KARACHI: Every banking company is responsible for deducting and collecting a certain percentage of tax on cash withdrawal on Rs50,000 per day from an account.
Since passage of Finance Supplementary (Second Amendment) Bill, 2019 from the parliament, the tax is no more on withdrawal by a filer of income tax return.
Therefore, this tax is only be deducted on withdrawal by non-filer of income tax return at the rate of 0.6 percent on cash withdrawal of Rs50,000 per day.
The tax is deducted under Section 231 of Income Tax Ordinance, 2001.
Section 231A: Cash withdrawal from a bank.—
Sub-Section (1): Every banking company shall deduct tax at the rate specified in Division VI of Part IV of the First Schedule, if the payment for cash withdrawal, or the sum total of the payments for cash withdrawal in a day, exceeds fifty thousand rupees.
“Explanation.- For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate withdrawals from all the bank accounts in a single day.”
Section 231AA: Advance tax on transactions in bank
Sub-Section (1): Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of sale against cash of any instrument, including Demand Draft, Pay Order, CDR, STDR, SDR, RTC, or any other instrument of bearer nature or on receipt of cash on cancellation of any of these instruments.
Sub-Section (2): Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of transfer of any sum against cash through online transfer, telegraphic transfer, mail transfer or any other mode of electronic transfer.
Sub-Section (3): The advance tax under this section shall be collected at the rate specified in Division VIA of Part IV of the First Schedule, where the sum total of payments for transactions mentioned in sub-section (1) or sub-section (2) as the case may be, exceed twenty-five thousand rupees in a day.