Govt decides to raise cash withdrawal limit to Rs75,000

The federal government has decided to raise the limit for cash withdrawals from banks from Rs 50,000 to Rs 75,000 to impose the enhanced withholding tax rate of 0.8% on cash withdrawals by non-filers. 

This change was agreed to by the Federal Board of Revenue (FBR), with FBR Chairman Rashid Mahmood Langrial confirming the decision during the review of the Finance Bill (2025-26) at a meeting of the National Assembly Standing Committee on Finance on Friday at Parliament House.

The FBR chairman confirmed that the withholding tax rate on cash withdrawals would be raised from 0.6% to 0.8%, correcting an earlier mistake in the budget speech, which had mistakenly mentioned a 1% rate. 

During the meeting, committee Chairman Naveed Qamar suggested raising the limit to Rs100,000. But, both the committee and the FBR agreed to set the new withdrawal limit at Rs75,000, up from the previous Rs50,000 threshold. The move is intended to capture a broader segment of non-filers while ensuring fairness in the tax system.

The FBR also proposed slight adjustments to banking sector taxation laws, aligning them with agreements made with the State Bank of Pakistan (SBP). This includes more disclosure-oriented provisions to ensure accurate reporting of income by banking companies. 

Additionally, a small reduction in super tax rates for income between Rs200 million and Rs500 million has been proposed to signal the government’s commitment to easing the tax burden on compliant sectors.