Advance Tax on Cash Withdrawal from Bank Section 231AB
Advance Tax on Cash Withdrawal from Bank Section 231AB: Finance Act 2023 to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws WHEREAS, it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws for the purposes hereinafter appearing;
The Finance Act, 2023 has reintroduced tax collection on cash withdrawals from Non-All persons by Banks. A new section 231AB has been introduced, requiring every banking company to deduct advance adjustable tax @ 0.6% from a person whose name is not appearing in Active Taxpayer List, at the time of making payment for sum total of cash withdrawal (aggregate cash withdrawal) in a single day exceeding Rs.50,000/-. Cash withdrawals made on credit cards or from ATMs shall also be covered by this provision.
Illustration: If aggregate of cash amount withdrawn in a single day exceeds Rs.50,000, the tax is required to be deducted on the entire amount of cash withdrawn as illustrated below:
Amount of Cash Tax to be withheld (&,
Withdrawal in a single day 0.6%
Rs. 50,000 Nil
Rs. 50,500 Rs. 303
Rs. 55,000 Rs. 330
Rs. 75,000 Rs. 450
The withholding tax on cash withdrawal is an adjustable tax against tax liability of the person for a tax year. The tax shall not be deducted in the case of withdrawals made by
(a) the Federal Government or a Provincial Government;
(b) a foreign diplomat or a diplomatic mission in Pakistan; or
(c) a person who produces a certificate from the Commissioner that his income during the tax year is exempt.
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