Karachi, July 6, 2025 – If you’re planning to withdraw large amounts of cash from your bank account and you’re not on the Active Taxpayers List (ATL), there’s something you need to know. From July 1, 2025, banks across Pakistan have begun deducting 0.8% advance income tax on cash withdrawal, according to officials at the Federal Board of Revenue (FBR).
This move comes under an updated provision—Section 231AB of the Income Tax Ordinance, 2001—introduced via the Finance Act, 2025. The FBR has revised the withholding tax rate on cash withdrawal for non-filers, increasing it from 0.6% to 0.8%. The rule applies when the daily cash withdrawal amount exceeds Rs50,000.
Let’s break it down:
If you’re not on the ATL and withdraw more than Rs50,000 in cash in a single day, your bank is legally bound to deduct 0.8% tax on the total amount. It doesn’t matter if you withdraw that sum in one go or through multiple smaller transactions—if the aggregate exceeds Rs50,000, the tax kicks in.
The FBR clarified this point in the updated Section 231AB to remove any confusion:
“The said fifty thousand rupees shall be aggregate cash withdrawals in a single day.”
This tax applies only to non-filers. If you’re an active taxpayer, you’re exempt from this advance tax on cash withdrawal.
Interestingly, this isn’t the first time FBR has targeted cash withdrawals for revenue. Earlier, tax collection was done under Section 231A, which was repealed in 2021 to ease the burden on the public. However, given the revenue potential, the tax was reintroduced in 2023 through Section 231AB and has now been revised upward.
According to officials, tax on cash withdrawal remains one of the key revenue streams for the FBR, especially from non-filers who often operate outside the formal tax net.
So, if you want to avoid this extra deduction, consider filing your taxes and getting yourself on the ATL.