Govt Considers Rs2.5M Cash Sale Expense Limit

Lahore, July 21, 2025, 02:30 PM PKT — The federal government is poised to address mounting pressure, contemplating a hike in the threshold for disallowing expenses on cash sales from Rs200,000 to Rs2.5 million per transaction, reported Business Recorder, amending Section 24 of the Income Tax Ordinance 2001, effective July 1, 2025 under the Finance Act 2025. This provision, sparking business community unrest by banning expense deductions above Rs200,000, now proposes a phased three-year adjustment to balance revenue protection with documentation goals.

The plan starts with a Rs2.5 million limit in the first year, dropping to Rs1.5 million in the second, then Rs500,000 in the third, while the disallowed expenditure rate falls from 50% to 20%, with gradual increases. This targets “Income from Business” under Section 18, sparing individuals or other income sources. Web context reveals tax policy debates, while posts found on X show relief mixed with skepticism—some welcome easing, others question compliance. Critically, the narrative of “tax relief” may mask implementation risks—web data hints at past enforcement gaps, and X sentiment suggests distrust in effective rollout, pointing to potential friction.