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ISLAMABAD: The federal government is expected to unveil a dual pricing system in Budget 2025-26. The plan introduces different tax and transaction rates for cash versus digital payments across various sectors, most notably fuel. The aim: to wage a full-scale “war on cash” and bring more transactions into the formal economy.
Sources confirm that fuel purchases will cost less when paid digitally. Petrol pumps across the country, from Karachi to Azad Kashmir, will soon be legally required to accept payments via QR codes, debit/credit cards, and mobile wallets. While cash transactions will still be permitted, they will come at a premium, Rs2-3 per litre more than digital payments.
“This is a regulated environment and implementable at the outset,” an official noted, highlighting that it would also improve tracking of fuel supplies across the country and help combat smuggling and adulteration, problems that cost Pakistan up to Rs500 billion annually.
Alongside the digital push, the upcoming budget is also expected to offer slight tax relief for salaried individuals—a cut of 1 to 1.5 percentage points—under the direction of the Prime Minister. While small, the change is meant to signal a policy shift towards reducing the burden on the documented class.
Finance Minister Muhammad Aurangzeb has held several talks with the FBR, the Ministry of Petroleum, financial institutions, and digital solution providers. They worked together to design the new policy. The plan will require all businesses, big and small, to provide both cash and digital payment options. Cash payments will carry extra fees.
Standard GST Plus 2% Penalty for Cash Payments
Under the proposed structure, importers and manufacturers will be required to charge 18% GST on digital transactions, with an additional 2% GST on cash-based sales. The decision applies across the supply chain, from wholesalers to retailers.
“If wholesalers, distributors and retailers are ready to pay higher tax and their customers are willing to absorb the additional cost, it’s their choice, but it will involve substantial finances,” another official added.
Unlike costly POS terminals, the new system promotes low-cost digital options like QR codes. This approach mirrors successful models in India, Indonesia, and Bangladesh. However, officials admit the FBR has struggled for years. They find it hard to document informal sectors like jewellers, doctors, lawyers, event managers, and beauty salons.
War on Cash: Not Just a Slogan
“This must be a war on cash if we aspire to join the G20,” the finance minister has repeatedly emphasized.
He argues that Pakistan’s economy could be worth over $700 billion, compared to the current estimate of $410 billion, with annual tax evasion topping Rs7 trillion.
He also noted that non-filers and under-filers alone evade Rs1.3 trillion in taxes. “We will ensure this documentation,” he said, promising bold measures in the budget to shift Pakistan’s economy onto a more transparent, traceable path.
Last month, the government introduced a bill in the National Assembly. It aims to digitally monitor fuel from production to retail. The goal is to stop leakage in the petroleum supply chain. The upcoming budget’s dual-pricing system will support this law. It will reward digital payments and penalize cash usage.
