ISLAMABAD, June 10, 2025 – In its bid to expand the formal tax net and curb undocumented economic activity, the government today unveiled a raft of stringent measures targeting non-filers in the Federal Budget 2025–26.
Advance Tax on Cash Withdrawals
Finance Minister Muhammad Aurangzeb announced that the advance tax on cash withdrawals by non-filers will rise from 0.6% to 1%. “This increase is aimed at discouraging large cash transactions outside the tax system and incentivizing timely return filing,” the minister told the National Assembly.
Eliminating Filer vs. Non-Filer Privileges
Under the new proposals, the longstanding distinction between filers and non-filers in key financial activities will be removed. Henceforth, only individuals who submit tax returns and wealth statements will be permitted to:
- Purchase vehicles
- Acquire immovable property
- Invest in securities and mutual funds
“These restrictions are designed to ensure that all significant financial transactions pass through documented channels,” Aurangzeb explained.
Bank Account Restrictions
In perhaps the most far-reaching measure, non-filers will be barred from opening new bank accounts. Existing accounts held by non-filers may remain operational, but future account openings will require proof of tax filing compliance. The finance minister asserted this step would severely limit avenues for informal money flows.
Rationale and Impact
According to government estimates, these tougher regulations could bring millions of previously untaxed individuals into the fiscal system, boosting revenue collection and enhancing transparency. Officials believe that by tying everyday financial activities to tax-filing status, the measure will “compel citizens to join the formal economy,” thereby reducing evasion and broadening the revenue base.
Next Steps
The budget proposals will now go to parliamentary committees for review. If approved, the new tax rates and transaction restrictions will take effect at the start of the next fiscal year on July 1.