FBR extends cash transaction limit to online CoD orders

ISLAMABAD: Pakistan’s tax authority has placed a ceiling of Rs200,000 on cash transactions at retail outlets and on cash-on-delivery (CoD) orders in the e-commerce sector, as part of a push to bring more businesses into the digital net.

The Federal Board of Revenue (FBR) announced the measure through a new income tax circular, extending to online purchases a cap already in place for physical retail. Officials say the move is designed to curb large-scale cash dealings and nudge buyers and sellers towards digital payments.

Shift towards cashless economy

Pakistan has one of the lowest rates of digital payment adoption in South Asia, with many buyers still preferring CoD. By extending the cap to online platforms, the FBR hopes to encourage both consumers and businesses to rely more on bank transfers, mobile wallets and other digital methods.

Under the new rules, e-commerce transactions carried out through online marketplaces or individual websites will now be subject to taxation. Payment intermediaries such as banks, forex dealers and digital gateways are required to withhold a 1 percent tax on digital transactions, while courier companies handling CoD will deduct 2 percent before passing payments to sellers.

The collected tax will count as final income tax on both domestic and export sales, and must be deposited monthly into the national treasury. Couriers and payment intermediaries are also required to submit regular statements to the FBR.

Registration and compliance

E-commerce sellers must now register for income tax, while online marketplaces and courier services are barred from working with unregistered vendors. Marketplaces are also obligated to file periodic reports about sellers operating on their platforms.

Penalties will apply for non-compliance, including fines for failing to withhold tax or ignoring registration rules. Courier companies remain responsible for tax collection on CoD sales, whether vendors trade independently or via marketplaces.

Officials say the framework is intended not only to plug revenue leaks but also to bring greater transparency into one of Pakistan’s fastest growing industries. 

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