Cash withdrawals from banks: FBR proposes raise in WHT for non-filers
However, the government is also trying to impose financial restrictions on non-filers of income tax returns from July 1, 2025. Under the proposal, the government will abolish the category of non-filers and 'ineligible persons' would not be able to carryout any kind of financial transactions.
The National Assembly Standing Committee on Finance and Revenue, had adopted the report on Tax Laws (Amendment) Bill, 2024 to impose restriction on economic transactions of non-filers through Finance Bill 2025-26 from next fiscal year. From July 1, 2025, the government will impose strict restriction on economic transactions of non-filers through the next Finance Bill.
FBR will now share income tax returns data with banks
Sources said that the government may not abolish all withholding taxes for non-filers in one go due to revenue implications. Therefore, the doubling of withholding tax rates on cash withdrawal from the banks by non-filers is also under consideration. Presently, over Rs 50,000 cash withdrawals by non-filers, in a single day, through credit cards/ATMs is also be subjected to 0.6 percent withholding tax.
The Finance Act 2023 had reintroduced tax collection on cash withdrawals from Non-ATL persons by banks. The section 231AB requires every banking company to deduct advance adjustable tax at 0.6 percent from a person whose name is not appearing in the Active Taxpayer List, at the time of making payment for sum total of cash withdrawal (aggregate cash withdrawal) in a single day exceeding Rs 50,000. Cash withdrawals made on credit cards or from ATMs were also be covered by this provision.
If the aggregate of cash amount withdrawn in a single day exceeds Rs 50,000, the tax is required to be deducted on the entire amount of cash withdrawn.
Copyright Business Recorder, 2025
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