The Federal Board of Revenue (FBR) has proposed increasing the withholding tax rate on cash withdrawals from banks for non-filers from 0.6% to 1.2%. The initiative is designed to enhance tax revenue for the fiscal year 2025-26..

Sources told Business Recorder that the government’s goal is to complicate financial activities for non-filers, thereby encouraging them to join the tax net.

There are plans to eliminate the non-filer category entirely starting July 1, which would prevent these “ineligible individuals” from conducting any financial transactions.

The National Assembly’s Standing Committee on Finance and Revenue has approved the “Tax Laws (Amendment) Bill 2024,” which will enforce strict limitations on the economic activities of non-filers. These regulations are set to be introduced in the upcoming Finance Bill for 2025-26.

Moreover, the FBR will share income tax return data with banks to streamline the identification of non-filers.

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Government likely to impose additional taxes on non-filers

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Currently, non-filers attempting to withdraw over Rs50,000 in a single day via ATMs or credit cards are subjected to a 0.6% tax, which is set to increase to 1.2%.

Under the Finance Act 2023, it was already mandated that individuals not on the FBR’s Active Taxpayer List (ATL) face a 0.6% advance adjustable tax on cash withdrawals exceeding 50,000 PKR, applied to the total amount rather than just the excess.