In a landmark shift in its taxation policy, Pakistan is preparing to eliminate the term ‘non-filer’ from its tax laws — a move set to be officially introduced in the upcoming Budget 2025-26.
This bold reform aims to tighten the noose around individuals who earn taxable income but fail to disclose their earnings and assets to the government.
The term ‘non-filer’, long synonymous with tax evasion, will be replaced with ‘ineligible persons’. These individuals will be barred from conducting key financial transactions unless they fulfill their legal obligations of filing income and asset declarations. This change signals a firm message: evasion will no longer be tolerated under a new regime of transparency and accountability.
The National Assembly Standing Committee on Finance and Revenue has already endorsed the Tax Laws (Amendment) Bill, 2024, laying the groundwork for this historic change. As part of the Finance Bill 2025-26, effective from July 1, 2025, the government will introduce sweeping restrictions on financial activities of non-filers. From real estate deals to large banking transactions, those outside the tax net will face increasing difficulty in accessing Pakistan’s formal economy.
Despite this aggressive shift, sources indicate that not all privileges for non-filers will be stripped away instantly. Due to concerns over potential revenue losses, certain withholding tax measures are expected to remain — at least temporarily. One such measure under consideration is the doubling of withholding tax on bank cash withdrawals by non-filers. Currently, a 0.6% tax applies to daily cash withdrawals exceeding Rs 50,000 by any individual not listed in the Active Taxpayer List (ATL), whether via ATM or credit card.
This provision, reintroduced under the Finance Act 2023 through Section 231AB, authorizes banks to deduct advance adjustable tax from non-ATL persons on all aggregate daily withdrawals above Rs 50,000. This rule applies uniformly across credit card transactions and ATM withdrawals, tightening control over undocumented cash flows.
As the Budget 2025-26 approaches, Pakistan’s tax enforcement landscape is set for a dramatic overhaul. With the end of the non-filer era in sight, the government is signaling a zero-tolerance stance on undeclared wealth. The upcoming budget will not only redefine compliance — it may very well redefine financial access in Pakistan.