Chartered accountants’ body proposes raising daily cash withdrawal limit to Rs75,000 for non-filers amid inflation and higher business cash-flow needs.
The Institute of Chartered Accountants of Pakistan has proposed increasing the daily cash withdrawal threshold for withholding tax collection in the federal budget for fiscal year 2026-27.
In its budget recommendations, ICAP highlighted the issue of advance tax on cash withdrawals under Section 231AB of the Income Tax Ordinance, 2001, which applies to individuals and entities not appearing on the Active Taxpayers List (ATL).
The institute said the current daily threshold of Rs50,000 has become outdated due to inflation and growing transactional requirements of businesses and individuals.
According to ICAP, the low threshold results in frequent withholding tax deductions even on routine cash withdrawals by small businesses and individuals managing day-to-day financial activities.
The institute recommended increasing the threshold from Rs50,000 to Rs75,000 to better align with current cash-flow realities and inflationary trends.
At the same time, ICAP proposed raising the withholding tax rate to 1.5% for non-ATL persons to preserve the policy objective of promoting documentation of the economy.
ICAP said the revised threshold would reduce unnecessary tax deductions on genuine cash transactions while easing financial pressure on small traders and low-income individuals.
The institute added that increasing the tax rate alongside a higher threshold would create a balancing effect and continue encouraging non-filers to join the Active Taxpayers List and become part of the documented economy.
According to ICAP, revising the threshold would better reflect prevailing economic conditions and improve the practicality of the withholding tax regime.
