FBR pushes for higher WHT on non-filers’ cash withdrawals

WEB DESK: The Federal Board of Revenue (FBR) has put forth a proposal to increase the withholding tax on cash withdrawals from banks by non-filers from 0.6 per cent to 0.9 per cent.

This move aims to generate an additional revenue of Rs15-20 billion during the fiscal year 2024-25.

The proposition aligns with the government’s strategy to penalize individuals who fail to file their income tax returns.

Discussions surrounding this proposal have taken place as part of the ongoing negotiations between the FBR and the International Monetary Fund (IMF) team.

Currently, cash withdrawals exceeding Rs50,000 in a single day by non-filers through credit cards/ATMs are subject to a 0.6 per cent withholding tax, as reported by Business Recorder.

The Finance Act of 2023 reintroduced tax collection on cash withdrawals from individuals not included in the Active Taxpayer List (ATL) by banks.

Section 231AB mandates every banking institution to deduct an advance adjustable tax at a rate of 0.6 per cent from individuals whose names are absent from the ATL at the time of cash withdrawal exceeding Rs50,000 in a single day.

This provision also encompasses cash withdrawals made through credit cards or ATMs.

Should the cumulative cash withdrawal on a single day surpass Rs50,000, the tax is levied on the entire amount withdrawn.

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