Top Islamic Advisory Body Reverses ‘Un-Islamic’ Declaration on Withholding Tax

The Islamic Ideology Council (IIC), Pakistan’s top Islamic advisory body, has reversed its earlier decision declaring the withholding tax “un-Islamic” and will reconsider the matter in its next meeting.

IIC Chairman Allama Raghib Naeemi told media that the tax issue was the final item on the agenda during the recent meeting. He added that several members had left after food was served, which contributed to misunderstandings regarding the council’s stance.

“Allama Raghib Naeemi said that many members of the council were against withholding tax, and the staff taking notes misunderstood that it had been declared un-Islamic,” he explained.

The day before, the IIC had termed withholding tax un-Islamic, stating it amounted to oppression against the public. A press release, now withdrawn, indicated that under Chairman Allama Dr. Raghib Naeemi, the council had expressed strong reservations, criticizing the tax as unjust and contrary to Islamic principles and urging the government to reconsider its imposition.

The statement sparked debates across political, religious, and economic circles, with many considering it a significant declaration on citizens’ financial rights under Islamic law.

Earlier this year, the Federal Board of Revenue clarified reports about a 20.5 percent tax on cash transactions exceeding Rs200,000, stating that no such levy has been introduced. The confusion arose following an amendment in the Finance Bill 2025, which disallows 50 percent of claimed expenses for sales where payments above Rs200,000 are made in cash or outside banking/digital channels, as per invoice.

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