In a major policy shift aimed at digitizing the economy and expanding the tax net, the federal government of Pakistan is set to introduce dual pricing and additional taxation on cash transactions in the upcoming 2025-26 budget. The measures, reported by Dawn, will primarily target purchases made at fuel stations, retail outlets, and other service providers. The initiative is part of a broader effort to discourage cash payments and encourage digital financial activity across all sectors of the economy.
According to the proposed plan, government-notified petroleum prices will only apply to customers who pay through digital channels. Those who opt to pay in cash at fuel stations will incur an additional charge of Rs. 2 to Rs. 3 per litre. The objective is to create a clear financial incentive for consumers to shift from cash to digital methods. All fuel stations across the country will be mandated by law to offer card machines, QR code scanners, and mobile payment options in addition to accepting cash.
This dual pricing policy is a significant step toward formalizing economic transactions and enhancing transparency. It is expected to strengthen tax compliance while reducing the scope for undocumented or untaxed economic activity, especially in high-cash-flow sectors like fuel and retail.
Beyond fuel purchases, the government is extending this approach to other areas as well. Digital transactions will remain subject to the standard 18 percent General Sales Tax (GST), whereas cash-based purchases will attract an additional 2 percent GST. This will impact a wide range of goods and services across the consumer spectrum. Importers and manufacturers will also be legally required to pass on these dual pricing mechanisms to their retailers and suppliers, ensuring consistency across the supply chain.
To support the implementation of these changes, the budget will include a legal requirement that obliges every business, regardless of size or sector, to offer both cash and digital payment options to customers. In recognition of the cost barriers associated with traditional point-of-sale systems, the government will allow businesses to utilize QR code-based digital payment systems, which are more affordable and easier to deploy, particularly for small retailers and service providers.
In a related move aimed at providing some relief to salaried individuals, the federal budget is also expected to reduce income tax rates by 1 to 1.5 percentage points. This is likely intended to offset the burden of rising inflation and offer a more balanced fiscal approach in light of the new taxation on cash transactions.
These sweeping reforms reflect a determined shift in policy to modernize Pakistan’s financial infrastructure, reduce cash dependency, and improve the traceability of commercial transactions. The proposed dual pricing and mandatory digital payment acceptance will not only help plug revenue leakages but also encourage the public to adopt safer and more efficient methods of payment.
By increasing the cost of undocumented, cash-based purchases and simplifying digital alternatives, the government aims to drive long-term behavioral change and support financial inclusion on a national scale.
