The Council of Islamic Ideology (CII) has termed the withholding tax on cash withdrawals and transfers as unjust and un-Islamic, urging lawmakers to take corrective action.
In the 2025–26 federal budget, the government reintroduced a withholding tax (WHT) on cash withdrawals exceeding a certain limit from banks. The move was aimed at increasing tax revenues and encouraging digital transactions. However, it sparked criticism from traders and religious circles who argued it unfairly burdens citizens who rely on cash.
At its 243rd meeting, the CII declared the WHT policy contrary to Islamic principles, stressing that taxing mere withdrawal or transfer of one’s own lawful money is against justice. The council recommended that parliament reconsider the decision and align financial policies with Shariah compliance.
The ruling could intensify the debate between the government’s revenue goals and the religious establishment’s stance on financial fairness. Questions now arise: Will the government amend the tax law to address CII’s concerns? Or will revenue needs outweigh religious objections?