The Federal Board of Revenue (FBR) has introduced a new cap on cash transactions for online shopping in Pakistan, restricting Cash on Delivery (CoD) payments to a maximum of Rs. 200,000 per order.
The directive, issued under Circular No. 02 of 2025-26 (Income Tax) on August 12, 2025, applies not only to e-commerce companies but also to physical retail outlets. The decision is rooted in Section 21(s) of the Income Tax Ordinance, 2001, which governs allowable business expenses.
Why the Restriction Matters
According to the FBR, the measure is designed to push consumers and businesses toward digital transactions, reducing the country’s heavy reliance on cash. Authorities argue that such limits can improve payment transparency, curb tax evasion, and streamline the tax net, while simultaneously supporting Pakistan’s broader shift toward a cashless economy.
What It Means for Businesses and Shoppers
For online retailers, this essentially means no single order can be paid fully in cash if it crosses the Rs. 200,000 threshold. Buyers, on the other hand, will need to switch to bank transfers, credit/debit cards, or mobile wallets for high-value purchases.
Industry watchers see the move as part of the government’s long-term digitalization agenda, though it may initially inconvenience some customers used to large cash transactions. However, policymakers believe the shift could ultimately make e-commerce more efficient and reduce informal financial activity.
