Pakistan plans to raise the threshold for applying a higher rate of withholding tax on cash withdrawals by non-filers, as part of adjustments to the Finance Bill 2025-26. The limit will be revised from Rs50,000 to Rs75,000, according to the Federal Board of Revenue (FBR).
FBR Chairman Rashid Mahmood Langrial confirmed the revision during a meeting of the National Assembly Standing Committee on Finance held on Friday at Parliament House. The committee and the tax authority reached consensus on the new threshold while reviewing proposed changes in the federal budget.
The withholding tax rate on cash withdrawals by non-filers is also set to increase—from 0.6 per cent to 0.8 per cent. Langrial clarified that the earlier announcement of a one per cent rate in the budget speech was a mistake, and the actual proposed rate remains 0.8 per cent.
During the meeting, committee chairman Naveed Qamar called the previous Rs50,000 threshold too low and recommended an increase to Rs100,000. However, both sides eventually agreed to settle at Rs75,000.
Separately, the government has revised tax rates on salaried individuals as part of its effort to provide relief to low and middle-income earners. Minister of State for Finance Bilal Azhar Kayani said tax rates have been lowered across all slabs up to an annual income of Rs3.2 million.
Initially, the Finance Bill proposed a one per cent income tax on the Rs600,000 to Rs1.2 million income bracket. However, in a subsequent meeting, the federal cabinet raised the rate to 2.5 per cent for this slab. Kayani explained that the adjustment was made due to budgetary constraints, following the government’s decision to increase federal employees’ salaries by 10 per cent.
On corporate taxation, the FBR chairman said changes in banking sector tax provisions were made in consultation with the State Bank of Pakistan. He noted that new disclosure requirements have been introduced to better reflect banks’ actual income and tax liabilities.
Langrial also announced a marginal cut in the super tax for high-income corporate entities. The super tax under Section 4C of the Income Tax Ordinance will be reduced by 0.5 percentage points for income brackets ranging between Rs200 million and Rs500 million. He described the reduction as a signal to the corporate sector that the government intends to gradually reduce the tax burden on compliant taxpayers.
The proposed adjustments are part of broader fiscal measures aimed at widening the tax net and addressing concerns from both salaried individuals and the corporate sector ahead of the budget’s final approval.
