The Federal Board of Revenue (FBR) in Islamabad has suggested an increase in the withholding tax on cash withdrawals from banks for non-filers, raising the rate from 0.6 percent to 0.9 percent. This measure aims to generate an additional revenue of Rs 15-20 billion in the fiscal year 2024-25.

The government’s proposal to penalize non-filers of income tax returns has been a key topic of discussion between the Federal Board of Revenue (FBR) and the International Monetary Fund (IMF). Currently, cash withdrawals exceeding Rs 50,000 by non-filers in a single day, whether through credit cards or ATMs, incur a 0.6 percent withholding tax. The Finance Act 2023 reintroduced this measure, mandating banks to deduct an advance adjustable tax from individuals not listed in the Active Taxpayer List. This tax applies to the total amount of daily cash withdrawals surpassing Rs 50,000. Exemptions from this tax include withdrawals by the federal or provincial governments, foreign diplomats, or individuals with an income exempt certificate from the commissioner. This withholding tax is adjustable against the person’s tax liability for the year.