ISLAMABAD: The Federal Board of Revenue (FBR) has begun monitoring citizens who are withdrawing large amounts of cash from banks, as part of efforts to increase the number of taxpayers in the country.
According to reliable sources, the FBR has been closely watching individuals who have been making substantial cash withdrawals from the banking system since July 1, 2023.
The primary goal of this initiative is to review the tax status of individuals who are engaging in significant cash withdrawals. Not only is the FBR obtaining information through online channels, but it has also requested banks to furnish details about individuals who withdraw more than Rs. 50,000 in a single day.
This heightened scrutiny by the FBR follows the implementation of the Finance Act of 2023, which has reintroduced tax collection on cash withdrawals from individuals who are not included in the Active Taxpayers List (ATL) maintained by banks.
Under the newly introduced Section 23 1AB of the Income Tax Ordinance, 2001, every banking institution is required to deduct an advance adjustable tax at a rate of 0.6% from any individual whose name does not appear in the Active Taxpayer List at the time of making a cash withdrawal exceeding Rs. 50,000 in a single day.
Furthermore, this provision encompasses cash withdrawals made using credit cards or through ATMs. The tax withheld on these cash withdrawals can be adjusted against the individual’s tax liability for the applicable tax year.
The FBR’s efforts to monitor and tax significant cash withdrawals are aimed at encouraging more citizens to become active taxpayers and contribute to the nation’s development.
