Pakistan, July 21 -- The federal government is planning a major tax reform by increasing the cash sales threshold from Rs200,000 to Rs2.5 million per transaction, effective from July 1, 2025. This move comes as part of an amendment to Section 24 of the Income Tax Ordinance 2001, aiming to address concerns raised by the business community regarding disallowed expense claims.

To ensure a smooth transition, the government has introduced a phased plan over three years. In the first year, the disallowance limit will rise to Rs2.5 million per transaction, allowing businesses greater flexibility in managing their cash-based transactions.

However, from the second year, the limit will be reduced to Rs1.5 million and later to Rs500,000 in the thi...