ISLAMABAD: The federal government has increased the cash withdrawal limit from Rs50,000 to Rs75,000 for applying the withholding tax on cash withdrawals by non-filers, aiming to expand tax coverage while correcting a budget misstatement.
In a key update to the Finance Bill 2025–26, the government has raised the threshold for applying withholding tax on cash withdrawals for non-filers from Rs50,000 to Rs75,000. This change was confirmed by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial during a review session with the National Assembly Standing Committee on Finance at Parliament House.
Langrial also clarified that the correct withholding tax rate is 0.8%, not 1% as mistakenly stated in the budget speech. The new Rs75,000 limit aims to capture a wider base of non-filers while easing compliance for lower withdrawal amounts.
Committee Chairman Naveed Qamar had initially suggested increasing the limit to Rs100,000, but both the FBR and the committee agreed to fix it at Rs75,000. The revised limit is intended to strike a balance between tax enforcement and public convenience.
The withholding tax on cash withdrawals for non-filers is part of the government’s broader plan to improve revenue collection. Additional proposals discussed included technical adjustments to banking sector taxation, aimed at better aligning with State Bank of Pakistan (SBP) regulations. These changes will improve income reporting through more disclosure-oriented provisions.
Additionally, the FBR proposed a slight reduction in the super tax rate for entities with income between Rs200 million and Rs500 million. The move is designed to ease the tax burden on compliant sectors and support economic activity.