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| A Pakistani entrepreneur working on his online business setup, surrounded by key legal documents like NTN, FBR certificate, and tax registration—showcasing the importance of legal compliance for e-commerce in Pakistan. |
E-commerce is growing rapidly in Pakistan, with more entrepreneurs turning to online platforms to sell their products and services. Whether you want to run a full-fledged online store or start a small Instagram-based business, it's important to understand the legal requirements. This guide will walk you through the key legal steps to start and operate an e-commerce business in Pakistan.
1. Decide the Type of Your E-Commerce Business
The first step is to decide the nature and model of your e-commerce business. This will affect your registration, taxation, and compliance process. Common types include:
- Online retail store: Selling physical goods (like clothes, electronics, etc.)
- Digital products/services: Selling courses, digital downloads, graphic design, etc.
- Marketplace: A platform where multiple sellers can sell (like Daraz)
- Dropshipping: Selling products without maintaining inventory
2. Choose a Business Structure
Next, decide the legal structure of your business:
- Sole Proprietorship: Easiest to start, low cost, under your own CNIC
- Partnership: If you have business partners; requires a partnership deed
- Private Limited Company (Pvt Ltd): Ideal for serious businesses; offers limited liability and credibility
Tip: For small e-commerce startups, sole proprietorship is a good place to begin.
3. Register Your Business
Depending on your chosen structure, here’s how to register:
Sole Proprietorship
- Go to your city’s FBR Regional Tax Office or apply online via FBR's IRIS portal
- Get your NTN (National Tax Number) under your CNIC
- Optional: Register your business name with the Chamber of Commerce
Private Limited Company
- Register with SECP (Securities & Exchange Commission of Pakistan)
- Reserve a name, submit incorporation documents, pay the fee
- Get your company's NTN from FBR
Note: Registration with SECP provides credibility, especially if you plan to work with banks or international clients.
4. Register for Sales Tax (If Applicable)
If you are selling physical goods, you may be required to register for Sales Tax with FBR. It’s mandatory if your annual turnover exceeds PKR 10 million, or if you’re selling taxable products.
Registration allows you to legally:
- Charge Sales Tax to customers
- Get a Sales Tax Number (STRN)
- Claim input tax refunds
If you're a service-based e-commerce business (like digital marketing or freelancing), register with the Provincial Revenue Authority (e.g., PRA, SRB, KPRA).
5. Open a Business Bank Account
After getting your NTN, you should open a business bank account. Required documents include:
- NTN certificate
- Business registration certificate
- Partnership deed (if applicable)
- Letterhead or stamp
This separates your personal and business finances and is essential for professional dealings.
6. Choose a Payment Gateway
To collect payments online, especially through debit/credit cards or mobile wallets, you’ll need a payment gateway. Options in Pakistan include:
- EasyPaisa, JazzCash: Good for local small businesses
- Bank Alfalah Gateway
- HBL Konnect, UBL GoGreen
- SadaPay & NayaPay (in development for merchants)
You can also use international options like Payoneer or Stripe (with a US/UK bank setup via Payoneer or Wise).
7. Draft Legal Policies for Your Website
Every e-commerce store should display important policies for transparency and customer trust:
- Privacy Policy: How customer data is used
- Return/Refund Policy: If and how customers can return goods
- Terms & Conditions: Rules of using your site or service
- Shipping Policy: Timeframe, costs, delivery areas
These policies also help in dispute resolution and PayPal/Stripe compliance (if used).
8. Ensure Compliance with Cyber Laws
Under the Prevention of Electronic Crimes Act (PECA) 2016, e-commerce businesses must not:
- Misuse customer data
- Engage in false advertising or scams
- Sell counterfeit or banned products
You can be legally penalized or blocked by the PTA (Pakistan Telecommunication Authority) if found violating these regulations.
9. Register with Marketplaces (Optional)
If you plan to sell on platforms like Daraz, OLX, or Instagram/Facebook Shops, register with them as a verified seller. Requirements include:
- CNIC copy
- Bank account details
- Business registration (sometimes optional)
These platforms often require regular reporting and product authenticity to avoid bans.
10. Keep Records and File Taxes
Every legal business must file annual tax returns with FBR, whether you’re making profit or not. You'll need to maintain:
- Sales invoices
- Purchase receipts
- Bank statements
- Delivery and refund logs
Filing deadlines:
- Income tax returns: Due by September 30 each year
- Sales tax returns: Filed monthly (if registered)
Consult a tax advisor to ensure proper documentation and avoid penalties.
Bonus Tips to Run a Legally Safe Online Business
- Use verified couriers like TCS, Leopards, or Pakistan Post with tracking
- Always issue receipts and keep proof of delivery
- Avoid importing restricted goods without legal documentation
- Keep screenshots and proof of online communication with customers
- Comply with advertising laws (e.g., don’t use fake reviews or competitor names)
Conclusion
Starting an e-commerce business in Pakistan is easier than ever—but to grow it successfully, you must ensure full legal compliance. From getting an NTN and registering your business to managing taxes and protecting customer rights, every step matters. A well-structured, legally registered business not only gives you peace of mind but also builds trust with your customers and payment partners.
Need more help? Stay tuned to Qanoon Ke Qisse for real-life examples and legal advice in simple Urdu!