Islamabad, January 21, 2026 – The Federal Board of Revenue (FBR) has recorded a significant increase in withholding tax collected on cash withdrawals from banking companies, reporting a 54% rise in December 2025 compared to the same month last year.
Official FBR data shows that withholding tax collections from cash withdrawals reached Rs4.27 billion in December 2025, up from Rs2.78 billion in December 2024. This surge reflects stronger compliance and an increase in cash transactions above the applicable threshold.
During the first half of fiscal year 2025-26 (July–December), the FBR achieved 19% growth in withholding tax collection from cash withdrawals, amounting to Rs17.47 billion, compared to Rs14.66 billion in the corresponding period of the previous year.
Under current regulations, commercial banks in Pakistan collect 0.8% withholding tax on daily cash withdrawals exceeding Rs50,000 from individuals whose names do not appear on the Active Taxpayers List (ATL). This tax mechanism aims to encourage registration in the ATL and improve overall tax compliance.
The withholding tax on cash withdrawals was reintroduced under the Finance Act, 2023 through Section 231AB of the Income Tax Ordinance, 2001. Previously, the FBR collected a similar tax under Section 231A, which was removed by the Finance Act, 2021.
Experts say the renewed focus on withholding tax compliance has helped broaden the tax base while also increasing FBR revenue. The strong growth in collections indicates greater adherence to tax regulations and a shift toward formal banking transactions in Pakistan.