Govt decides to hike cash withdrawal limit to Rs75,000

SOHAIL SARFRAZ

ISLAMABAD: The government has decided to increase limit from Rs50,000 to Rs75,000 for charging enhanced rate of withholding tax of 0.8 percent on cash withdrawals from banks by non-filers.

The assurance has been given by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial during review of Finance Bill (2025-26) at a meeting of the National Assembly Standing Committee on Finance held here on Friday at the Parliament House.

During the meeting, the FBR chairman informed the committee that the rate has been proposed to be raised from 0.6 percent to 0.8percent.

Chairman of the committee Naveed Qamar stated that the limit is very low which needs to be increased to Rs100,000.

However, both the committee and FBR mutually agreed to raise the limit upto Rs75,000 under the Finance Bill (2025-26).

On the conclusion of the committee meeting, the FBR chairman informed media that the Finance Bill (2025-26) has increased the withholding tax rate on cash withdrawal from banks from 0.6 percent to 0.8 percent.

Due to an inadvertent mistake in budget speech, the rate of one percent has been announced. “The proposed rate is 0.8 percent and not one percent as announced in the budget speech (2025-26)”, the FBR chairman added.

About reduction in incidence of tax on salaried class, Minister of State for Finance Bilal Azhar Kayani said that there is a reduction proposed in all slabs of salaried individuals.

Tax rates for salaried individuals for income slab upto Rs3,200,000 has been reduced to provide relief to lower and middle tiers income bracket.

Minister of State for Finance Bilal Azhar Kayani said that the Finance Bill 2025-26 has proposed one percent tax on income slab between Rs600,000 and Rs1.2 million under revised salary slabs.

Later, the budget meeting of the federal cabinet has approved 2.5 per cent tax on income slab between Rs600,000 and Rs1.2 million.

When committee members asked about the reason behind this federal cabinet’s decision, Kayani said that the government has increased salary of federal government employees by 10 percent.

Therefore, due to limitation of fiscal space, the tax rate was proposed to be increased from one percent to 2.5 percent for the said salary slab.

The FBR chairman said that the FBR has proposed only those changes in banking taxation laws which were agreed by the State Bank of Pakistan (SBP). The provisions regarding assessment of banking companies has been made more disclosure oriented to determine true and fair income of the banking companiesand tax payable thereon under Finance Bill 2025-26. “The extraordinary treatment given to banks in terms of taxation has been reviewed,” Langrial stated.

The FBR chairman said that very slight reduction has been made in the rates of the super tax in budget 2025-26 to give a signal to the corporate sector that the government is committed to reduce burden of taxes on compliant sectors. Super tax rates under Section 4C of the Income Tax Ordinance proposed to be reduced by half a percentage point for income slabs between Rs200 million to Rs500 million against each slab respectively.