After the approval of Finance Bill 2016 from the National Assembly of Pakistan, still, for many Pakistanis, it is not clear what the withdrawal is withholding tax on all banking transactions for the year 2016-17.
Well the SRO at this moment issued by the Federal Board of Revenue has clearly stated that the withholding tax rate on withdrawal from the banking system above Rs. 50,000 will be applicable at the rate of 0.4 percent. The rate will be applicable till June 30, 2016. However, Finance Ministry is considering extending the rate to 0.6 percent that will take effect on July 01, 2016 if approved.
Current withholding tax on all type of withdrawal from the banking system would be 0.4 percent if the total amount exceeded from Rs. 50,000. From the start of July, the chances are high that rate will be extended to 0.6 percent if approved by the Finance Ministry. Along with increase rate of withholding tax, an explanation has been proposed whereby it is clarified that Rs. 50,000 shall be the aggregate from all bank accounts in a single day.
The proposed suggestion will not be applicable until the tax department makes the clear system of applying a tax on the withdrawal.
