Withholding Tax on Cash Withdrawals Declared Un-Islamic

Pakistan’s Council of Islamic Ideology (CII) on Wednesday ruled that withholding tax on cash withdrawal and transfer is an “excess” and therefore “un-Islamic.”

Withholding tax (WHT) is an advance payment of tax deducted during specific economic activities under the Income Tax Ordinance, 2001, and the Sales Tax Act, 1990. In the case of cash transactions, banks automatically deduct the tax on behalf of account holders when money is withdrawn or transferred, depositing it with the government.

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In a press release issued after its 243rd meeting, the CII stated, “The council declared the withholding tax imposed on cash withdrawal or transfer to be an excess and therefore un-Islamic.”

The CII is a constitutional advisory body tasked with examining whether Pakistan’s laws align with Islamic principles. The meeting was chaired by CII Chairman Dr. Muhammad Raghib Hussain Naeemi and attended by other members.

The council also reviewed additional issues. On the use of insulin for diabetic patients, it noted that insulin made with halal ingredients should be used where available. If insulin contains pig-derived elements, it should be avoided unless no permissible alternative exists.

Separately, the council considered a request from the Ministry of Religious Affairs and agreed to prepare a ringtone reminding citizens to respect flags, banners, and buntings with sacred inscriptions during Rabi Al-Awwal.