Bad news for credit and debit card holders as the Sindh government has doubled the service tax on payments at various restaurants and cafes. According to a notification from the Sindh Revenue Board (SRB), 58 hotels and restaurants in Karachi can now charge a 15% service tax on digital payments, up from the previous 8%.
Initially, the Sindh Sales Tax (SST) on restaurant services paid through debit and credit cards was reduced from 15% to 8% in the Sindh budget for the fiscal year 2024-25 (FY25). However, the SRB’s notification indicates that only a limited number of restaurants have been permitted to collect the 15% tax, intended for input adjustment of tax payments.
Only restaurants with a Point of Sale (POS) system are eligible to collect the 15% tax. Out of the hundreds of thousands of restaurants in the province, only 1,700 are registered with the revenue board, mostly in Karachi, and only 58 of these high-end establishments have received permission to charge the higher tax.
Tax experts believe that these larger establishments with significant market share have been allowed to impose the increased service tax.
