The government is likely to increase the financial burden on non-filers in the upcoming fiscal year by doubling the withholding tax rate on bank cash withdrawals, sources revealed. The proposed hike aims to raise an additional Rs. 15 to 20 billion in revenue for the fiscal year 2025-26.
According to officials, a proposal is under review to increase the current withholding tax rate from 0.6 percent to 1.2 percent on daily cash withdrawals exceeding Rs. 50,000 by individuals not listed on the Active Taxpayer List (ATL). This increase would apply to transactions through bank branches, credit cards, and ATMs.
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The move follows the provisions laid out in the Finance Act 2023, which reinstated tax collection under Section 231AB of the Income Tax Ordinance. Under this section, all banking companies are mandated to deduct advance adjustable tax from non-ATL individuals withdrawing more than Rs. 50,000 in a single day.
The potential increase is part of broader efforts to bring more individuals into the tax net and discourage non-compliance by imposing higher costs on those who avoid registration. The final decision is expected to be announced in the upcoming federal budget.
