KARACHI – Pakistani government tightened noose around non-filers in budget 2025-26. Amid several stern measures, the government increased tax rate on cash withdrawals made by individuals who have not filed their income tax returns.
The tax rate has been raised from 0.6% to 1%, amid stricter approach towards undocumented cash transactions.
Previously, non-filers were taxed at 0.6pc on the amount they withdrew in cash from their bank accounts. Under the new budget, this rate will double to 1%, meaning non-filers will face a higher tax burden on cash withdrawals starting from the next financial year.
So if non-filer withdraws Rs1 lac in cash, they will pay 1,000 as tax on that withdrawal. If they withdraw Rs3 lac, the tax will be 3,000.
Previously, at 0.6pc, the tax on 1 lac would have been 600, and on 3 lac it would have been 1,800.
In addition to the tax hike, the government has announced that non-filers will no longer be allowed to open bank accounts. Furthermore, they will be prohibited from investing in securities and mutual funds, reflecting the government’s efforts to promote tax compliance and curb the use of unaccounted money.
The budget also places restrictions on non-filers from purchasing vehicles and immovable property. These measures are aimed at expanding the tax base and ensuring greater transparency in financial transactions.
Finance Minister Aurangzeb presented federal budget for FY 2025-26 in Senate on Tuesday, amid protests from opposition. Following constitutional protocol, the budget was submitted shortly after its introduction in the National Assembly. The Senate chairman asked members to submit any suggestions by June 12 and referred the bill to the Senate’s Finance Committee for review by June 13.
Although the Senate can debate and recommend changes, the National Assembly has the final say on the budget. According to the constitution, money bills must originate in the National Assembly, but the Senate is allowed 14 days to offer feedback.
Pakistan Finance Minister presents Budget 2025-26 amid taxation challenges
