The Federal Board of Revenue (FBR) has moved to tighten payment rules for online and retail shoppers, introducing a new limit for cash payments on COD orders that will reshape the way large transactions are handled in Pakistan. From August 12, 2025, any Cash on Delivery (CoD) purchase exceeding Rs200,000 must be settled through digital means rather than in physical currency.
This change, announced via Circular No. 02 of 2025-26 (Income Tax), applies not only to e-commerce platforms but also to physical retail outlets. It reflects the government’s broader ambition to accelerate the adoption of a cashless economy and to modernise payment systems nationwide.
Push Towards Digital Transactions
According to Section 21(s) of the Income Tax Ordinance, 2001, the new threshold aims to nudge both buyers and sellers toward secure, traceable, and more convenient payment channels. FBR officials say this limit for cash payments on COD orders will help curb tax evasion, enhance transaction transparency, and make record-keeping simpler for businesses.
E-commerce businesses, particularly those selling high-value electronics, jewellery, or furniture, will now have to adjust their checkout processes to inform customers of the restriction. Likewise, consumers accustomed to handing over large amounts of cash at their doorstep will need to explore bank transfers, mobile wallets, and other non-cash methods for settling bills above the limit.
Authorities believe the shift will also benefit logistics companies, as reduced cash handling lowers security risks for delivery personnel and streamlines order reconciliation.
Economic and Consumer Impact
For Pakistan’s growing online shopping sector, this limit for cash payments on COD orders marks a significant cultural change. CoD remains the most popular payment method in the country, largely due to consumer distrust of online payments and limited access to banking facilities in certain regions.
Analysts say the Rs200,000 cap is a strategic compromise, high enough to avoid disrupting small and mid-sized purchases, but firm enough to push high-ticket transactions toward formal banking channels.
While some customers may initially resist the shift, experts predict that greater exposure to digital payments will eventually increase trust in electronic transactions, ultimately helping Pakistan align with global e-commerce norms.
The FBR has urged businesses to educate their customers early, ensuring a smooth transition before enforcement steps up in the coming months.
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