Pakistani authorities are stepping up efforts to clamp down on tax evasion, with the Federal Board of Revenue (FBR) proposing tougher financial restrictions in the upcoming budget.
One of the major changes under consideration is the doubling of the withholding tax on cash withdrawals by non-filers—from the current 0.6% to 1.2%. This would apply to daily cash withdrawals exceeding Rs 50,000, whether through ATMs, credit cards, or over-the-counter transactions.
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In addition to the tax hike, the government plans to scrap the “non-filer” category altogether starting July 1, 2025, replacing it with the term “ineligible persons.” This reclassification means individuals who fail to file income tax returns could be barred entirely from conducting financial transactions, effectively cutting them off from the formal economy.
These changes are part of the Tax Laws (Amendment) Bill, 2024, already approved by the National Assembly’s Finance and Revenue Committee.
The upcoming Finance Bill 2025-26 will formalize these proposals. Officials noted that although the government aims to eventually phase out withholding taxes, immediate priorities include boosting revenue and ensuring tax compliance—making the financial landscape much tougher for those outside the tax net.
