Cash Withdrawal Tax (Section 231AB)
Bank deduction on cash withdrawals.
Cash Withdrawal Tax Calculator (Section 231AB) in Pakistan
Withdrawing cash from a bank account may seem like a routine transaction, but certain cash withdrawals can be subject to advance tax under Pakistan's Income Tax Ordinance, 2001. Section 231AB specifically deals with advance tax on cash withdrawals by persons whose names are not appearing on the Active Taxpayers List (ATL).
Our Cash Withdrawal Tax Calculator helps you estimate the tax that may be deducted when your total cash withdrawals from a bank exceed the applicable daily threshold. It can be useful for individuals and businesses that regularly withdraw larger amounts of cash.
Under the current rules, a banking company is required to deduct advance adjustable tax from a person who is not appearing on the Active Taxpayers List when the aggregate cash withdrawals in a single day exceed PKR 50,000. The rate was increased from 0.6% to 0.8% through Finance Act 2025. :contentReference[oaicite:1]{index=1}
What Is Section 231AB?
Section 231AB of the Income Tax Ordinance, 2001 deals with advance tax on cash withdrawal. The provision applies to certain cash withdrawals made by persons whose names are not appearing in the Active Taxpayers List.
The tax is collected by the banking company when the applicable conditions are met. FBR classifies this amount as advance adjustable tax, meaning it is not simply a separate bank fee. :contentReference[oaicite:2]{index=2}
What Is the Current Cash Withdrawal Tax Rate?
For the current tax framework, the cash withdrawal tax under Section 231AB is 0.8% for a person whose name is not appearing in the Active Taxpayers List, when the aggregate cash withdrawals exceed the applicable daily threshold.
Finance Act 2025 increased the rate from the previous 0.6% to 0.8%. FBR's explanatory circular confirms this change. :contentReference[oaicite:3]{index=3}
Because tax rates can change through future Finance Acts, it is important to select the correct tax year when using an online calculator.
What Is the PKR 50,000 Daily Threshold?
The threshold is based on the aggregate cash withdrawals in a single day. It is not necessarily calculated separately for every individual withdrawal.
For example, if a person makes several cash withdrawals from the bank during the same day, those withdrawals can be aggregated for determining whether the PKR 50,000 threshold has been exceeded.
This point is specifically explained in Section 231AB, which states that the PKR 50,000 amount refers to aggregate cash withdrawals in a single day. :contentReference[oaicite:4]{index=4}
Example of Cash Withdrawal Tax Calculation
Suppose a non-ATL person withdraws PKR 100,000 in cash in a single day.
If the applicable rate is 0.8%, the estimated tax would be:
PKR 100,000 × 0.8% = PKR 800
The bank would deduct the applicable amount according to the prevailing tax rules.
This example is intended to explain the calculation method. The actual amount deducted by the bank should always be checked against the applicable tax year and transaction record.
What If I Withdraw PKR 50,000 or Less?
Section 231AB applies when the aggregate cash withdrawals in a single day exceed the specified threshold. Therefore, a person should not automatically assume that every cash withdrawal is subject to this tax.
The daily aggregate is important. If several withdrawals are made on the same day, the total amount may be considered when determining whether the threshold has been crossed.
Does the Tax Apply to ATL Taxpayers?
Section 231AB specifically targets a person whose name is not appearing in the Active Taxpayers List.
Being on the ATL provides taxpayers with various benefits, including lower rates of tax deduction at source on certain transactions. FBR specifically lists lower tax deduction on cash withdrawals among the benefits of being on the ATL. :contentReference[oaicite:5]{index=5}
If you are unsure about your ATL status, check your current status through the official FBR system before estimating your tax.
What Is an Active Taxpayer?
An Active Taxpayer is a person whose name appears on the Federal Board of Revenue's Active Taxpayers List.
ATL status can affect several withholding tax rates in Pakistan. For cash withdrawals, Section 231AB specifically concerns persons whose names are not appearing on the ATL.
Is Cash Withdrawal Tax a Bank Fee?
No. Cash withdrawal tax under Section 231AB should not be confused with a bank's service charges or ATM fees.
A bank may have its own charges for certain services, while the amount collected under Section 231AB is tax collected under the Income Tax Ordinance.
Your bank statement may therefore show separate amounts for banking charges and applicable tax deductions.
Is Section 231AB Tax Adjustable?
Yes. The tax under Section 231AB is described as advance adjustable tax.
This means that, subject to the applicable tax rules, the amount deducted can be relevant when determining the taxpayer's overall income tax position.
Taxpayers should keep bank statements and tax deduction records so that any tax already collected can be properly accounted for when preparing their tax return.
How Does the Cash Withdrawal Tax Calculator Work?
The calculator is designed to make the calculation easier. Depending on the fields available, you may need to enter:
- Total cash withdrawn during the day
- Taxpayer or ATL status
- Applicable tax year
- Any other information requested by the calculator
After entering the required information, the calculator can estimate the amount of advance tax that may be deducted.
How to Calculate Cash Withdrawal Tax
A simple calculation can be represented as:
Cash Withdrawal Tax = Applicable Cash Withdrawal Amount × Applicable Tax Rate
For a qualifying non-ATL cash withdrawal under the current 0.8% rate, a withdrawal of PKR 200,000 would produce a basic estimate of:
PKR 200,000 × 0.8% = PKR 1,600
The calculator should always use the threshold and rate applicable to the selected tax year.
Multiple Cash Withdrawals on the Same Day
Multiple withdrawals during one day are an important consideration under Section 231AB.
For example, suppose a person withdraws:
- PKR 30,000 in the morning
- PKR 25,000 in the afternoon
- PKR 20,000 in the evening
The total cash withdrawn during the day would be PKR 75,000. Since the law refers to aggregate cash withdrawals in a single day, the daily total is important when determining whether the threshold has been exceeded. :contentReference[oaicite:6]{index=6}
Does the Rule Apply to ATM Withdrawals?
Cash withdrawals through banking channels can be subject to the applicable tax rules when the conditions of Section 231AB are met. The exact treatment should be determined from the current law and the bank's transaction records.
If you regularly withdraw large amounts through ATMs or other banking channels, keep your transaction history so that you can verify the total amount withdrawn during the day.
Why Keep Cash Withdrawal Records?
Keeping accurate banking records is useful when checking how much tax has been deducted from your account.
You should keep bank statements, transaction receipts and tax deduction information where available. These records can also help when preparing your income tax return.
Common Cash Withdrawal Tax Mistakes
People often make mistakes when estimating cash withdrawal tax. Common mistakes include:
- Using the old 0.6% rate instead of the current rate.
- Ignoring the PKR 50,000 daily threshold.
- Looking at only one withdrawal instead of the aggregate daily withdrawals.
- Selecting the wrong ATL status.
- Confusing tax with bank service charges.
- Using an outdated tax calculator.
- Failing to keep bank statements and deduction records.
Why Use a Cash Withdrawal Tax Calculator?
Calculating tax manually can become confusing when you have several cash withdrawals during the same day. An online calculator can give you a quick estimate and help you understand the possible tax deduction before making a large withdrawal.
It can help you:
- Estimate tax on qualifying cash withdrawals.
- Understand the daily withdrawal threshold.
- Calculate tax using the applicable rate.
- Compare different withdrawal amounts.
- Understand the effect of ATL status.
- Plan larger cash transactions more effectively.
Can the Cash Withdrawal Tax Rate Change?
Yes. Pakistan's withholding tax rates can be changed through Finance Acts and other amendments.
For example, the rate under Section 231AB was increased from 0.6% to 0.8% through Finance Act 2025. FBR's current rate card identifies Section 231AB as advance tax on cash withdrawal and lists the applicable non-ATL rate. :contentReference[oaicite:7]{index=7}
Therefore, an online calculator should be updated whenever the applicable tax law changes.
Final Thoughts
Cash withdrawal tax under Section 231AB is an important consideration for taxpayers who are not appearing on the Active Taxpayers List and withdraw larger amounts of cash from their bank accounts.
Under the current rules, the relevant threshold is based on aggregate cash withdrawals exceeding PKR 50,000 in a single day, and the rate was increased to 0.8% through Finance Act 2025. :contentReference[oaicite:8]{index=8}
Our Cash Withdrawal Tax Calculator makes it easier to estimate the possible deduction based on your withdrawal amount and taxpayer status. Always use the correct tax year and verify the final deduction against your bank statement and the latest FBR rules.