The federal government has proposed significant tax reductions for people making international payments through debit and credit cards, offering potential relief to thousands of consumers who regularly use banking channels for overseas transactions.
Under the proposed measures, the withholding tax on foreign transactions made through bank-issued cards will be reduced from 5% to just 0.5%.
This substantial reduction is expected to lower the cost of international purchases, online subscriptions, travel-related expenses, and other payments made abroad.
In addition to the reduction in withholding tax, authorities have also proposed abolishing the Capital Value Tax (CVT) on foreign card transactions.
If approved, this step will further decrease the overall charges faced by consumers when using their cards for international payments.
Officials say the measures are designed to encourage greater use of formal banking systems and digital payment methods. By reducing transaction costs, the government hopes more people will prefer electronic payments instead of informal or cash-based alternatives.
The proposal is part of a broader strategy aimed at strengthening financial inclusion and promoting the growth of Pakistan’s digital economy.
Authorities believe that increased use of banking channels can improve economic documentation, transparency, and overall efficiency within the financial system.
Industry experts have welcomed the proposed relief, noting that lower taxes may encourage more consumers to use debit and credit cards for international transactions.
The changes could also benefit freelancers, online shoppers, students, and travelers who frequently make payments to foreign platforms and service providers.
If approved, the new tax measures will become part of the fiscal framework for the upcoming year and could make digital transactions significantly more affordable for Pakistani consumers.