Islamabad, February 12, 2026 – Non-filers of income tax returns or those not on the Active Taxpayers List (ATL) have contributed over Rs20 billion in withholding tax on cash withdrawals during the first seven months (July 2025 – January 2026) of the current fiscal year, according to officials from the Federal Board of Revenue (FBR).
Withholding Tax Collections Rise 20%
Provisional data reveals that the FBR collected Rs20.47 billion from non-filers during the seven-month period, compared with Rs17.12 billion in the same period last year, marking a 20% growth.
In January 2026 alone, collections surged by 22%, reaching Rs3 billion, up from Rs2.46 billion in January 2025.
Legal Framework: Section 231AB
The Income Tax Ordinance, 2001, under Section 231AB, mandates banks to collect withholding tax on cash withdrawals from non-filers or non-ATL individuals on behalf of the FBR.
Key provisions include:
• Banks deduct 0.8% advance adjustable tax on daily cash withdrawals exceeding Rs50,000 from non-filers or non-ATL individuals.
• The Rs50,000 threshold is based on aggregate withdrawals in a single day, ensuring compliance across multiple transactions.
Impact and Significance
The rise in withholding tax highlights the FBR’s focus on bringing non-filers into the tax net and promoting financial transparency. Analysts say the measure also encourages greater formalization of banking transactions and strengthens tax compliance in Pakistan’s economy.
With sustained growth in collections, the FBR aims to broaden the tax base and ensure that non-filers contribute their fair share while keeping financial flows traceable and transparent.