Islamabad, June 9, 2023 – In a bid to enhance the documentation of the economy, Pakistan has implemented a withholding tax on cash withdrawals from banks. However, this tax will only apply to individuals who are not listed on the Active Taxpayers List (ATL) of the Federal Board of Revenue (FBR).
Finance Minister Ishaq Dar, while presenting the federal budget for the fiscal year 2023-24, announced the imposition of this tax as an important measure to formalize the economy.
As a result, a withholding tax of 0.6 percent will be levied on individuals making cash withdrawals exceeding Rs50,000 in a day.
READ MORE: Pakistan Unveils Rs14.46 Trillion Budget for FY 2023-24, Focusing on Relief and Growth
Minister Dar emphasized that this measure aims to encourage individuals to join the ATL and contribute to the documentation of their financial transactions.
Consequently, the withholding tax on cash withdrawals will only be applicable to those who do not appear on the ATL.
This move is part of the government’s broader efforts to promote transparency and accountability in financial transactions, discouraging the use of cash as a means of conducting business.
READ MORE: Finance Bill 2023 Unveils Comprehensive Amendments to Income Tax Ordinance
By encouraging individuals to be part of the ATL, the government aims to foster a culture of tax compliance and strengthen the formal economy.
The imposition of withholding tax on cash withdrawal from banks represents a significant step towards documenting the economy and expanding the tax base. It encourages individuals to become active taxpayers, contributing to the overall economic development of Pakistan.
READ MORE: List of amendments to Sales Tax Act through Finance Bill 2023
