ISLAMABAD: In order to raise an extra Rs 15-20 billion in income during 2024–2025, the Federal Board of income (FBR) has proposed raising the withholding tax on cash withdrawals from banks by non-filers from 0.6 percent to 0.9 percent.

The plan is a component of the government's policy to sanction income tax return non-filers, sources told Business Recorder. The notion has come up in the continuing discussions between the delegation from the International Monetary Fund (IMF) and the FBR.

Currently, there is an additional 0.6 percent withholding tax applied to non-filers who withdraw more than Rs 50,000 in cash in a single day using credit cards or ATMs.

Bank cash withdrawals from non-ATL individuals are subject to tax collection, which was reinstated by the Finance Act 2023. When a person's name does not appear on the Active Taxpayer List, section 231AB mandates that banking companies withhold advance adjustable tax at a rate of 0.6 percent from their payment. This applies to any cash withdrawals made totaling more than Rs 50,000 in a single day. This clause also applied to cash withdrawals from ATMs and credit card accounts.

Should the total quantity of cash taken out in a single day above Rs 50,000, tax must be subtracted from the total amount of cash taken out.

The cash withdrawal withholding tax is a levy that can be adjusted against an individual's tax due for a certain tax year.

They further stated that withdrawals made by the federal or provincial governments, foreign diplomats or diplomatic missions in Pakistan, or anyone presenting a certificate from the commissioner stating that their income for the tax year is exempt will not have tax withheld from it.