The federal government of Pakistan is reportedly considering a proposal that could significantly alter the cost dynamics of digital transportation in Islamabad. In the upcoming FY2025–26 federal budget, a 4% sales tax may be levied on ride-hailing services such as Careem, InDrive, Bykea, Jugnoo, and Yango, marking a major policy shift for the sector in the capital city.
This development, if approved, would be the first time that cab aggregators operating in the Islamabad Capital Territory (ICT) are brought under a federal tax net. Currently, Islamabad-based users enjoy tax-free rides, unlike their counterparts in provinces such as Punjab, Sindh, and Khyber Pakhtunkhwa, where a 5% sales tax is already in place for similar services.
According to sources cited by ProPakistani, the proposal is being actively reviewed by the Federal Board of Revenue (FBR) as part of broader efforts to enhance tax collection and bring uniformity to digital service taxation across the country. The move reflects a growing consensus that the ride-hailing sector, which has grown exponentially in recent years, should be contributing to the national tax pool, particularly as these services become increasingly mainstream in urban mobility.
This is not the first time such a tax has been floated. A similar proposal was introduced during the FY2024–25 budget cycle, but it was dropped from the final Finance Bill at the last minute, likely due to stakeholder pushback or lack of consensus. However, this year, the push appears more serious, and if included in the upcoming budget, the tax could come into effect as early as July 1, 2025.
The implications of this proposed tax are far-reaching. Ride-hailing platforms operating in Islamabad would see an increase in their operational costs, which could, in turn, be passed on to both drivers and consumers. For drivers, this may translate to reduced earnings, while passengers could face higher fares—something that may not sit well with a public already dealing with inflationary pressures.
The impact would be particularly significant for InDrive, which currently dominates the market with an estimated 60% market share in Pakistan. Any change in fare structures or service dynamics in Islamabad could potentially ripple through the broader digital ride-hailing ecosystem in the country.
The final decision will likely be unveiled during the FY2025–26 federal budget announcement, which is expected in June. Industry stakeholders, including ride-hailing companies, drivers’ unions, and consumer advocacy groups, are closely monitoring the situation and are expected to respond based on how the policy is framed and implemented.
As Pakistan’s urban centers become increasingly dependent on digital transport solutions, taxation and regulatory oversight are inevitable. However, experts warn that these measures must be designed with care to avoid stifling growth in a sector that offers employment opportunities, convenience, and last-mile connectivity to millions of Pakistanis.
For now, commuters in Islamabad are advised to stay alert to any changes that may be announced in the upcoming budget. If the 4% sales tax is approved, everyday ride costs could rise, prompting users to reconsider their commuting choices or budget accordingly. The ride-hailing ecosystem in Pakistan is at a crossroads, and the next few weeks could determine how inclusive and affordable digital mobility remains in the capital.
