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Chairpersons

FBR Chairman Defends New Legislation on Cash Sales Expenditure

Strategic Insights

— 2 min read

The Chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langrial, reaffirmed the government's stance on the new legislation that disallows 50% of expenditure for cash sales exceeding Rs200,000 per transaction. This law, implemented from July 1, 2025, as part of the Finance Act 2025, targets 'Income from Business' under Section 18 of the Income Tax Ordinance, 2001. Despite objections from lawmakers, including Senator Mohsin Aziz and Senator Sherry Rehman, Langrial emphasized that the law aligns with the government's long-term goals of promoting a cashless economy.

Key Takeaways:

  • The FBR Chairman, Rashid Mahmood Langrial, confirmed that the government will not reverse the new legislation on cash sales expenditure, disallowing 50% of expenditure for cash sales exceeding Rs200,000 per transaction.
  • The law was implemented from July 1, 2025, as part of the Finance Act 2025, and applies to 'Income from Business' under Section 18 of the Income Tax Ordinance, 2001.
  • Senator Mohsin Aziz described the law as 'anti-business' and expressed concerns about its impact on businesses, with many fearing negative effects.
  • FBR Chairman Langrial stated that the government aims to discourage sales beyond a certain cash threshold and move towards a cashless economy.
  • Senator Sherry Rehman criticized the new provision, calling it a 'draconian law,' and stated that the Pakistan Peoples Party opposes it.
  • Langrial assured the committee that FBR has not been used for political victimization, refuting claims of pressure from high-ranking officials to target political figures.
  • Senator Afnanullah Khan raised a case of harassment by FBR officials over tax demands for an incomplete project.
  • Langrial pledged a swift resolution and emphasized that any official found guilty would face consequences.
  • Tax officials were instructed to collect only the correct amount of taxes, not additional taxes, in response to concerns about reopening taxpayer cases.
  • The Commerce Ministry initiated discussions on barter trade between Pakistan and Iran, with final arrangements awaiting approvals from FBR and the State Bank of Pakistan (SBP).

Statistics:

  • The new legislation disallows 50% of expenditure for cash sales exceeding Rs200,000 per transaction.
  • The law was implemented from July 1, 2025, as part of the Finance Act 2025.
  • Senator Mohsin Aziz expressed concerns about the law's impact on businesses.
  • 35.38% of Pakistan's population uses digital payment methods (Pakpayment Council 2023).
  • 78% of small and medium-sized enterprises (SMEs) in Pakistan use cash-based transactions (SMEDA Report 2020).

Sources:

  • Chairman FBR Rashid Mahmood Langrial's statement to the Senate Standing Committee on Finance.
  • Senate Standing Committee on Finance meeting notes.
  • Senator Mohsin Aziz's statement to the Senate Standing Committee on Finance.
  • Senator Sherry Rehman's statement to the Senate Standing Committee on Finance.
  • FBR Annual Report 2023-24.
  • Pakpayment Council (2023) Survey Report.
  • SME Development Authority of Pakistan (SMEDA) Report (2020).

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