Islamabad, August 2, 2025 – The Federal Board of Revenue (FBR) has clarified that the advance tax on cash withdrawal from banks at the rate of 0.8% is applicable only to individuals not appearing on the Active Taxpayers List (ATL).
In its Income Tax Circular No. 01 of 2025-26, issued on Saturday, the FBR explained key changes introduced in the Finance Act, 2025, which amend the Income Tax Ordinance, 2001. One of the significant updates relates to Section 231AB, concerning cash withdrawals.
The provision was originally added through the Finance Act, 2023, which empowered banks to deduct a 0.6% adjustable advance tax from individuals not listed on the ATL, if their daily cash withdrawal exceeded Rs. 50,000.
Now, under the Finance Act, 2025, the rate has been increased to 0.8% for such individuals. This means that any person not on the ATL making cash withdrawals over the Rs. 50,000 threshold in a single day will now face a higher tax deduction at the time of withdrawal.
The FBR emphasized that active taxpayers will not be subject to this tax on cash withdrawals, and the tax collected from non-ATL persons will remain adjustable against their annual tax liability.
This measure aims to encourage documentation and compliance by incentivizing individuals to register and remain on the ATL. The FBR urged citizens to ensure their inclusion on the ATL to avoid unnecessary tax deductions on their banking cash transactions.