ISLAMABAD: In a notable move under the Finance Bill 2025-26, the has decided to increase the limit for charging the enhanced withholding tax on cash withdrawals by non-filers from Rs50,000 to Rs75,000. The assurance was given by Federal Board of Revenue Chairman Rashid Mahmood Langrial during a review meeting of the National Assembly Standing Committee on Finance held at Parliament House on Friday.
The decision under the Finance Bill 2025-26 is aimed at easing the burden on smaller banking transactions while continuing efforts to discourage undocumented cash usage and expand the tax base.
Finance Bill 2025-26 Confirms Revised Withholding Tax Rate
During the meeting, the FBR chairman informed lawmakers that the withholding tax rate on cash withdrawals by non-filers has been proposed to increase from 0.6 percent to 0.8 percent in the Finance Bill 2025-26. He later clarified that the announcement of a one percent rate during the federal budget speech was due to an inadvertent error.
According to Langrial, the officially proposed rate under the Finance Bill 2025-26 remains 0.8 percent, and no higher rate has been approved, providing clarity to banks and account holders alike.
Finance Bill 2025-26 Revised After Parliamentary Consultation
Standing Committee Chairman Naveed Qamar expressed concerns that the earlier Rs50,000 threshold was too low and suggested increasing it to Rs100,000. After detailed discussion, the committee and the FBR mutually agreed on a revised limit of Rs75,000, which will now be formally incorporated into the Finance Bill 2025-26.
This compromise reflects the consultative approach adopted in shaping the Finance Bill 2025-26, balancing revenue needs with economic realities faced by ordinary banking customers.
Finance Bill 2025-26 Promises Relief for Salaried Class
Addressing the salaried segment, Minister of State for Finance Bilal Azhar Kayani said the Finance Bill 2025-26 proposes a reduction in tax incidence across most income slabs for salaried individuals. He noted that tax rates for annual income up to Rs3.2 million have been reduced to provide meaningful relief to lower- and middle-income earners amid rising living costs.
The relief measures under the Finance Bill 2025-26 are part of the government’s broader effort to protect purchasing power while maintaining fiscal discipline.
Finance Bill 2025-26 Revises Tax Slab After Cabinet Approval
Kayani revealed that the Finance Bill 2025-26 initially proposed a one percent tax on the income slab ranging from Rs600,000 to Rs1.2 million. However, the federal cabinet later approved a higher rate of 2.5 percent for this slab.
He explained that the revision was necessary as the government had approved a 10 percent increase in salaries for federal employees. Due to limited fiscal space, the adjustment under the Finance Bill 2025-26 was made to offset the financial impact of the salary hike.
Finance Bill 2025-26 Tightens Banking Sector Tax Framework
FBR Chairman Langrial stated that all amendments related to banking taxation under the Finance Bill 2025-26 were finalized in consultation with the State Bank of Pakistan. The revised provisions place greater emphasis on disclosure-based assessments to determine the true and fair income of banking companies and the taxes payable by them.
He added that the extraordinary tax treatment previously extended to banks has been reviewed under the Finance Bill 2025-26, signaling a shift toward transparency and equitable taxation.
Finance Bill 2025-26 Sends Measured Signal to Corporate Sector
Langrial further disclosed that the Finance Bill 2025-26 includes a very slight reduction in super tax rates to reassure the corporate sector. Super tax under Section 4C of the Income Tax Ordinance is proposed to be reduced by half a percentage point for income slabs ranging from Rs200 million to Rs500 million.
Though modest, this step under the Finance Bill 2025-26 is intended to demonstrate the government’s commitment to gradually reducing the tax burden on compliant sectors and supporting long-term economic stability.
