15% service tax reinstated on card payments at restaurants in Sindh

Sindh’s tax hike aims to address revenue concerns and ensure fair tax compliance

The Sindh government has reinstated a 15 per cent service tax on debit and credit card payments at restaurants and hotels across the province.

This move marks a reversal from a previous reduction in the tax rate, which had been lowered to 8 per cent earlier in the year.

The Sindh Revenue Board confirmed that 58 establishments in Karachi have been authorised to apply the increased tax rate.

This adjustment aims to address revenue shortfalls and improve tax compliance across the hospitality sector.

The higher tax rate will be applied to card transactions at these venues, affecting both local patrons and visitors.

The reinstatement of the 15 per cent tax follows a period of reduced rates intended to stimulate consumer spending and support the restaurant industry amid economic challenges.

However, the increase is expected to lead to higher costs for diners and may influence spending patterns in the city's vibrant food and hospitality sector.

Officials have stated that the adjustment is part of broader fiscal measures aimed at balancing the provincial budget and addressing revenue gaps.

The tax on card payments is a significant revenue source, and this change underscores the government's efforts to ensure that the sector contributes adequately to the public finances.

The actual impact of this tax increase on restaurant sales and revenue remains to be seen, as card transactions constitute a substantial portion of many establishments' business.

The Sindh Revenue Board has indicated that further evaluations of tax compliance and revenue outcomes will be conducted in the coming months.