New Bank Transaction Taxes: Here’s How Much You’ll Now Pay on Cash Withdrawals

The federal government has rolled out a revised tax regime on bank transactions, which came into effect on July 1. The new measures impact both tax filers and non-filers, introducing additional costs for cash withdrawals and banking services.

Withholding Tax Rates Increased

As per the new policy, tax filers will now face a 0.3% withholding tax on daily cash withdrawals exceeding Rs50,000, while non-filers will be charged at an even higher rate of 0.6%.

“Any daily withdrawal exceeding Rs50,000 will automatically be subject to withholding tax.”

Non-Filers Face More Deductions

Non-filers withdrawing Rs20,000 or more via cheque will now have Rs522 deducted from the transaction amount.

Banking Service Charges Also Raised

In addition to the tax changes, banks have significantly increased fees for various services:

• ATM transaction fee (for using other banks’ ATMs) raised from Rs18 to Rs34
• ATM card issuance/renewal now costs Rs700 more
• SMS alert services increased from Rs1,200 to Rs2,000 annually

ATM Withdrawal Limits Introduced

Banks have also enforced new daily withdrawal limits:

• Standard debit card holders: Rs25,000–Rs50,000
• Premium card holders: Up to Rs500,000
• International cardholders: Equivalent of $200–$500

Fees on International Transactions

Banks will now apply charges on international ATM withdrawals, either as a fixed amount or calculated based on the current exchange rate.

These new rules and charges are part of the government’s effort to increase tax collection and promote digital banking. However, they also pose a greater financial burden on regular customers.