The Federal Board of Revenue (FBR) has informed businesses, including importers, vendors, and producers, about stricter rules under Section 21 of the Income Tax Ordinance for FY26, intended to curb large cash transactions and widen the tax base.
As per the announcement, any cash payment surpassing PKR 200,000 will not be accepted as an admissible business cost. As a result:
- Only 50% of such spending will be allowed for tax calculations.
- The portion not accepted will face an extra tax liability, effectively increasing the expense by 20.5%.
- For fully disallowed transactions, the overall impact may rise to 79.5%.
READ MORE: FBR Extends Sales Tax Integration Deadline
Firms are advised to ensure that all payments to suppliers and clients are conducted via proper banking systems to avoid heavy fines and added inspections by FBR.
READ MORE: FBR Orders Hotels & Couriers to Go Digital
Business entities have been warned that ignoring this may result in major monetary setbacks and audit-related issues.
