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Starting July 1, the federal government has implemented a sweeping tax policy that affects all types of bank transactions, whether you’re a filer or a non-filer.
Alongside this move, banks have revised their service charges, significantly increasing the cost of everyday banking.
Higher Withholding Tax on Cash Withdrawals
Under the new policy:
- Filers now face a 0.3% withholding tax on cash withdrawals exceeding Rs50,000 per day.
- Non-filers are hit with a 0.6% tax for the same.
- Moreover, non-filers withdrawing Rs 20,000 or more via cheque will see Rs 522 deducted automatically.
As part of their updated schedule of charges, banks have imposed several fee hikes that took effect on July 1:
- ATM usage fee (for other banks’ ATMs): Increased from Rs18 to Rs34 per transaction.
- ATM card fee: Raised by Rs 700.
- SMS alert service: Jumped from Rs1,200 to Rs2,000, an Rs800 increase.
ATM Withdrawal Limits and International Fees
Banks have also imposed new daily withdrawal limits:
- Standard debit cards: Rs25,000 to Rs50,000
- Premium debit cards: Up to Rs500,000
- Foreign debit cards: $200 to $500 equivalent
International ATM transactions will now incur additional fees, either based on the exchange rate or a fixed charge defined by the bank.
Customer Frustration and Industry Pushback
The combined impact of increased taxes and higher banking fees has led to a surge in customer complaints and confrontations with bank staff. Many see this as a double blow to their finances. Banks, in turn, have reached out to 1Link to consider revising the fee structure, warning that the current changes could drive more people toward cash-based transactions.
The broader concern? These aggressive measures may undermine the country’s efforts to promote digital banking and financial inclusion, replacing convenience with cost.
