Commercial banks have reportedly started to raise the transaction fee for cash withdrawals from ATMs of other banks, which has been noticed in transactions made at commercial bank ATMs that are not of the account’s host bank.

 

According to reports, the per-transaction fee for withdrawals has skyrocketed from Rs23.44 to a hefty Rs35, resulting in customers facing a staggering 49.3 percent hike in transaction fees if they choose to withdraw their cash from ATMs of other banks.

 

As per reports, this change has been made across all banking institutions and is not limited to any particular commercial bank. Analysts have cautioned users from withdrawing cash from ATMs not provided by their banks as these charges are applicable on each withdrawal transaction.

 

Commercial banks reportedly end up retaining only a minor fraction of the fees when customers use ATMs of banks that they are not customers of. The majority of the revenue generated from the fees go to 1-Link – the service that connects ATMs of all member banks and financial institutions across Pakistan.

 

In other commercial banking related developments, the Senate Standing Committee on Finance recently approved a proposal to increase withholding tax on cash withdrawals to one percent for fiscal year (FY) 2025–26. According to reports, the hike, effective from July 1, will apply only to non-filers.

 

The move was recommended by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial, who suggested that the withholding tax should be revised upward from its previous rate of 0.6 percent.

 

In FY 2024-25, cash withdrawals made by non-filers, via debit and credit cards, exceeding Rs50,000 were also subject to a 0.6 percent withholding tax. The increase in the tax rate is now intended to boost the federal government’s revenues for FY 2025-26.

 

Reports indicate that withdrawals larger than Rs50,000 will result in tax deduction from the entire amount. Under a one percent withdrawal rate, withdrawals amounting to Rs75,000 in a single day will result in non-filers paying Rs750 to the federal government. Similarly, non-filers withdrawing Rs100,000 in a single day will have to face a tax of Rs1,000.