KARACHI – Pakistani government increased withholding tax rate on cash withdrawals by non-filers from 0.6pc to 0.8pc. Alongside this, the threshold for this tax has been raised from Rs 50,000 to Rs 75,000.
FBR Chairman Rashid Mahmood Langrial clarified that an error in the budget speech had initially indicated a 1% tax rate, but the actual proposed rate remains at 0.8pc. The increase in the threshold came after consultation between the Finance Committee and the Federal Board of Revenue (FBR), which agreed on Rs 75,000 as a balanced limit.
Committee Chairman Naveed Qamar had earlier suggested raising this limit to Rs 100,000, considering Rs 50,000 was too low. Besides these changes, State Minister for Finance Bilal Azhar Kiani revealed that the Finance Bill 2025-26 proposes tax reductions across all slabs for salaried individuals.
Relief has been provided for those earning up to Rs 3.2 million annually. However, the income tax rate for individuals earning between Rs 600,000 and Rs 1.2 million has been revised upward from 1% to 2.5%. The minister explained this adjustment is due to a 10% salary increase for government employees and the consequent financial constraints.
Regarding banking sector, Chairman Langrial confirmed that tax law amendments were made only with the consent of the State Bank of Pakistan. A disclosure-based method has been adopted to accurately estimate the income of banking companies and ensure appropriate taxation.
Budget 2025-26 includes slight reduction in the super tax rate for corporations, aimed at signaling the government’s commitment to easing the tax burden on the corporate sector. Specifically, the super tax on companies with incomes between Rs 2 billion and Rs 5 billion has been reduced by 0.5%, under Section 4C of the Income Tax Ordinance.
Budget 2025-26: How much Tax will Non-Filers pay on Cash Withdrawals after tweaks?
