ISLAMABAD – Pakistani authorities continue to tighten noose around those evading taxes. Amid stern measures, Federal Board of Revenue (FBR) is planning to double the withholding tax on bank cash withdrawals and imposing severe restrictions on financial transactions.
As part of the proposed federal budget, the apex tax collection authority recommended increasing the current 0.6pc withholding tax on cash withdrawals by non-filers to a steep 1.2%. This means non-filers withdrawing over Rs 50,000 in cash per day—via ATMs, credit cards, or over-the-counter—will face double the tax on the entire withdrawn amount.
But the bad news doesn’t end there. Starting July 1, 2025, the government intends to eliminate the “non-filer” category altogether and introduce the term “ineligible persons.” This sends clear signal that leniency for non-filers is over. Those who continue to stay outside the tax net may soon find themselves not just paying more, but also financially paralyzed.
Under this new classification, individuals who have not filed their income tax returns will be completely barred from performing financial transactions, effectively locking them out of the formal economy.
These harsh measures come under the Tax Laws (Amendment) Bill, 2024, which has already been approved by the National Assembly Standing Committee on Finance and Revenue. The upcoming Finance Bill 2025-26 will serve as the vehicle to implement these sweeping changes.
According to officials, while the government is committed to phasing out withholding taxes in the long run, the immediate priority is revenue generation and enforcing tax compliance. Therefore, non-filers can expect a tougher financial environment starting in the next fiscal year.
Under existing rules—revived in the Finance Act 2023—banks deduct a 0.6% tax on total daily cash withdrawals exceeding Rs 50,000 from individuals not listed in the Active Taxpayer List (ATL). With the proposed changes, this rate will double, adding more financial pressure on non-compliant individuals.
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