ISLAMABAD: The Council of Islamic Ideology (CII) reversed its earlier position on the controversial withholding tax (WHT) imposed on cash withdrawals and transfers, admitting on Wednesday that no final decision had been made.
In an official statement issued following a meeting chaired by CII Chairman Dr Muhammad Raghib Hussain Naeemi, the council had initially called the withholding tax “excessive and un-Islamic.”
However, in a surprising turn of events, the council retracted its statement within hours, clarifying that it had not yet reached a conclusive stance on the matter, raising further confusion.
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The withholding tax (WHT) is an advance income tax deducted automatically by banks when individuals withdraw or transfer funds.
The tax is then deposited with the government on behalf of the account holder as per the Income Tax Ordinance, 2001, and the Sales Tax Act, 1990.
Reports suggest that the CII’s abrupt change of position may have been influenced by external pressure from influential economic stakeholders, prompting questions about the council’s independence in policy matters.
Economic experts argue that the decision may have been more ideologically motivated than driven by financial realities, particularly as the country struggles with an ongoing fiscal crisis.
The reversal follows a series of controversial actions by the CII, including its rejection of amendments to the Diyat (blood money) law and its opposition to a Supreme Court ruling that affirmed a divorced woman’s right to maintenance, regardless of consummation.
Critics argue that these stances show the CII’s growing influence over both legal and social policies, despite its non-binding advisory role.
While the CII’s recommendations are not legally binding, its influence over national policies remains significant. As its latest reversal on the withholding tax indicates, many question whether the council’s ideological direction is aligned with the country’s economic needs.
Copyright Business Recorder, 2025
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