ISLAMABAD: Federal Board of Revenue (FBR) has said that 0.6 percent withholding tax shall be collected on cash withdrawal of Rs50,000 each day by persons not on the Active Taxpayers List (ATL).
The FBR updated withholding tax card 2020-2021 after incorporating amendments to Income Tax Ordinance, 2001 made through Finance Act, 2020. The FBR issued the withholding tax card updated up to June 30, 2020.
The withholding tax rates on cash withdrawal from banking companies shall remain same for tax year 2021 (2020-2021).
According to the withholding tax card every banking company shall collect/deduct withholding tax from account holders withdrawing cash. The tax shall be deducted at the time the cash is withdrawn.
The withholding tax on cash withdrawal was introduced in year 2005 by inserting Section 231A to the Income Tax Ordinance, 2001.
Under this section the banks are required to collect 0.6 percent of cash withdrawn above Rs50,000 per day.
It has been clarified by the FBR that the said Rs50,000 shall be aggregate withdrawals from all the bank accounts in a single day.
There were two different tax rates for filers and non-filers of income tax returns were applicable on the cash withdrawn from banking system.
However, in order to ease burden on the compliant tax payers through Finance Act, 2019 the amendments were made and the tax rate is now only those persons who are not on the ATL.