Bank Transactions
ISLAMABAD: Starting July 1, the federal government has initiated the collection of taxes on all types of bank transactions, applying the new tax regime to both filers and non-filers. This move is part of broader efforts to enhance revenue collection, but it has also triggered widespread public concern and discontent.
Under the revised policy, individuals who are tax filers will now face a 0.3% withholding tax on daily cash withdrawals exceeding Rs50,000. In contrast, non-filers are subject to a significantly higher rate of 0.6% for the same transactions.
The tax deductions will be applied automatically to any qualifying transaction above the specified threshold. This measure is aimed at encouraging more people to join the tax net, yet it imposes a financial burden on ordinary bank users.
Alongside the taxation changes, banks across the country have updated their schedules of charges, further intensifying the financial pressure on customers. The ATM usage fee for using a machine operated by another bank has been increased from Rs18 to Rs34 per transaction.
Similarly, the annual fee for ATM cards has gone up by Rs700, and the SMS alert service, once priced at Rs1,200 per year, will now cost Rs2,000—an increase of Rs800.
Additionally, non-filers will incur a deduction of Rs522 for cash withdrawals of Rs20,000 or more made via cheque. Withdrawal limits have also been adjusted based on card type.
Standard debit card holders can withdraw between Rs25,000 and Rs50,000 per day, while premium card users may withdraw up to Rs500,000 daily. Holders of foreign debit cards are allowed to withdraw the equivalent of $200 to $500 per day, with applicable deductions based on the updated taxation rules.
Banks have also revised their policies on international ATM transactions, which will now include either fixed charges or currency conversion-based fees, depending on the bank’s terms.
These increased taxes and service charges have led to a surge in customer complaints and growing tension at bank branches.
Frustrated customers have reportedly clashed with staff, voicing concerns about the lack of communication and rising costs of routine banking services. In response, several banks have reached out to 1Link, the interbank network, seeking a review and potential revision of the current charges.
Critics argue that the new tax regime and associated fees could discourage digital banking and promote a return to cash-based transactions, undermining financial inclusion and digital payment efforts.
Bankers also fear that this policy shift could reduce transaction volumes and overall customer trust. The full impact of these changes on the banking ecosystem and consumer behavior will likely become clearer in the coming weeks.
