ISLAMABAD: The government has decided to increase the cash withdrawal limit for non-filers before withholding tax is applied. The new limit has been raised from Rs50,000 to Rs75,000, while the withholding tax rate on such withdrawals has been increased from 0.6% to 0.8%.
This decision was shared by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial during a meeting of the National Assembly Standing Committee on Finance, held at the Parliament House on Friday. The meeting was called to review the Finance Bill 2025-26.
Committee Chairman Naveed Qamar suggested that the Rs50,000 threshold was too low and should be increased to Rs100,000. After discussion, the committee and FBR agreed to set the new limit at Rs75,000.
Clarifying confusion over the announced rate, the FBR chief said that the budget speech mistakenly mentioned a 1% rate, but the actual proposed rate is 0.8%.
Meanwhile, on the issue of income tax for salaried individuals, Minister of State for Finance Bilal Azhar Kayani said that tax relief has been given in all slabs, especially for lower and middle-income groups. Income up to Rs3.2 million will now be taxed at reduced rates.
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Initially, the Finance Bill proposed a 1% tax on the income slab between Rs600,000 and Rs1.2 million. However, the federal cabinet later approved a revised rate of 2.5% for this slab.
When questioned by committee members about the increase, Kayani explained that the federal government has raised employee salaries by 10%, and due to limited fiscal space, the tax rate had to be adjusted accordingly.
Addressing changes in taxation of banks, the FBR chairman said only those amendments were made which had the agreement of the State Bank of Pakistan (SBP). He said that the taxation system for banks has now been made more transparent to ensure accurate reporting of income and taxes.
Langrial also announced a small reduction in the super tax rate to send a positive signal to the corporate sector. Under the revised proposal, super tax under Section 4C of the Income Tax Ordinance will be cut by 0.5% for income slabs ranging from Rs200 million to Rs500 million.
