New Tax Policy 2026: Government of Pakistan to Promote Digital Payments, Penalize Cash Transactions

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A customer making a digital payment via mobile wallet at a retail shop in Pakistan, reflecting the government's new tax policy to encourage electronic transactions and reduce cash usage.

Government of Pakistan Introduces New Tax Policy to Encourage Digital Payments

Islamabad – June 2025:

The Government of Pakistan has announced a new tax policy aimed at promoting digital payments and curbing the flow of black money in the economy. This policy is part of a broader initiative to increase financial transparency and modernize the country’s payment ecosystem.

According to official sources, the policy will be implemented following the federal budget announcement in June 2026. It introduces a dual-tax structure where cash transactions will incur an additional tax, while digital payments will remain exempt.

Under the proposed framework:

Cash payments for goods and services at marketplaces will be subject to a small percentage of transaction tax.
Digital payments, including debit and credit cards, mobile wallets like Easypaisa and JazzCash, and QR code-based transactions, will be exempt from this additional tax.

Key Sectors Affected:

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Retail Markets
Customers opting to pay in cash will see a slight increase in their total bill due to the added tax. This aims to gradually shift consumer behavior toward traceable digital methods.
Fuel Stations
Petrol and diesel purchases made with cash may attract a surcharge of Rs. 2 to Rs. 4 per transaction. No such fee will apply if payments are made digitally. Officials believe this will also address issues of fuel quantity manipulation at pump stations.
Restaurants
Dining bills paid in cash will include a small tax, while digital payments will remain tax-free, further incentivizing the use of electronic transactions.

Government’s Rationale:

Authorities emphasize that the objective is not to penalize cash users but to encourage transparency and formalize the economy. By reducing reliance on cash, the government aims to:

Improve tax collection
Discourage fraudulent transactions
Enhance documentation of financial activity

Implementation Timeline:

This policy will not take immediate effect. It is scheduled to be enforced after the national budget announcement in June 2026, giving businesses and consumers ample time to prepare for the transition.