Restaurant Bills just got costlier as Punjab imposes 8% Sales Tax on Card Payments

LAHORE – Diners used to pay through cards instead of cash payments to avoid taxes but tapping your card at restaurants will now cost little more as Punjab officially raised sales tax on digital payments from 5% to 8%, making cashless dining and several other services more expensive. As the government moves to boost revenue and expand its tax net, Punjab government officially jacked up sales tax rate on wide range of service sectors from 5% to 8%, with the revised rate now coming into force across the region of over 127 million. Punjab Revenue Authority (PRA) directed all businesses to immediately implement new tax rate, issue invoices accordingly, and collect 8% Punjab Sales Tax from customers. Under revised tax regime, customers making payments through credit cards, debit cards, mobile wallets, and QR codes will now pay 8% sales tax at restaurants, cafés, coffee shops, and food chains, replacing the previous 5% rate. The tax hike covers broad range of service providers, including wedding halls, catering services, event management companies, travel and tour operators, rent-a-car services, fitness centers, apartment houses, property dealers, architects, warehouses, cold storage facilities, and two additional service sectors brought under the new rate. All businesses falling within revised framework are legally required to charge customers the updated tax rate. The government says the move is aimed at increasing provincial revenue, expanding the effectiveness of the tax net, and strengthening the overall tax collection system. The increase follows a proposal included in the Finance Bill, which recommended raising the sales tax on digitally paid transactions, from 5% to 8%, for payments made via debit cards, credit cards, mobile wallets, and QR codes. The decision is expected to have impact on consumers who rely on digital payment methods. While financial experts believe the measure could significantly boost government revenues, they also warn that it will increase the