress and adds complexity to tax compliance. Shifting focus toward digital payments could improve transparency, efficiency, and formal sector growth.
If accepted, the proposal could be included in Pakistan’s upcoming budget and pave the way for more digital adoption nationwide.
This story has been reported by PakTribune. All rights reserved.
