ISLAMABAD: Pakistan’s federal government on Tuesday announced an increase in the withholding tax on cash withdrawals by non-filers as part of the Budget for the Fiscal Year 2025–26, raising the rate from 0.6% to 1% in a bid to curb undocumented transactions and improve tax compliance.
According to the budget document, non-filers will no longer be permitted to open bank accounts. They will also be prohibited from investing in securities and mutual funds. This measure aims to curb undocumented cash transactions and promote tax compliance.
According to the budget document, non-filers will also be barred from purchasing vehicles and immovable property.
To broaden the tax base and strengthen enforcement, the government has decided to engage external auditors.
The proposals seek to end the distinction between filers and non-filers altogether. Only individuals who submit tax returns and wealth statements will be permitted to carry out financial transactions.
Earlier in the day, Finance Minister Muhammad Aurangzeb presented the budget for the fiscal year 2025-26 with a total outlay of PKR 17,573 billion.
He added that the International Monetary Fund (IMF) has shown trust in the reforms undertaken by the government.
