The federal government of Pakistan has introduced a new tax on bank transaction, effective from July 1, 2025. These changes are part of a broader effort to expand the tax base and reduce reliance on cash-based transactions. However, the decision has sparked public concern due to its wide-ranging impact on everyday banking.
Withholding Tax on Cash Withdrawals
Under the new policy, withholding tax is now applicable to daily cash withdrawals from bank accounts.
- Filers: A 0.3% tax is applied to daily withdrawals exceeding Rs. 50,000.
- Non-filers: The tax is 0.6%, effectively double the rate for filers.
Additionally, cheque-based cash withdrawals above Rs. 20,000 by non-filers will incur a surcharge of Rs. 522. This move targets those operating largely in cash without contributing to the formal tax system.
Hike in ATM Fees and Banking Charges
Banks have also raised service charges related to ATM use and banking notifications:
- ATM fee for interbank withdrawals: Increased from Rs. 18 to Rs. 34 per transaction.
- Debit card issuance/renewal: Now costs Rs. 700.
- SMS banking alerts: Raised from Rs. 1,200 to Rs. 2,000 annually.
These additional costs are expected to burden everyday users who rely on digital banking services for convenience.
New Withdrawal Limits Introduced
To further monitor financial activity, banks have set new withdrawal limits:
- Standard debit cards: Rs. 25,000–Rs. 50,000 per day.
- Premium debit cards: Up to Rs. 500,000.
- Foreign debit cards: $200–$500/day (or equivalent in PKR).
Users withdrawing from international ATMs will also face separate conversion fees and possible flat-rate charges.
Read Also: Petrol Nears Rs. 270 Per Liter as Govt Hikes Prices Again
Banks Respond to New Policies
According to reports, commercial banks have approached 1LINK to review the increased ATM service charges. However, 1LINK clarified that it only collects Rs. 28 per interbank ATM transaction and retains a Rs. 7 share, passing the rest to the bank servicing the ATM.
These tax policies reflect the government’s aggressive push to formalize the economy, but they also risk discouraging digital banking adoption due to rising transaction costs.
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