Finance Act 2025 & COD: What Every Pakistani Shopify Store Needs to Know

What changed under Finance Act 2025

Pakistan's Finance Act 2025 introduced a significant change for ecommerce merchants: couriers are now required to deduct 2% Withholding Tax (WHT) from COD remittances before paying merchants. This affects every Pakistani store receiving COD payments via courier services.

The change came into effect mid-2025 and applies to all logistics companies operating in Pakistan that facilitate Cash on Delivery payments on behalf of merchants.

What is Withholding Tax (WHT) on COD?

Withholding Tax is a mechanism where the party making a payment (in this case, the courier) deducts a percentage of the payment and remits it directly to the Federal Board of Revenue (FBR) on behalf of the recipient (the merchant).

Under Finance Act 2025, couriers must:

• Deduct 2% of the gross COD amount collected on your behalf
• Remit that 2% directly to FBR
• Provide you with a withholding certificate documenting the deduction

This means if a courier collected PKR 100,000 in COD for your store, they will remit PKR 98,000 to you and PKR 2,000 to FBR.

How it affects your settlements

The most immediate impact is on your settlement amounts. If you were previously reconciling courier remittances based on gross COD collected minus courier charges, you now need to account for an additional 2% WHT deduction.

Stores that don't update their reconciliation process will see what appears to be a recurring discrepancy — their expected settlement amount is consistently 2% higher than what they actually receive. Without proper tracking, this can appear as a courier underpayment rather than a legitimate tax deduction.

The WHT amount is not lost money — it is a tax credit that you can claim against your annual income tax liability, provided you have proper documentation.

The compliance burden

Staying compliant requires:

1. Collecting withholding certificates from each courier for each settlement period
2. Tracking the total WHT deducted per courier per period
3. Maintaining records that match courier remittances to WHT deductions for tax filing
4. Ensuring your annual tax filing correctly claims WHT as a credit

For stores working with 3–5 couriers and receiving weekly settlements, this quickly becomes a significant bookkeeping task without the right tools.

How Courierify handles Finance Act 2025 compliance

Courierify's COD Settlement Reconciliation feature (Pro plan) was updated to handle Finance Act 2025 compliance automatically:

• WHT tracking: Every settlement reconciliation automatically accounts for the 2% WHT deduction — expected settlement amounts are calculated net of WHT.
• Discrepancy detection: Courierify distinguishes between a legitimate WHT deduction and an actual courier underpayment — so you never chase a courier for money they correctly withheld for tax.
• Settlement reports: Generated reports include WHT amounts broken out per courier, per period — in the format needed for your accountant and FBR filings.
• Pakistani bank reconciliation: Settlement data is formatted for reconciliation with Pakistani banking systems.

What you need to do

For Courierify Pro users: the WHT compliance features are already active. Ensure you're collecting withholding certificates from your couriers and uploading settlement data for reconciliation.

For stores not yet on Courierify, or on Free/Starter plans: speak with your accountant about how to update your settlement reconciliation process, and consider upgrading to Pro if you receive significant COD volume.

Book a demo if you'd like to see how Courierify's settlement reconciliation works for your specific courier setup.