The Federal Board of Revenue (FBR) has decided to legally challenge the Islamic Ideology Council’s (CII) ruling that declared the collection of withholding tax on bank withdrawals and transfers as un-Islamic. Sources said that all legal preparations have been completed, and the case will soon be taken to court.
Earlier this week, the CII, under the leadership of Chairman Allama Dr. Raghib Hussain Naeemi, announced that charging withholding tax on withdrawing or transferring one’s own money from banks has no basis in Shariah. Dr. Naeemi explained that after reviewing the matter in the light of the Quran and Sunnah, the council found no justification for such deductions. He added that taxing people on their own money is excessive and not permissible under Islamic law.
When questioned about the CII’s decision at the FBR headquarters, Chairman Rashid Mahmood Langrial avoided giving a direct comment, saying the ruling would first be reviewed before any official response is made.
However, insiders confirmed that the FBR has already decided to oppose the council’s ruling. They stressed that withholding tax is an important source of revenue for the government and cannot be removed without creating a major financial gap.
The upcoming legal battle highlights the tension between financial policies designed for revenue collection and religious interpretations of taxation practices. The final outcome is expected to have a significant impact on both the banking sector and the state’s revenue system.
