To encourage diners to make cashless payments, the Pakistan government mandated a reduced Goods and Services Tax (GST) rate of 5% on payments made through cards and mobile wallets at restaurants in Islamabad, effective July 1.
According to the 2023-24 budget document, customers who choose to settle their bills using cards or mobile wallets will pay a 5% GST instead of the standard rate of 15%. However, cash payments will continue to incur a 15% tax rate. Additionally, the proposal suggests a 15% tax rate for services provided by hotels, motels, guest homes, farmhouses, marriage halls, lawns, clubs, and caterers.
The revised directives would be applicable to services provided by restaurants, including cafes, food parlors, coffee houses, deras, food huts, eateries, resorts, and similar establishments offering ready-to-eat food services. This change is aimed at encouraging customers to opt for cashless transactions when dining out.
Dedicated Customer Service
Many proactive restaurants have swiftly implemented the revised GST rate, demonstrating their dedication to customer satisfaction and adherence to the new taxation guidelines. Diners are encouraged to verify the tax rate applied to their card payments and ensure that the correct rate of 5% is implemented.
Report non-compliance
While the transition to the revised GST rate is underway, diners are advised to remain knowledgeable about their consumer rights and file a formal complaint with the appropriate authorities in cases where a restaurant fails to comply with the revised tax rate and continues to charge the previous 15% GST on card transactions. By adhering to the new tax regulations and reporting any deviations, both customers and establishments can collectively contribute to a transparent and equitable dining experience for all. The new regulation prompted numerous eateries to adopt the lower tax rate, potentially resulting in savings for customers.