Islamic Council Takes U-Turn on Declaring Withholding Tax Un-Islamic

The Council of Islamic Ideology (CII) has issued a formal clarification stating that no final decision has been made regarding the religious status of withholding tax on money withdrawals or transfers. The clarification, released from the Chairman’s Desk after the Council’s latest meeting, addresses recent reports and speculation about the Council’s stance on the matter. According to the official statement, while some members of the Council shared their views on the withholding tax during the meeting, there was no consensus or formal ruling. The Council stated that the issue remains under discussion and will be taken up again in the next meeting, where further expert opinions and additional information will be sought before any decision is made. The clarification comes amid heightened public and media interest after reports emerged that the CII had declared the withholding tax on money withdrawals or transfers as unjust and un-Islamic. In its 243rd meeting held on September 24, 2025, the Council reportedly emphasized the need for legislative action to address the issue, stating that such taxes place an undue burden on citizens and are inconsistent with Shariah principles. In response to these reports, sources told ProPakistani that the Federal Board of Revenue (FBR) has decided to challenge the Council’s ruling in the Supreme Court of Pakistan. The FBR maintains that the withholding tax is a key part of the government’s revenue framework and documentation efforts, and is seeking clarity on the constitutional and legal status of the Council’s opinion. With the CII now clarifying that no final decision has been made, the debate over the religious and legal status of withholding tax on money withdrawals or transfers remains unresolved. The Council is expected to revisit the issue in its next meeting after further consultation and expert input.