Revised Cash Withdrawal Tax for Non Filers: What Budget 2025 26 Means for Pakistan

What Changed in the Budget 2025‑26?

The Federal Board of Revenue (FBR) has proposed a 0.8% withholding tax on daily cash withdrawals exceeding Rs75,000 by non-filers. This replaces the earlier 0.6% tax on amounts over Rs50,000. Although Finance Minister Aurangzeb’s budget speech mistakenly stated a 1% tax, FBR Chairman Rashid Mahmood Langrial clarified the correct rate as 0.8%.
Source: ProPakistani

Why This Tax Now?

FBR’s rationale behind the revision aligns with efforts to widen the tax net, as Pakistan’s tax-to-GDP ratio remains under 10%, one of the lowest in the region. In its latest budget brief, the International Monetary Fund (IMF) emphasized increasing compliance and documentation as part of Pakistan’s structural benchmarks under the Extended Fund Facility (EFF).
Source: IMF – Pakistan Country Report 2024

FBR estimates that non-filers account for billions in untaxed income, and indirect taxation like this serves both as a revenue tool and enforcement mechanism.

Timeline and Implementation

The tax will take effect after parliamentary approval of the Finance Bill, expected by the end of June. It will be implemented on all commercial banks, with daily thresholds calculated per CNIC across accounts and branches.

Historical Context: Withholding Tax on Cash Withdrawals

Earlier efforts, such as the 2015 WHT regime, were met with criticism for penalizing cash-based businesses, leading to adjustments. This time, FBR has raised the limit to reduce hardship while still maintaining documentation pressure.

Stakeholder Reactions

Banks:

• Banks are expected to upgrade internal systems to monitor linked CNIC withdrawals.
• Industry analysts suggest this may increase digital transactions—a positive trend for transparency.

Non-Filers:

• Many see it as an avoidable charge with careful planning.
• Others argue it’s another form of indirect tax on the poor, disproportionately affecting the informal sector.

Economists:

• Financial analysts, including commentary from Business Recorder, support it as a smart nudge to push informal earners into the documented economy.
  Source: Business Recorder Editorial

How It Works: Step-by-Step

1. Bank tracks total cash withdrawals per day.
2. If the total exceeds Rs75,000, 0.8% is applied only to the excess amount.
3. The tax is deducted automatically at the time of withdrawal.
4. Collected funds are deposited to FBR’s account and logged against the non-filer’s CNIC.

Smart Tips to Avoid the Penalty

• Use Digital Transfers: Non-filers are not taxed on IBFT, Raast payments, or wallets like Easy paisa/Jazz Cash.
• Withdraw Below the Limit: If urgent, withdraw smaller amounts across days.
• Start Filing Taxes: Once you’re a filer, this tax no longer applies.

For more on becoming a filer, refer to this step-by-step guide by Dawn News on the FBR registration process.
How to Become a Filer – Dawn 
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Other Tax Reforms in Budget 2025‑26

The withholding tax measure is part of a broader fiscal plan:

• Tax Relief for salaried class earning below Rs3.2 million annually.
• 15% Tax on Digital Ads by global platforms like Google, Facebook, and YouTube.
  Source: The News International – Budget Highlights
• Adjustments in capital gains and property taxes to curb speculation.
• Special incentives for the IT and digital services export sector.

FAQs – Your Questions Answered

Q1. Who is a non-filer?
Anyone not appearing on the FBR Active Taxpayers List (ATL) for the previous tax year.

Q2. Can I avoid this tax by using another bank?
No. All banks are integrated with CNIC and withdrawal data.

Q3. Does this apply to overseas Pakistanis?
If their account is marked under the Roshan Digital Account (RDA) category, exemptions may apply.

Q4. Can I dispute a wrongly deducted tax?
Yes, you can file a complaint via FBR Tajir Dost App or IRIS portal.

What’s Next?

Once passed, the FBR will notify all banks. Full implementation is expected to roll out from July 1, 2025. Businesses and non-filers should prepare accordingly to avoid additional tax burdens and consider formalizing their tax status.