FBR Sets a Rs. 200,000 Cash Payment Limit for E-com Cash-on-Delivery (COD) Orders
In a significant move to push Pakistan towards a cashless economy, the Federal Board of Revenue (FBR) has imposed a cash payment cap of Rs. 200,000 on both retail transactions and e-commerce Cash on Delivery (COD) orders.
It is expected that this ruling, which was made public on August 16, 2025, by Circular No. 02 of 2025-26 (Income Tax), will change how Pakistani companies and internet retailers handle payments, client billing, and tax compliance.
Why Has FBR Fixed This Cash Limit?
The limit has been enforced under Section 21(s) of the Income Tax Ordinance, 2001, which restricts the deductibility of expenses made through cash beyond a certain threshold.
Simply put:
- Any cash payment above Rs. 200,000 will not be admissible for tax purposes.
- Both retail markets and e-commerce COD transactions must now follow the same restriction.
This action is a component of the government’s larger goal to:
- Curb undocumented cash transactions
- Encourage digital payment adoption
- Increase tax transparency
- Support the growth of a formal economy
What This Means for Businesses in Pakistan
This policy directly affects traders, shopkeepers, wholesalers, and e-commerce sellers who rely heavily on COD.
- Retailers: Must ensure large bulk payments are shifted to banking channels instead of cash.
- E-Commerce Sellers: COD orders above Rs. 200,000 will no longer be valid. Businesses will need to guide customers toward bank transfers, debit/credit cards, or mobile wallet payments.
- SMEs & Startups: The regulation will increase reliance on formal bookkeeping and digital transactions, making tax compliance more important than ever.
This is a mentality shift for many businesses, not merely a change in regulations.
Pakistan’s economy has long been cash-driven, but with increasing tax reforms, digital-first businesses will gain a competitive edge.
How Should E-Commerce Businesses Adapt?
If you’re running an online store in Pakistan, this regulation means you need to rethink how you structure payments.
Here’s how you can adapt quickly:
- Set COD Limits: Clearly mention that COD is only available for orders under Rs. 200,000.
- Encourage Prepayments: Offer small discounts or free delivery for online payments.
- Integrate Multiple Payment Gateways: For customer convenience, provide bank transfer, Visa/MasterCard, Easypaisa, and JazzCash alternatives.
- Maintain Proper Records: Track every transaction digitally to stay compliant with FBR audits.
How to Stay Compliant with FBR?
Adapting to tax laws can be confusing, but that’s where Waystax comes in.
We offer professional services to ensure that your company maintains complete compliance while you concentrate on expansion.
Our services include:
- SECP Company Registration in Pakistan
- NTN Registration
- E-Filing of Income & Sales Tax Returns
- E-Commerce Registration
Don’t wait until FBR knocks on your door.
Register your business, get tax compliant, and let Waystax help you adapt smoothly to Pakistan’s evolving business landscape.
Compliance Today, Growth Tomorrow
The Rs. 200,000 cash transaction cap is more than just a new rule, it’s a step towards a modern, digital, and documented economy.
Companies that accept this shift will be in a better position to expand, gain credibility, and endure over the long run.
With Waystax, you don’t just meet regulations, you turn them into an opportunity to grow your business with transparency and efficiency.