The federal government has raised the cash withdrawal limit for non-filers from Rs50,000 to Rs75,000 before applying withholding tax. This adjustment, part of the Finance Bill 2025–26, aims to widen tax coverage while addressing a budget misstatement. The Federal Board of Revenue (FBR) confirmed the change during a National Assembly Standing Committee on Finance meeting.
FBR Clarifies Correct Tax Rate
FBR Chairman Rashid Mahmood Langrial clarified that the withholding tax rate is 0.8%, not 1% as mentioned in the budget speech. The revision ensures accurate tax application while easing compliance for non-filers. The Rs75,000 limit is intended to bring more individuals into the tax net without burdening those making smaller withdrawals.
Committee Debates Higher Limit Before Final Decision
Initially, Committee Chairman Naveed Qamar proposed increasing the limit to Rs100,000. However, after discussions, the FBR and committee agreed on Rs75,000. This compromise balances tax enforcement with public convenience, ensuring broader compliance while minimizing taxpayer inconvenience. The decision reflects a measured approach to revenue expansion.
Also Read: Tax Hike on Non-Filers for Cash Withdrawals
Withholding Tax Aims to Boost Revenue Collection
The withholding tax on cash withdrawals for non-filers is part of the government’s strategy to enhance tax revenue. By adjusting thresholds, authorities aim to encourage tax filing while maintaining financial flexibility. The measure targets non-compliant individuals, pushing them toward formal tax documentation without excessive disruption.
Banking Sector Taxation Adjustments Discussed
The committee also reviewed technical adjustments to banking sector taxation to align with the State Bank of Pakistan (SBP) regulations. These changes focus on improving income reporting through stricter disclosure requirements. The revisions aim to enhance transparency and ensure accurate financial reporting across banking institutions.
Super Tax Rate Reduced for Mid-Sized Businesses
Additionally, the FBR proposed lowering the super tax rate for businesses earning between Rs200 million and Rs500 million. This reduction seeks to ease the tax burden on compliant sectors, fostering economic growth. The move is expected to support mid-sized enterprises, encouraging investment and operational expansion.
Government Balances Enforcement and Taxpayer Relief
The revised cash withdrawal limit demonstrates the government’s effort to balance enforcement with taxpayer relief. By increasing the threshold, authorities reduce pressure on small withdrawals while maintaining scrutiny on larger transactions. The policy aims to gradually integrate non-filers into the formal tax system.
Conclusion: A Step Toward Broader Tax Compliance
The Rs75,000 cash withdrawal limit for non-filers reflects a pragmatic approach to tax policy. By correcting the budget misstatement and adjusting rates, the government ensures fairer implementation. These measures, alongside banking reforms and super tax adjustments, aim to strengthen revenue collection while supporting economic activity. The changes mark progress toward a more inclusive tax system.
