FBR Fixes Rs 200,000 Cash Limit for Retail Purchases and E-Commerce COD Orders

 

ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a new restriction on large cash transactions, setting a limit of Rs 200,000 for payments made at retail outlets as well as for e-commerce Cash on Delivery (CoD) orders.

The move was announced through Circular No. 02 of 2025-26 (Income Tax), issued on Friday, as part of the government’s ongoing efforts to reduce reliance on cash and encourage digital payments across the country.

Promoting a Cashless Economy

According to the FBR, the measure is in line with section 21(s) of the Income Tax Ordinance, 2001. By applying the same restriction to both physical retail outlets and online marketplaces, the government aims to standardize transaction practices while curbing excessive cash use.

“This limit will help promote transparency, curb undocumented financial activity, and support the government’s vision of a cashless economy,” the circular noted.

Impact on Retailers and E-Commerce

The decision directly affects both traditional retailers and Pakistan’s rapidly expanding e-commerce sector, which has heavily relied on CoD services due to low digital payment adoption among customers.

Industry experts believe that while the measure could initially pose challenges for online businesses—particularly those dealing in high-value products—it may also push customers toward adopting digital payment solutions such as bank transfers, debit cards, and mobile wallets.

E-commerce companies have expressed concern that operational costs could increase in the short term due to the new tax regulations and transaction restrictions. However, analysts suggest that the long-term outcome will create a more documented and secure business environment.

A Step Toward Digital Transformation

The Rs 200,000 cap is being viewed as part of a broader set of reforms aimed at digitizing Pakistan’s economy, reducing the shadow economy, and increasing tax compliance. By encouraging electronic transactions, the government hopes to improve traceability of financial flows and broaden the tax base.