The Punjab government has increased the sales tax on digital payments at restaurants from 5% to 8%, while promoting the revised tax structure as offering “50% relief” to customers who pay electronically.

Under the new policy, customers paying through debit cards, credit cards, mobile wallets, or other digital methods will pay 8% GST, compared with 16% GST for cash payments. The government says the lower rate is intended to encourage digital transactions and improve tax documentation.

However, tax experts note that the announcement does not highlight that the GST on digital payments has itself been increased. Previously, customers using digital payment methods paid 5% GST, meaning the tax has now risen by 3 percentage points, even though it remains lower than the rate charged on cash payments.

A tax expert told ProPakistani that the government’s messaging emphasizes the 50% difference between digital and cash payment taxes but overlooks the increase in the tax burden on consumers who were already paying digitally.

The revised rates apply to eligible restaurants across Punjab and form part of the provincial government’s broader strategy to promote cashless payments and reduce undocumented cash transactions. While digital payments continue to receive preferential tax treatment over cash, consumers choosing to pay by card or other electronic methods will now pay a higher GST than they did under the previous regime.