FBR Nets Rs 10 Billion in Cash Withdrawal Tax, Targets Non-Filers

The Federal Board of Revenue (FBR) in Pakistan has collected Rs 10 billion in tax revenue during the first 10 months of the current fiscal year (ending June 2024) from a levy on bank cash withdrawals. This tax specifically targets individuals not registered on the Active Taxpayers List (ATL).

Key Points:

• The tax applies only to cash withdrawals exceeding Rs. 50,000 per day, including ATM and credit card withdrawals.
• The current tax rate is 0.6% for non-filers.
• This tax is collected at the time of withdrawal and is adjustable against the individual's final annual tax liability.

Geographic Focus:

• The initial Rs. 10 billion collection originated from banks headquartered in Karachi.
• The FBR expects a higher national collection figure as major banks in Islamabad and Lahore are also involved.

Background:

• The tax provision on cash withdrawals for non-filers was reintroduced through the Finance Act 2023 (Section 231AB of Income Tax Ordinance, 2001).
• This aims to encourage tax compliance and broaden the tax base by identifying individuals with potentially undisclosed income sources.

Exemptions:

• The tax does not apply to withdrawals by:
• Federal or Provincial governments
• Foreign diplomats or diplomatic missions in Pakistan
• Individuals with a certificate from the Commissioner verifying tax-exempt income for the year

Looking Ahead:

• The FBR's enforcement of this tax mechanism reflects its commitment to:
• Increase tax revenue
• Strengthen Pakistan's tax system
• As the fiscal year ends, the total tax collected from cash withdrawals is expected to rise significantly.

Staying Informed:

• Taxpayers and stakeholders are advised to stay updated on these regulations to ensure compliance and avoid penalties.
• The FBR is continuously working towards a more efficient and equitable tax system in Pakistan.

This article was published at Pakistan Collects Rs 10 Billion in Tax from Bank Cash Withdrawals (But Not Everyone Pays)