Business Desk 
May 31, 2025
In order to broaden the tax base and generate additional revenue, the Federal Board of Revenue (FBR) has recommended increasing the withholding tax on cash withdrawals by non-filers from 0.6% to 1.2%.
As per the Business Recorder, the FBR, under the 2025-26 fiscal year budget, plans to generate more revenue by targeting non-filers under stricter financial regulations. Under this proposal, which is expected to be implemented on July 1, 2025, the government will abolish the "non-filer" category of persons altogether.
Taxpayers who do not file income tax returns will fall under the "ineligible" category of persons, and their financial transactions, including banking operations, may be completely blocked.
The proposal changes are part of the Finance Bill, 2025-26, which was discussed by the National Assembly Standing Committee on Finance and Revenue last week and is intended to push through measures that will place stricter economic constraints upon non-filers.
In addition to the proposed 1.2% tax increase on cash withdrawals, the FBR intends to provide all banks with access to taxpayer data so that they can better track and identify non-filers.
Currently, non-filers only have withholding tax deducted at 0.6% when they withdraw more than Rs50,000 in one day.
This rule applies to withdrawals made through credit cards, bank branches, or ATMs.
The FBR may not remove all withholding taxes immediately due to possible revenue loss. However, doubling the rate on cash withdrawals is seen as a strong signal to encourage tax return filing and economic documentation.
