KARACHI - Minister of State for Revenue Hammad Azhar has agreed to do away with withholding tax on cash withdrawals for tax filers in the upcoming mini budget, the Karachi Chamber of Commerce and Industries (KCCI) said on Friday.

Referring to their meeting with Azhar in Islamabad, acting KCCI President Khurram Shahzad said the minister has agreed to abolish this tax in order to promote ease of doing business and enhance the number of bank deposits.

The KCCI delegation and Azhar discussed the former’s recommendations in detail and also briefed the minister about issues facing traders and industrialists. The minister assured them he would incorporate their suggestions in the Supplementary Finance Bill on January 23.

Under the current regime, filers — people who have filed their income tax returns — are subject to an advance tax of 0.3% on cash withdrawals exceeding Rs50,000. However, non-filers will continue to pay this tax on their bank transactions above the stated amount. This advance or withholding tax was enforced by the PML-N government and has remained in place since then.

The minister also agreed to withdraw sales tax and withholding tax on the sale of used or second hand capital goods (goods used to produce other goods) and textile machinery by manufacturers and local traders.

The KCCI says that all the proposals are in the overall interest of the economy and will help remove distortions in the tax regime, enhance ease of doing business and result in higher revenue for the government.