Bad News for Diners paying by Card as Punjab mulls increasing Restaurant Sales Tax from 5% to 8%

LAHORE – If you are a foodie who loves dining out and prefers paying by card or mobile wallet, there is bad news for you as Punjab government has proposed increasing sales tax on digital restaurant payments from 5% to 8%. Despite reiterating the digital push in Punjab, the provincial administration wants consumers to pay more when eating out, as the provincial government proposed increase in sales tax on restaurant transactions made through digital payment channels. Under Punjab Finance Bill 2026, the sales tax rate on payments made via debit cards, credit cards, mobile wallets, and QR codes is set to rise from 5% to 8%. The proposed change means that customers who prefer cashless transactions for dine-in meals or takeaway orders could see their restaurant bills increase in the coming fiscal year. While the move raises tax burden on digital payments, the government retained much higher 16% sales tax on all other payment methods, including cash. Officials argue that the gap between the two rates is designed to keep digital transactions attractive while simultaneously boosting provincial revenues. Payment Method Proposed Sales Tax Debit/Credit Cards, Mobile Wallets, QR Codes 8% (up from 5%) All Other Payment Methods 16% The proposal is part of the Punjab government’s broader revenue-generation strategy outlined in the Finance Bill 2026. Authorities believe the revised tax structure will not only help increase tax collection but also encourage greater documentation of sales within the restaurant sector. Tax officials maintain that digital transactions will still enjoy a significant advantage over cash payments, with the 8% rate remaining half of the 16% tax imposed on other payment methods. The government hopes this differential will continue to encourage consumers and businesses to adopt traceable payment systems, helping bring more economic activity into the documented economy. If approved, the revised tax rates will apply to restaurant dine-in and takeaway tra