Banks will deduct 0.8% adjustable advance tax from individuals not appearing on the Active Taxpayers List (ATL) when their combined daily cash withdrawals exceed Rs50,000.

The Federal Board of Revenue (FBR) has maintained a 0.8% withholding income tax on cash withdrawals by non-filers for Tax Year 2027, covering the period from July 1, 2026, to June 30, 2027.

According to the Income Tax Ordinance, 2001, updated up to June 30, 2026, the provision is explained under Section 231AB, which governs advance tax on cash withdrawals.

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Under the provision, every banking company is required to deduct adjustable advance tax at the rate of 0.8% from cash withdrawals made by individuals whose names do not appear on the Active Taxpayers List (ATL).

The tax applies when the aggregate amount of cash withdrawals by an individual exceeds Rs50,000 in a single day.

The FBR has clarified that the Rs50,000 threshold applies to the combined cash withdrawals made throughout the day rather than to each individual transaction.

This means banks must consider the total amount withdrawn by a non-filer in one day when determining whether the threshold has been crossed.

The deduction is treated as adjustable advance tax, meaning eligible taxpayers can adjust the amount against their income tax liability under the applicable provisions.

The measure forms part of Pakistan’s withholding tax framework aimed at bringing more individuals into the documented tax system and encouraging compliance with income tax filing requirements.

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