ISLAMABAD, June 30: The Central Board of Revenue on Thursday exempted the foreign currency accounts from the levy of 0.1 per cent withholding tax on cash withdrawals.

However, the CBR has requested all banking companies to immediately issue instructions to all their branches to start collection of tax under section 231A of the Income Tax Ordinance from July 1, 2005.

An official announcement said the banks should recover the amount of tax at the rate of 0.1 per cent on cash withdrawal of more than Rs25,000 from Pakistani rupee accounts.

The amount of tax shall be recovered from the person maintaining the account with a bank, by debiting the account from which the cash withdrawal of amount exceeding Rs25,000 was being made.

“The tax deducted shall be payable in the federal government account within seven days of such deductions. However, the person presenting the cheque or withdrawing the amount would be paid in full. Failure to comply with this legal obligation shall render the banks liable to be treated in default under section 161 of the Income Tax Ordinance, 2001,” added the announcement.