Higher Taxes Ahead for Cash Payments on Fuel, Retail, and Services in Pakistan
In a bid to curb cash transactions and promote digital payments, the federal government plans to introduce a dual pricing and taxation model in the upcoming 2025-26 budget. This policy will apply to fuel purchases, retail sales, and other services nationwide.
Under the new system, government-notified petroleum prices will be valid only for digital payments. Customers choosing to pay in cash at fuel stations will incur an additional charge of Rs. 2 to Rs. 3 per litre. Fuel stations will be mandated to provide digital payment facilities, including QR codes, card machines, and mobile payment options.
Furthermore, digital purchases will be taxed at the standard 18 percent General Sales Tax (GST), whereas cash transactions will carry an additional 2 percent GST. This dual-pricing policy will also apply to goods distributed by importers and manufacturers to retailers and suppliers.
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To support digital payment adoption, all businesses—regardless of size—will be legally required to accept both cash and digital payments. QR code-based digital payments will be permitted to help smaller retailers avoid the cost of installing POS terminals.
The upcoming budget will also include a 1 to 1.5 percentage point reduction in income tax for salaried individuals.
This initiative aims to impose greater financial accountability on undocumented transactions, enhance tax collection, and improve traceability in sectors like petroleum sales.
