Bank withdrawals up to Rs50,000 go tax-free

ISLAMABAD: The Federal Board of Revenue (FBR) Thursday unveiled a revised tax policy pertaining to bank withdrawals under which withdrawals up to 50,000 rupees will now be entirely ‘tax-free’.

According to the latest circular issued by the FBR, individuals will no longer be subject to any tax on withdrawals up to Rs50,000 from their bank accounts.

This decision comes as a relief to millions of taxpayers and will ease the burden on small-scale transactions.

Prior to this revision, a tax rate of 0.6% was imposed on non-filers making withdrawals from the bank.

The tax was applicable to those individuals who were not included in the active taxpayer list.

For withdrawals ranging from 50,001 to 50,500 rupees, a nominal tax of 303 rupees will be applicable.

As per the updated tax policy, a tax of Rs330 will be charged on withdrawals amounting to Rs 55,000, while a tax of Rs450 will be collected from non-filers withdrawing Rs75,000. The new tax rates will only apply to the portion of the withdrawal that exceeds the threshold of Rs50,000.

It is important to note that the full amount withdrawn from the bank in a day will be subject to taxation only if it exceeds the Rs50,000 limit. Transactions below this threshold will not be taxed.

In addition to individual taxpayers, the FBR circular also clarified that the tax exemption will extend to the federal and provincial governments. Furthermore, foreign embassies and diplomatic missions operating in Pakistan will also be exempted from this tax.