Withholding Tax on Banking Transactions in Pakistan — Filers vs Non-Filers

What Is Withholding Tax on Banking Transactions?

Withholding tax on bank transactions is a tax deducted at source by banks on certain financial activities — most notably cash withdrawals. The policy is designed to promote tax return filing by making banking significantly more expensive for non-filers.

Understanding Filers, Non-Filers, and Late Filers

In Pakistan, taxpayers fall into three categories:

• Filers: Individuals or businesses that have filed their latest income tax return on time and appear on the Active Taxpayer List (ATL)
• Late Filers: Those who filed after the due date — they may appear on ATL but with a delay
• Non-Filers: Those who have not filed their latest return — they face the highest withholding rates

This distinction is crucial because it directly determines how much tax your bank deducts from every transaction.

Withholding Tax Rates for Tax Year 2025

Non-Filers

Withholding tax on cash withdrawals is 0.6% where the total amount exceeds Rs. 50,000 in aggregate in a single day. This applies to every withdrawal above the threshold — and it adds up fast.

Filers and Late Filers

There is no withholding tax on cash withdrawals for filers and late filers for tax year 2025. This is a massive financial benefit of being on the ATL.

Can You Claim This Tax Back?

Yes. The withholding tax deducted on cash withdrawals is fully claimable. You can adjust it against your income tax liability or claim a refund when filing your Income Tax Return for the relevant year.

How to Get Your Bank WHT Certificate

You'll need the withholding tax certificate from your bank to claim the tax back. There are several ways to obtain it:

1. Visit Your Bank Branch

Go to the nearest branch where your account is operational and request the certificate directly. Banks are legally bound to provide it.

2. Through Online Banking

Most banks have streamlined this process. Log in to your online banking portal and request the certificate — usually found under "Tax" or "Certificates" section.

3. Through Mobile App

Download your bank's mobile app, log in, and request the certificate. Most major banks (HBL, UBL, MCB, Meezan, etc.) offer this feature.

4. Through Bank Helpline

Call your bank's helpline. After identity verification, they'll email the certificate to your registered email address.

The Bottom Line

If you're a non-filer, you're paying 0.6% on every significant cash withdrawal — money that filers don't pay at all. Over a year, this can cost you hundreds of thousands of rupees. The solution is simple: file your return and get on the ATL. Contact us to get started.