ISLAMABAD: The federal government has started implementing the new tax measures on all bank transactions from July 1 under the Finance Act 2025-26, with a sharp increase in both government taxes and bank service charges, affecting both filers and non-filers alike.
CASH WITHDRAWALS TAX
According to reports, a 0.3% withholding tax is now being applied on daily cash withdrawals exceeding Rs50,000 for tax filers, while non-filers are being charged 0.6%. This deduction applies whether the amount is withdrawn via ATM or through a cheque at the bank counter.
The increases come into effect as the government begins implementing its new fiscal measures for 2025-26, already sparking criticism over the growing financial pressure on ordinary citizens.
However, these deduction contradicts with the Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial’s statement, who had confirmed during a meeting of the National Assembly Standing Committee on Finance that the withdrawal limit would be raised to Rs75,000, up from the previous Rs50,000 threshold.
He had also confirmed that the withholding tax rate on cash withdrawals would be raised from 0.6% to 0.8%.
INCREASED BANK CHARGES
Simultaneously, commercial banks have increased their own charges across multiple services.
The fee for using other banks’ ATMs, which was previously Rs23, has now surged to Rs34 per transaction. ATM card issuance fees have seen an increase of Rs700, while SMS alert charges have gone up by Rs800, bringing the total to Rs2,000 annually.
DEDUCTION AT CASH COUNTER
For non-filers, even a Rs20,000 withdrawal at a cash counter now results in a Rs522 deduction.
In addition, banks have also capped daily ATM withdrawal limits, with standard debit cardholders allowed to withdraw Rs 25,000 to Rs 50,000, premium cardholders up to Rs 500,000, and foreign cardholders between USD 200 to 500 in local currency.
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Following these changes, tensions between bank customers and staff have increased, prompting banks to approach 1LINK for a possible revision of the newly implemented charges.
Banking officials have warned that the added burden may discourage digital transactions and encourage a return to cash-based economy, undermining the government’s goal of broadening the tax net.