ISLAMABAD – Budget 2025 is around the corner and Pakistani government is considering to jack up withholding tax on cash withdrawals by non-filers, in latest bid to boost revenue.
The new proposal would directly impact individuals withdrawing Rs50,000 or more from banks. As of FY24-25, non-filers withdrawing over Rs. 50,000 in cash through ATMs or credit cards face a withholding tax of 0.6pc.
Under the new proposal, this rate could be doubled to 1.2percent, raising the tax on a Rs. 1 lac withdrawal from Rs. 600 to Rs. 1,200.
Cash Withdrawals Tax Update
This measure is part of the government’s efforts to widen tax base and increase revenue from non-filers, who are currently subject to fewer tax obligations. Officials estimate that the increased rate could generate an additional Rs. 15 to 20 billion in revenue during the fiscal year 2025-26.
Those familiar with development suggest that while the move targets unregistered taxpayers, it may also affect daily banking behavior and increase the cost of cash withdrawals for many individuals.
The proposal is still under review, and final decisions are expected in the upcoming budget announcements. Non-filers are advised to monitor developments closely, as this change could significantly affect their banking transactions in the near future.
Budget 2025-26
Sharif led government plans removing category of non-filers, preventing those who don’t meet tax requirements from conducting financial transactions starting July 1, 2025.
National Assembly also approved Tax Laws (Amendment) Bill 2024 to enforce these restrictions through the Finance Bill 2025-26. To avoid major revenue loss, the government may gradually implement changes, including doubling the withholding tax on cash withdrawals by non-filers.
This tax was reinstated by the Finance Act 2023 and applies to the total withdrawal amount if it exceeds the threshold.
Federal govt sets target of Rs14, 305tr tax collection during FY 2025-26
