No WHT on cash withdrawals from banks: FBR

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue has made it clear that there is no withholding tax on cash withdrawal from bank accounts where foreign remittances are deposited directly. Wafaqi Mohtasib Secretariat received a complaint from Muhammad Ashfaq, an overseas Pakistani working in Saudi Arabia, regarding unjust deduction of withholding tax on withdrawal of amount exceeding Rs 50,000 from banks.

Hafiz Ahsaan Ahmad Khokhar, Senior Advisor (Law)/Grievance Commissioner for Overseas Pakistanis, Wafaqi Mohtasib’s Secretariat, Islamabad took cognizance of the matter and asked the Federal Board of Revenue (FBR) to explain regarding unjust deduction of withholding tax from foreign remittances bank accounts on overseas complaints.

The FBR in response to Wafaqi Mohtasib letter vide letter dated 06.05.2019 submitted a report that from the date of promulgation of Finance Supplementary Act i.e. 09.03.2019, exemption on tax u/s 231A in case of foreign remittances has been provided in Clause 101A of Part IV of the Second Schedule to the Income Tax Ordinance, 2001. Further explained in FBR report that if tax is still being charged in such cases, it is due to some fault in the banks’ system and there is no tax applicable on the bank accounts where foreign remittances are deposited directly.

Hafiz Ahsaan on the clarification of the FBR disposed of the matter. This is big relief for Overseas and they can withdraw their cash from such bank account where foreign remittances are deposited directly and no withholding tax is applicable.