Cash Withdrawal Tax — Section 231A at a Glance
First Rs. 50,000 cash withdrawn in a day is exempt. WHT applies only on the amount above this threshold.
On the amount above Rs. 50,000/day. An advance tax — creditable in your annual return.
Four times the filer rate. On the same threshold. Becomes a permanent cost without filing.
What Is Section 231A and Why Does It Exist?
Section 231A was introduced to broaden Pakistan's tax base by collecting advance income tax from people who withdraw large amounts of cash — a proxy for identifying high-income individuals who may not be filing returns or declaring income accurately.
Banks are designated as withholding agents under the Income Tax Ordinance 2001. They are legally required to deduct Section 231A WHT before disbursing cash above the daily threshold, and deposit it with FBR on the customer's behalf.
Your bank — automatically at the time of cash disbursement. You do not need to do anything; it is deducted before you receive the cash.
Deposited by the bank to FBR on your behalf. Credited against your total income tax liability when you file your annual return.
The Rs. 50,000 Daily Threshold — How It Works
The daily threshold of Rs. 50,000 is applied per bank, per day, across all your accounts at that bank. Understanding exactly how it is calculated is important to avoid surprises:
Threshold Rule:
Total cash withdrawn from all accounts at ONE bank in ONE day
If total < Rs. 50,000 → No WHT deducted
If total > Rs. 50,000 → WHT on the EXCESS above Rs. 50,000 only
| Daily Cash Withdrawal | Exempt Amount | Taxable Amount | Filer WHT (0.15%) | Non-Filer WHT (0.6%) |
|---|---|---|---|---|
| Rs. 30,000 | Rs. 30,000 | Rs. 0 | Rs. 0 | Rs. 0 |
| Rs. 50,000 | Rs. 50,000 | Rs. 0 | Rs. 0 | Rs. 0 |
| Rs. 100,000 | Rs. 50,000 | Rs. 50,000 | Rs. 75 | Rs. 300 |
| Rs. 200,000 | Rs. 50,000 | Rs. 150,000 | Rs. 225 | Rs. 900 |
| Rs. 500,000 | Rs. 50,000 | Rs. 450,000 | Rs. 675 | Rs. 2,700 |
| Rs. 1,000,000 | Rs. 50,000 | Rs. 950,000 | Rs. 1,425 | Rs. 5,700 |
ATM vs Bank Counter — Does It Matter?
Section 231A applies to all forms of cash withdrawal — the law does not distinguish between ATM machines and bank teller counters. Both are treated as cash withdrawals from the account.
All cash over-the-counter transactions count toward the daily threshold. A single large counter withdrawal can trigger WHT on the same day as ATM activity.
Also count toward the daily threshold. However, most Pakistani banks cap ATM withdrawals at Rs. 25,000–50,000 per transaction or per day — which may naturally keep ATM-only users within the exempt threshold.
Annual Cost of Non-Filer Cash Withdrawal Tax
The cumulative annual cost of paying the higher non-filer rate is significant for frequent or large cash users:
| Daily Cash Withdrawal Pattern | Annual Filer WHT (0.15%) | Annual Non-Filer WHT (0.6%) | Annual Saving |
|---|---|---|---|
| Rs. 100,000/day, 250 days/year | Rs. 18,750 | Rs. 75,000 | Rs. 56,250 |
| Rs. 200,000/day, 250 days/year | Rs. 56,250 | Rs. 225,000 | Rs. 168,750 |
| Rs. 500,000/day, 250 days/year | Rs. 168,750 | Rs. 675,000 | Rs. 506,250 |
For a business owner, trader, or professional regularly withdrawing large amounts, the annual saving from filer status on Section 231A alone can be several hundred thousand rupees — far exceeding any tax owed in the annual return.
Is Cash Withdrawal WHT a Final Tax or Advance Tax?
Section 231A WHT is an advance tax — not a final tax. This is an important distinction:
- The WHT deducted is credited against your total income tax liability when you file your annual return.
- If total advance taxes paid (Section 231A + other WHT) exceed your annual income tax owed, you can claim a refund.
- Non-filers who do not file returns cannot credit or recover this WHT — it becomes a permanent cost.
- Filers may find that their annual WHT deductions exceed their actual tax liability, generating a refund claim.
Example: Rs. 75,000 in Section 231A WHT deducted during the year
Annual income tax owed (after other deductions): Rs. 50,000
Section 231A credit applied: Rs. 50,000 (covers full tax owed)
Refund claim: Rs. 25,000 (excess WHT)
→ Filing the return generates a Rs. 25,000 refund
How to Activate the Lower Filer Rate at Your Bank
Banks apply Section 231A rates based on the filer status registered against your account's CNIC. Follow these steps to ensure you pay the lower 0.15% rate:
- Register on FBR IRIS — visit iris.fbr.gov.pk and register with your CNIC. Free, takes about 20 minutes.
- File any return — a nil return (zero income) counts. File for the current or previous tax year. This places you on the ATL.
- Verify ATL status — go to atl.fbr.gov.pk, enter your CNIC, and confirm your status shows "Active Taxpayer." ATL updates every Monday.
- Visit your bank branch — bring your CNIC, NTN certificate (from IRIS), and an ATL printout. Request the branch officer update your account profile to reflect ATL filer status.
- Submit a self-declaration if required — most banks have a standard filer status self-declaration form at the branch.
- Confirm on your next statement — check that the WHT rate on your next cash withdrawal reflects 0.15% (not 0.6%).
How to Declare Section 231A WHT in Your Annual Return
- Obtain your bank's annual WHT certificate or statement showing total Section 231A deducted.
- Log in to FBR IRIS and open your annual income tax return.
- Navigate to "Advance Taxes Paid" section.
- Enter the total Section 231A cash withdrawal WHT amount for the year.
- Also declare any income (salary, business, etc.) that generated the cash withdrawals.
- IRIS credits the advance tax against total liability — excess generates a refund claim.
Common Cash Withdrawal Tax Mistakes in Pakistan
- Not updating bank records after getting on the ATL — bank continues deducting at 0.6%.
- Assuming the Rs. 50,000 threshold applies across all banks — it applies per bank, per day.
- Not filing a return and losing the advance tax credit on significant WHT deductions.
- Thinking splitting withdrawals across two days avoids WHT — it does, as long as each day stays under Rs. 50,000 per bank.
- Confusing IBFT online transfers with cash withdrawals — only physical cash triggers Section 231A.
- Not collecting the annual WHT certificate from the bank for return filing.
Related Banking Tax Guides
Useful Tax Tools & Guides
Estimate income tax alongside banking WHT.
Tax SlabsFBR Tax Slabs 2025-26Income tax rates for annual return filing.
NTNApply NTN OnlineRegister free to activate 0.15% filer rate.
VerifyNTN VerificationCheck ATL status before visiting your bank.
FilingHow to File ReturnDeclare WHT and recover advance tax credits.
PropertyFiler Savings on PropertyRs. 750,000+ saving on a Rs. 10M property deal.
Official FBR Resources
Frequently Asked Questions
What is the tax on cash withdrawal from bank in Pakistan?
Section 231A WHT — 0.15% for ATL filers, 0.6% for non-filers — on cash withdrawals above Rs. 50,000 per day at the same bank.
How does the Rs. 50,000 threshold work?
The first Rs. 50,000 withdrawn in cash per day per bank is exempt. WHT applies only on the amount above Rs. 50,000. It applies per bank — not across all your banks combined.
Does cash withdrawal tax apply to ATM withdrawals?
Yes — Section 231A applies to all cash disbursements including ATM. ATM daily limits (typically Rs. 25,000–50,000) often keep ATM users within the exempt threshold naturally.
Does Section 231A apply to online bank transfers?
No. Only physical cash withdrawals from your own account (counter or ATM) trigger Section 231A. IBFT, cheques, and debit card transactions are exempt.
Can I recover cash withdrawal WHT paid?
Yes — by filing an annual return and declaring it as advance tax paid. If total WHT exceeds your income tax owed, the excess can be claimed as a refund through FBR IRIS.
How do I get my bank to apply the 0.15% filer rate?
Register on FBR IRIS, file any return to get on the ATL, verify at atl.fbr.gov.pk, then visit your bank branch with your CNIC and ATL printout and request a filer status update on your account.
Summary
Section 231A withholding tax on cash withdrawals applies above Rs. 50,000 per day per bank at 0.15% (filer) or 0.6% (non-filer). It is an advance tax — fully creditable in your annual return. For frequent large cash users, the annual saving from filer status alone can reach several hundred thousand rupees.
Register on FBR IRIS, file any return, verify ATL status, and inform your bank. The bank updates your account to the lower 0.15% rate — reducing your cash withdrawal tax by 75% on every future withdrawal.