A claim circulating in the media suggests that the federal government is now collecting taxes on all types of bank transactions for both filers and non-filers from July 1.
In reality, the government is only collecting withholding tax (WHT)on cash withdrawals above Rs. 50,000, and only non-filers are subject to this tax.
Under the new tax regime effective July 1, 2025, the federal government has revised the rules for withholding tax on cash withdrawals from banks.
Official sources clarified that the individuals who are on the Active Taxpayers List (commonly known as filers) are exempt from the withholding tax (WHT) on daily cash withdrawals exceeding Rs. 50,000.
In other words, if you file your tax returns, you will not be charged this tax on your cash withdrawals, whether you use a bank branch or an ATM. On the other hand, non-filers will face a higher WHT rate of 0.8% from the previous 0.6% on daily cash withdrawals exceeding Rs. 50,000. These deductions are automatic and apply to all relevant cash transactions.
It is important to note that this withholding tax applies only to cash withdrawals above the Rs. 50,000 daily threshold. It does not apply to all types of bank transactions, such as online transfers, cheque payments, or deposits. The claim that taxes are being collected on “all types of bank transactions” is therefore incorrect. Only non-filers are subject to this tax on large cash withdrawals, while filers are exempt.
Filers will not be charged WHT on cash withdrawals above Rs. 50,000, while non-filers will be charged at a rate of 0.8%. No tax is being collected on all types of bank transactions, only on cash withdrawals above the specified limit, and only non-filers are affected, official sources added.
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