Withholding Tax on Cash Withdrawals from Banks implemented
Withholding Tax on Cash Withdrawals from Banks implemented. In Pakistan, the recent federal budget was announced on 9th June 2023. In this budget Government of Pakistan proposed to implement again withholding tax (WHT) on cash withdrawals from banks.
Moreover, this step initiated by the Government to bring more and more people into the tax net and increase the documentation of the economy.
This tax will apply to those persons whose names are not on the active taxpayer’s list of the Federal Board of Revenue (FBR).
Previously, such tax ended with the removal of section 231A of the Income Tax Ordinance 2001 through the Finance Act 2021. Now, banks will deduct withholding tax @0.6% on cash withdrawals. If such an amount exceeds Rs50,000 in a single day under section 231AB of Income Tax Ordinance 2001.
For this purpose, new section 231AB “Advance Tax on Cash Withdrawal” introduced recently. According to this section, every banking company shall deduct Advance adjustable tax at the rate of .6% of the cash withdrawal from a person whose name is not appearing in the active taxpayers’ list on the sum total of the payments for cash withdrawal in a single day, exceeding fifty thousand rupees.
Moreover, section 231AB also explains that “For the removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate cash withdrawal in a single day.”