Sindh Government reduces sales tax on commissions charged by online platforms for home based vendors

In the recently announced provincial budget 2022/2023, the Sindh Government took an important step in supporting home based vendors through allowing a reduction in sales tax on commissions charged for home chefs that operate on online platforms. The rebate is consistent with similar reductions offered by other provinces like Punjab and KP, and is expected to help grow the sector and support grass root economic empowerment (especially for women).  

The rebate reduces sales tax from 13% to 8%, allowing for better unit economics and higher potential for growth for such HomeChefs operating on online food delivery platforms, such as foodpanda.

Dr. Wasif  Ali Memon, Chairman SRB, stated, “This step by the Sindh Government will support home-based entrepreneurs working on online delivery platforms and drive economic viability for a large, and growing segment of the society. The rebate will lead to an increase in the number of home based vendors and create an enabling environment which is well aligned with the government’s focus on economic sustainability.”

Muntaqa Peracha, CEO foodpanda, while sharing his thoughts said, “This initiative by the Government of Sindh is in line with our vision of creating a favourable business environment for HomeChefs as they represent an important segment of our portfolio. This move will help grow a new sector that has significant potential for financial and economic inclusion, specifically women’s economic empowerment. We are excited to see its positive impact on food entrepreneurship and aim at scaling it further across the country.”

The reduction in the rate of Sindh sales tax (SST) on commission charged by online food delivery channels from home-based chefs will be applicable from 1st of July, for a  period of two years, ending on June 30, 2024.

HomeChefs are essentially people operating out of their home kitchens who sell food through online platforms. Foodpanda, along with a few other players in the industry, currently has several thousand registered HomeChefs who have been taken on board after stringent routine checks for food hygiene, quality, safety, packaging, etc. The sector is expected to grow significantly, for example foodpanda aims to increase the HomeChefs base in the next two years and take it up to 100,000 registered HomeChefs.