If you are not on the Active Taxpayer List (ATL) and your total cash withdrawals from a bank cross Rs 50,000 in a single day, the bank deducts 0.8% advance tax on the full amount under Section 231AB of the Income Tax Ordinance, 2001. On a withdrawal of Rs 100,000, that is Rs 800 deducted before the cash reaches your hand. The tax is adjustable in your annual return, and it stops completely once your name appears on the ATL.
Key facts
- Rate: 0.8% of the total cash withdrawn, effective 1 July 2025 (Finance Act 2025 raised it from 0.6%).
- Threshold: aggregate cash withdrawals exceeding Rs 50,000 in one day. The limit is on the day's total, not on each transaction.
- Who pays: any person whose name does not appear on the ATL. Persons on the ATL pay nothing under this section, on any amount.
- Who collects: the bank, at the time it pays out the cash. ATM withdrawals count as cash withdrawals.
- Nature: advance adjustable tax. It is not a final tax, and it is not a bank charge.
Why older articles say Section 231A
The cash withdrawal tax first existed as Section 231A. That section was omitted by the Finance Act 2021, so for two years no tax was deducted on cash withdrawals. The Finance Act 2023 then brought the tax back as a new section, 231AB, at 0.6%, and the Finance Act 2025 raised the rate to 0.8%.
| Period | Section | Rate for non-ATL persons |
|---|---|---|
| Up to 30 June 2021 | 231A | Tax applied (section later omitted) |
| 1 July 2021 to 30 June 2023 | None | No cash withdrawal tax |
| 1 July 2023 to 30 June 2025 | 231AB | 0.6% |
| From 1 July 2025 | 231AB | 0.8% |
So if a bank statement, an old article or a tax certificate mentions 231A, it is referring to the same charge. For any current transaction, the governing provision is 231AB, and the current rate is confirmed in the FBR Withholding Tax Rate Cards.
How the tax is calculated
Once the day's total crosses Rs 50,000, the 0.8% applies to the entire amount withdrawn that day, not only to the part above Rs 50,000.
Cash withdrawal tax = Total cash withdrawn in the day × 0.8%
Example 1: Below the threshold
You withdraw Rs 40,000 in cash in a day and nothing else. The Rs 50,000 threshold is not crossed, so no tax is deducted.
Example 2: A single withdrawal of Rs 60,000
The threshold is crossed, so the tax applies to the full Rs 60,000:
Rs 60,000 × 0.8% = Rs 480
Example 3: Splitting the withdrawal does not help
You withdraw Rs 20,000 in the morning, Rs 20,000 at noon and Rs 15,000 in the evening. Each transaction is below Rs 50,000, but the day's total is Rs 55,000, so the tax applies:
Rs 55,000 × 0.8% = Rs 440
Common amounts
| Total cash withdrawn in a day | Tax at 0.8% |
|---|---|
| Rs 60,000 | Rs 480 |
| Rs 100,000 | Rs 800 |
| Rs 200,000 | Rs 1,600 |
| Rs 500,000 | Rs 4,000 |
| Rs 1,000,000 | Rs 8,000 |
This is why the charge surprises people who withdraw large amounts regularly. A trader or business owner taking out Rs 500,000 in cash every week loses Rs 4,000 each time, over Rs 200,000 in a year, purely for not being on the ATL.
Who pays, and who does not
The test is your ATL status, not whether you call yourself a filer. You may have filed a return in an earlier year and still not be on the current ATL.
- Salaried individuals: tax deducted from your salary by your employer does not put you on the ATL. If you have never filed, or your name is missing from the list, the bank will deduct on qualifying withdrawals.
- Freelancers and business owners: the same rule applies, and frequent large cash withdrawals make the cost add up quickly.
- Persons on the ATL: no deduction under this section, whatever the amount.
Three categories sit outside the section altogether: the Federal Government and Provincial Governments, foreign diplomats and diplomatic missions in Pakistan, and a person who produces a certificate from the Commissioner confirming that their income for the year is exempt. The full text is in the Income Tax Ordinance, 2001 on the FBR website.
One more boundary worth knowing: this tax is only on cash withdrawals. Online transfers, cheque payments and cash deposits are not charged under Section 231AB.
How to check your ATL status
Do not rely on an old return acknowledgement or on someone's word that you are a filer. Check the official list:
1. Open the FBR Active Taxpayer List page.
2. Follow the verification service using your CNIC or NTN as instructed.
3. If your name is missing, the usual reason is that no return is on record for the relevant tax year, or the return was filed without completing the steps that place you on the list.
4. After filing, check again. Your status counts only once your name actually appears.
How to stop the deduction
The only durable fix is to get your name on the ATL:
1. Work out your filing position. If your income, salary, bank transactions or assets meet the filing conditions, a return is due from you in any case. Filing only to stop a bank deduction, with wrong figures, creates a bigger problem later.
2. Prepare accurate figures: salary or business income, bank statements, tax already deducted, assets and liabilities.
3. File the return for the relevant tax year through FBR IRIS. Our step-by-step guide on how to file an income tax return in Pakistan walks through the full process.
4. Verify your ATL status on the FBR list after filing, and keep proof of it for your bank.
Note that filing late now carries its own cost: under the Finance Act 2026 changes, a surcharge applies for restoration to the ATL when a return is filed after the due date, so filing on time matters more than it used to.
Is this tax adjustable or refundable?
Yes, it is adjustable. The amount the bank deducts under Section 231AB is advance tax, and you claim it in your income tax return for that year against your total tax payable. Two practical points:
- Keep the bank statement and the deduction certificate the bank issues. Without a record, claiming the amount becomes difficult.
- Adjustment is not an automatic refund. If your total tax for the year is less than the advance tax collected, the excess follows the normal refund process through your return; it does not come back on its own.
The bank deducted the tax even though you are on the ATL
This happens, usually because the bank's record was not updated or your status changed after the withdrawal date. Ask the bank for the basis and the certificate of deduction, and compare the withdrawal date with your ATL status on that date. If you were on the ATL on that date, show the bank your ATL proof and ask it to correct the deduction. Whatever the outcome, keep the certificate: the amount can still be claimed as advance tax in your return, so it is not lost.
Frequently asked questions
Is cash withdrawal tax also charged on cash deposits?
No. Section 231AB applies to cash withdrawals only. Depositing cash into your account does not attract this tax, although large deposits can still be asked about as a source-of-funds matter in your return and wealth statement.
My employer already deducts tax from my salary. Why did the bank deduct again?
Because the two are separate checks. Salary tax puts you in the tax system, but the bank looks only at the ATL. Until your name appears on the ATL, which normally requires filing your own return, the bank must deduct on qualifying cash withdrawals.
File once, and this tax disappears
For most non-filers, the 0.8% deduction is the most expensive way to stay outside the tax net: it repeats on every large withdrawal, all year. A single correctly filed return places you on the ATL, stops this deduction, and lowers your withholding rates on several other transactions as well.
TrueFiler helps you prepare and file your return with your income, deductions and wealth statement organised in one place. You can check the current rates on our pricing page, read the law in the TrueFiler Law Library, or ask a question in plain words with TrueFiler Tax AI.
Last updated: 18 October 2026
Reviewed by a licensed tax practitioner
Disclaimer: This article is general educational information about Section 231AB, not tax advice for a specific case. Rates and thresholds are set by the Finance Act and FBR notifications and can change; confirm the current position in the official sources below before acting.
Official references: