FBR Limits Cash to Rs200K for Retail, CoD

Islamabad, August 16, 2025, 04:14 PM PKT — The Federal Board of Revenue (FBR) has unleashed a bold clampdown, setting a Rs 200,000 limit on cash transactions at retail outlets and for Cash on Delivery (CoD) orders in the e-commerce sector, as outlined in Circular No. 02 of 2025-26 (Income Tax), signaling a major push for a cashless economy, per official announcement. This restriction, rooted in section 21(s) of the Income Tax Ordinance, 2001, extends the retail cap to online CoD orders, aiming to streamline cash flows across markets and digital platforms, following earlier directives in Income Tax Circular No. 01 and Sales Tax Circular No. 02 for e-commerce registration and withholding tax (WHT) implementation.

Under section 6A, all digital transactions via online marketplaces (OMPs) or websites face taxation, with payment intermediaries (banks, financial institutions, forex dealers, digital gateways) withholding 1% tax, and couriers deducting 2% on CoD payments before transferring to sellers, treating the collected tax as final for domestic and export income. E-commerce sellers must register for income tax, while OMPs and couriers are barred from serving unregistered vendors, requiring periodic vendor reports and facing penalties for non-compliance. Web context on cashless policies shows mixed success, while posts found on X reflect concern—some back digital shift, others fear compliance burdens. Critically, the narrative of “economic modernization” may mask enforcement gaps—web data hints at past resistance, and X sentiment suggests distrust in smooth rollout, pointing to potential hurdles.