ISLAMABAD: The Federal Board of Revenue (FBR) has proposed to raise withholding tax on cash withdrawal from the banks by non-filers from 0.6 percent to 0.9 percent to generate additional revenue of Rs 15-20 billion during 2024-25.
Sources told Business Recorder that the proposal is part of the government’s policy to penalise non-filers of income tax returns. The proposal has been discussed during the ongoing talks between the FBR and the International Monetary Fund (IMF) team.
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.
Income tax returns: FBR warns non-filers of account freeze
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If the aggregate of cash amount withdrawn in a single day exceeds Rs 50,000, the tax is required to be deducted on the entire amount of cash withdrawn.
The withholding tax on cash withdrawal is an adjustable tax against tax liability of the person for a tax year.
The tax shall not be deducted in case of withdrawals made by the federal government or a provincial government; a foreign diplomat or a diplomatic mission in Pakistan; or a person who produces a certificate from the commissioner that his income during the tax year is exempt, they added.
Copyright Business Recorder, 2024
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