WHT regime: Finance Bill will introduce major changes

ISLAMABAD: Finance Bill (2025-26) will introduce major changes in withholding tax regime in budget (2025-26) to generate additional revenue.

According to sources, the difference of withholding taxes between filers and non-filers would be further widened from next fiscal year. The heavy reliance on withholding taxes would continue in the next fiscal year. The withholding taxes (collected in sales tax mode) constitute over 70 percent of the direct taxes collection.

One of the proposals under consideration is to raise tax rate on interest income.

Cash withdrawals from banks: FBR proposes raise in WHT for non-filers

The Federal Board of Revenue (FBR) has proposed to raise withholding tax on cash withdrawal from the banks by non-filers from 0.6 percent to 1 to 1.2 percent.

Another proposal is to impose 1.5 percent withholding tax on the value of imports. The rates of Withholding Tax on immovable properties are expected to be rationalized in the upcoming budget (2025-26) to facilitate buyers and sellers of real estate sector from July 1 2025.

Other proposals under consideration included raise in withholding tax on supplies, services and contracts.

Copyright Business Recorder, 2025