The federal government has revised and simplified its proposed income tax framework on cash-on-delivery (COD) payments, introducing higher tax rates for COD transactions compared to digital payments. The move aims to discourage cash usage and promote greater economic documentation.

The announcement came during a session of the National Assembly Standing Committee on Finance, where Bilal Azhar Kayani, Minister of State for Finance, confirmed that separate tax rates will apply for payments made in cash and those processed digitally.

Previously, the government had proposed a tax ranging from 0.25 percent to 2 percent on COD transactions. The Federal Board of Revenue (FBR) expects to generate Rs. 59 billion from this tax measure in the fiscal year 2025-26.

Committee Chairman Syed Naveed Qamar, along with other lawmakers, expressed concerns about the implementation of the tax without clear safeguards and practical thresholds to protect small businesses. Lawmakers urged the FBR to ensure that small sellers are not unfairly burdened by the new tax regime.