What is the 0.8% Tax on Cash Withdrawals?
If your name is not on the Active Taxpayers’ List (ATL) in Pakistan, Section 231AB of the Income Tax Ordinance, 2001 (updated for 2026) requires banks to deduct 0.8% advance tax on cash withdrawals.
• The tax is deducted at source by banks on behalf of the Federal Board of Revenue (FBR).
• The tax applies to daily withdrawals exceeding Rs. 50,000.
⚠ Key Point: The Rs. 50,000 threshold is aggregate cash withdrawals in a single day, not per transaction.
Legal Background
• Earlier, Section 231A governed advance tax on cash withdrawals, but it was removed in 2021.
• Section 231AB was reintroduced through Finance Act, 2023 due to revenue shortfall.
📊 Official data: FBR collected Rs30 billion in withholding tax on cash withdrawals in the previous fiscal year, showing a slight drop compared to Rs32.25 billion earlier.
This highlights that citizens are actively filing income tax returns to get ATL status and avoid this deduction.
Who is Affected?
| Criteria | Effect |
| Not on ATL | Banks will deduct 0.8% advance tax on daily cash withdrawals > Rs. 50,000 |
| ATL Taxpayer | No advance tax on withdrawals above threshold |
| Withdrawal ≤ Rs. 50,000/day | No tax deducted |
✅ Tip: Filing your income tax return on time ensures ATL status and avoids this advance tax.
How the Tax Works – Example
| Cash Withdrawal (Single Day) | Tax Deduction (0.8%) | Remarks |
| Rs. 60,000 | Rs. 480 | Deducted by bank at source |
| Rs. 100,000 | Rs. 800 | Only applies if taxpayer not on ATL |
| Rs. 50,000 | Rs. 0 | Threshold not exceeded |
💡 Reminder: Tax is adjustable against your final tax liability when you file your return.
Step-by-Step: Avoid 0.8% Cash Withdrawal Tax
1. Check ATL Status: Log in to FBR ATL Portal.
2. File your income tax return for 2025 or the relevant year.
3. Confirm inclusion in ATL before making large withdrawals.
4. Plan cash withdrawals below Rs. 50,000/day if ATL is pending.
5. Keep banking records to ensure tax is adjusted properly.
FAQs – Advance Tax on Cash Withdrawals
Q1: What is ATL?
• Active Taxpayers’ List; taxpayers whose names are updated with FBR as compliant.
Q2: What happens if I withdraw Rs. 200,000 in one day?
• 0.8% advance tax applies on the entire sum above Rs. 50,000, i.e., Rs. 1,600.
Q3: Can this tax be refunded?
• Yes. If you are on ATL or file your return, the deducted tax is adjustable against your total liability.
Q4: Why was Section 231AB reintroduced?
• Due to revenue shortfall and to encourage tax compliance.
Checklist for Taxpayers
• Check ATL status before large withdrawals
• File income tax returns on time
• Keep track of daily cash withdrawals
• Ensure withheld tax is adjusted in tax return
• Educate family/business associates about ATL rules
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. For case-specific guidance, consult the Federal Board of Revenue (FBR) or a certified tax professional.