Non-Filers Face Higher Tax on Bank Withdrawals in FY2025-26 Budget

News Desk

Islamabad: The federal government is gearing up to introduce sweeping tax reforms in the upcoming budget for fiscal year 2025-26, with a particular focus on boosting revenue by targeting cash-based transactions, e-commerce, and fossil fuel consumption.

According to senior officials familiar with the budgetary deliberations, the government is expected to double the withholding tax on bank withdrawals made by non-filers—from the current 0.6 per cent to 1.2 per cent. In addition, a new levy is being considered on daily cash withdrawals exceeding Rs50,000, in an effort to curb undocumented cash flows and widen the tax net.

The upcoming budget also proposes to revise taxation on profit-generating financial instruments, including bank deposits and savings schemes. A higher rate of tax on capital gains and profits is under consideration, aiming to meet revenue targets amid a sluggish economy and strict commitments under the International Monetary Fund (IMF) program.

In a significant shift to digital taxation, an 18 per cent general sales tax (GST) is likely to be imposed on e-commerce transactions, aligning them with the standard sales tax regime for the first time. Currently, such transactions are taxed at a lower slab.

Fuel-Powered Vehicles in the Crosshairs

In a move aligned with environmental sustainability goals, the government is planning to introduce a new levy on petrol and diesel-powered vehicles. The proposed tax aims to discourage fuel consumption and promote the adoption of electric and hybrid alternatives.

“Taxation will now be used not only to generate revenue but also to drive behavioural change,” a senior official from the Federal Board of Revenue (FBR) told The Pen PK on condition of anonymity.

Moreover, the GST on locally manufactured small vehicles—particularly those with engine capacities up to 850cc—may be raised from 12.5 per cent to the standard 18 per cent.

Super Tax Revisions Under Review

While most sectors are bracing for a heavier tax burden, the government is reportedly considering a reduction in the super tax rate for large corporations. The move, backed by the business community, is currently under review by the finance ministry and could serve as an incentive to stimulate large-scale investment and job creation.

The federal budget for FY2025-26 is expected to be tabled later this month.