ISLAMABAD: There is no withholding tax on cash withdrawal from banking system by a person, whose name is appeared on Active Taxpayers List (ATL), officials in Federal Board of Revenue (FBR) said on Friday.
Under Section 231A of Income Tax Ordinance, 2001 the withholding tax rate is 0.6 percent for a person making cash withdrawal above Rs50,000 from banking system.
However, this tax rate is only applicable on a person whose name is not appeared on ATL.
For appearing on the ATL a person is required to file his annual income tax returns by due date prescribed by the FBR. In other cases the person can file his return after due date after payment of penalty to ensure his name on the ATL.
The officials said that through Finance Supplementary (Second Amendment) Act, 2019 the government abolished 0.3 percent withholding tax rate on persons who were compliant in return filing.
The Section 231A related to cash withdrawal from a bank said that every banking company shall deduct tax at the rate specified in Division VI of Part IV of the First Schedule, if the payment for cash withdrawal, or the sum total of the payments for cash withdrawal in a day, exceeds fifty thousand rupees.
Explanation: For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate withdrawals from all the bank accounts in a single day.