The Federal Board of Revenue (FBR) has introduced a new tax proposal targeting cash withdrawals exceeding Rs50,000 per day. Under this plan, individuals and businesses making withdrawals above this threshold—whether through ATMs, bank counters, or credit card transactions—will be subject to taxation on the full withdrawn amount. This move is part of the government’s broader strategy to document the economy, curb tax evasion, and encourage digital transactions.
Currently, Pakistan has a largely cash-based economy, with many transactions occurring outside the formal banking system. By imposing a tax on high-value cash withdrawals, the FBR aims to discourage the circulation of untaxed money and promote transparency in financial dealings. The proposed measure is expected to affect both individual and corporate account holders who frequently withdraw large sums of cash for personal or business use.
If implemented, the tax would apply to all withdrawals exceeding Rs50,000 in a single day, regardless of the transaction method. This includes ATM withdrawals, over-the-counter cash disbursements, and even cash advances obtained through credit cards. The FBR has not yet disclosed the exact tax rate, but experts suggest it could be a fixed percentage or a tiered structure based on withdrawal amounts.
Critics argue that this policy may inconvenience small businesses and individuals who rely on cash for daily operations, particularly in rural areas with limited banking infrastructure. However, supporters believe it will help broaden the tax net and reduce illicit financial activities. The FBR has emphasized that the measure is designed to target tax evaders rather than burden compliant taxpayers.
The proposal is still under discussion, and its final form will depend on stakeholder feedback and government approval. If enacted, banks and financial institutions will be responsible for deducting the tax at the time of withdrawal, ensuring immediate revenue collection for the government. This initiative aligns with global trends where governments are increasingly discouraging large cash transactions to enhance financial accountability.
In conclusion, the FBR’s proposed tax on cash withdrawals over Rs50,000 represents a significant step toward formalizing Pakistan’s economy. While it may face resistance from cash-dependent sectors, its success will depend on balanced implementation and public awareness campaigns to ensure smooth adoption.
