To strengthen financial supervision and promote tax compliance, Pakistan has introduced new regulations on bank cash withdrawal limits, effective from July 2025. These measures, implemented by the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP), aim to curb the informal economy, increase transparency, and broaden the tax base. This blog explores the latest updates, their implications, and how they affect individuals and businesses in Pakistan.
Background on Cash Withdrawal Regulations
Pakistan’s financial system has long suffered from a significant informal economy, where cash transactions are often undocumented. To address this, the government has periodically introduced measures such as withholding tax and withdrawal limits to encourage digital transactions and tax compliance. Recent amendments to the Finance Bill 2025 mark a significant step in this direction, building on existing policies to introduce stricter controls for non-filers and high-value transactions.
Key Updates on Annual Cash Withdrawal Limits
1. Annual Cash Withdrawal Cap for Ineligible Persons
A notable provision in the amended Finance Bill 2025 allows individuals classified as “ineligible” (generally non-filers or not included in the list of active taxpayers) to withdraw up to PKR 100 million annually from the banking system. This cap is designed to monitor large cash movements and ensure that high-value withdrawals are tracked for tax purposes.
2. Increased Withholding Tax for Non-Filers
For non-filers, cash withdrawals exceeding PKR 50,000 per day are subject to Withholding Tax (WHT). Starting July 1, 2025, the tax rate is set to rise from 0.6% to 0.8%. This applies to the entire amount withdrawn, not just the portion exceeding PKR 50,000. For example, a withdrawal of PKR 75,000 in a day will attract a tax of PKR 600 at the new rate. This move encourages people to register with the FBR and file tax returns to avoid higher deductions.
3. Daily Withdrawal Limits for Non-Filers
Non-filers now face a daily cash withdrawal limit of PKR 75,000 from banks and ATMs. The restriction is intended to discourage excessive use of cash and push people towards digital banking, which is easier to monitor. Filers, on the other hand, usually enjoy higher or no such limits, depending on their bank’s policies.
4. Bank-Specific ATM Withdrawal Limits
While the SBP does not impose a universal ATM withdrawal limit, individual banks set their own caps, which vary based on account type and card category. For instance:
- MCB Bank: Offers daily ATM withdrawal limits ranging from PKR 25,000 to PKR 50,000, depending on the card type.
- Bank Alfalah: Allows cardholders up to PKR 100,000 per transaction, with biometric options available for increased limits.
- SadaPay: Recently increased its daily ATM withdrawal limit to PKR 50,000 to meet customer demand. These limits ensure flexibility for customers while aligning with regulatory targets.
5. International Transaction Limits
Since November 2022, a yearly cap of USD 30,000 (or its PKR equivalent) has been set for card-based cross-border transactions across the industry. This restriction, implemented by the SBP, ensures that international spending is monitored and restricted to personal use. Non-compliance may lead to fines or administrative actions.
