The Senate Standing Committee on Finance on Wednesday approved a proposal to increase the withholding tax on cash withdrawals by non-filers to 1 percent in the upcoming fiscal year, following a recommendation by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial.

The new rate is higher than the previously proposed 0.8 percent and the current 0.6 percent rate.

During the meeting, the FBR also proposed stringent financial restrictions on non-filers to be included in the Finance Bill 2025. These measures include bans on purchasing and registering property or vehicles beyond specified limits and restrictions on operating bank accounts.

The FBR suggested replacing the existing filer and non-filer classification with new categories: “eligible” and “ineligible” persons. Ineligible individuals—those who do not file tax returns—would be barred from purchasing or registering vehicles, buying property exceeding Rs. 130 million, investing in securities, and operating regular bank accounts, which would be limited to Aasan or pension accounts. However, purchases of motorcycles, rickshaws, and tractors would be exempted.

The committee also approved raising the property purchase limit for non-filers from 130 percent of declared assets to 500 percent. Senator Mohsin Aziz supported the increase, stating that a person with Rs. 10 million in declared assets should be allowed to buy property worth up to Rs. 50 million.

Finance Minister Muhammad Aurangzeb stressed the importance of restoring public trust in the tax system, noting that Pakistan is unique in maintaining the concept of “non-filers.” He highlighted that penalties on non-filers were increased last year and that efforts to broaden the tax net are ongoing.

Some committee members expressed concerns over the severity of the restrictions being imposed on non-filers.