The federal government is considering a significant increase in the withholding tax on cash withdrawals by non-filers in the upcoming fiscal year, aiming to boost tax revenues and pressure more individuals into compliance.
Sources indicate that the proposed change would raise the existing 0.6% withholding tax on daily cash withdrawals exceeding Rs. 50,000 to 1.2% for individuals not listed on the Active Taxpayer List (ATL). The move is projected to generate an additional Rs. 15–20 billion in revenue for the 2025–26 fiscal year.
The current rule, reintroduced under the Finance Act 2023, applies to all cash withdrawals exceeding Rs. 50,000 in a single day—including those made via ATMs and credit cards—if the person’s name is not on the ATL.
If approved, this proposal will further tighten financial restrictions on non-filers and could serve as a strong incentive for citizens to register with the tax system.
Tax authorities argue that such measures are essential to broaden the tax net, while critics raise concerns about the rising financial pressure on those already grappling with inflation.
