Govt to hike non-filer cash withdrawal limit to Rs75,000

ISLAMABAD: The government has decided to raise the cash withdrawal threshold for non-filers to Rs75,000 from Rs50,000, aiming to provide relief to middle-income bank users.

However, under revised budget proposals for fiscal year 2025-26, withdrawals exceeding the new limit will be subject to a higher 0.8 percent advance tax, up from 0.6 percent in the current year.

The decision, endorsed by Federal Board of Revenue (FBR) Chairman Rashid Langrial and approved by the National Assembly’s Finance Committee on Friday, marks a significant shift in the government’s approach to revenue collection, balancing between facilitation and enforcement. The move also includes a key exemption for Asaan Accounts, widely used by low-income individuals, ensuring they remain untaxed.

The lawmakers and the FBR chief reached this agreement here in the NA standing committee on Finance and revenue. This decision will be now included in the finance bill 2025-26, slated to be passed by end of this month.

In a major win for the real estate sector, the government has decided to abolish the 3 percent to 7 percent federal excise duty on the purchase of commercial and residential properties and open plots—a controversial tax that the IMF had initially resisted. “We convinced the IMF that this excise duty was wrongly imposed, as it applies globally only on movable assets. And the revenue would not fall,” said Langrial during the meeting chaired by MNA Syed Naveed Qamar.

Under the revised taxation structure, property sellers will now pay significantly higher withholding taxes of 4.5pc for sales of property having gross value up to Rs50 million, 5pc for Rs50–100 million, and 5.5pc for properties over Rs100 million. Buyers, on the other hand, will see slightly reduced rates: 1.5pc, 2pc, and 2.5pc across the same value bands. For sellers, this means an across-the-board increase of 1.5 percentage points in withholding tax rates, chairman FBR said.

Meanwhile, the government is throwing a lifeline to the struggling equity market by rationalising dividend tax rates on Mutual Funds. Government is narrowing the tax advantage enjoyed by investors in government securities. The tax on investments in in government securities (including PIBs and T-bills) has been raised from 15pc to 25pc, while the tax on equity dividends remains at 15pc. “This will redirect capital from government securities to the stock market,” said Minister of State for Finance Bilal Azhar Kayani. “We want investors to shift their focus to equities, where the real economic growth happens.” High-income earners may breathe a small sigh of relief. The FBR chief revealed that the income tax surcharge on individuals earning over Rs10 million per month would be reduced from 10pc to 9pc, citing concerns over the growing exodus of high-skilled professionals. “This tax is contributing to brain drain,” Langrial said, calling for a more competitive fiscal regime to retain talent. A 0.5 per cent cut has been proposed to the super tax for incomes between Rs200 million and Rs500 million in FY2025-26. A 1pc on income between Rs150 million and Rs200 million, 1.5pc (Rs200m to Rs250m), 2.5pc (Rs250m to Rs300m), 3.5pc (Rs300m to Rs350m), 5.5pc (Rs350m to Rs400m), 7.5pc (Rs400m to Rs500m) and 10 percent for those having income above Rs500 million.

Notably, global tech giants like Google, YouTube, and Facebook will see their taxes jump. The government is increasing the tax on online advertisements from 10pc to 15pc, hoping to not only boost revenue but also push these platforms to establish offices in Pakistan, FBR chief said. Platforms with a physical presence will still benefit from a reduced 5pc withholding tax, but the FBR has now proposed a legal requirement for all digital advertisers to file quarterly statements detailing ad revenues generated in Pakistan.

Thar coal miners will now be allowed to sell coal to sectors beyond independent power producers (IPPs), for which 100% tax credit was previously granted. Under the revised policy, the tax credit will be proportionally reduced based on the share of coal sold outside the power sector, in a move aimed at boosting the use of local coal.

In a controversial move, the government also proposed to impose a phased sales tax in the erstwhile FATA and PATA regions, starting at 10pc and reaching 18pc over four years. MNA Shahram Khan Tarakai opposed the plan, citing worsening economic conditions in the tribal areas. However, Langrial assured that income tax exemptions would continue, and the new sales tax measure was developed in consultation with industry stakeholders to prevent abuse of the existing exemptions.