Withholding tax now mandatory on salaries of government employees

Government officials and employees whose salaries exceed specified thresholds are now required to have income tax deducted at source from their monthly wages. The Comptroller and Auditor General’s (CAG) office issued the directive on Monday, 10 November.

According to a letter from the CAG’s Additional Accounts and Procedures Division, under the Income Tax Act 2023, male government employees earning a basic monthly salary of ₨26,785 or more, and female employees earning ₨30,357 or more, exceed the tax-free income limit. Consequently, income tax must be deducted at source when preparing salary bills.

The letter also notes that responsibility for deducting income tax and other statutory deductions from the salaries of government employees rests with the authorised disbursing officer, in accordance with Treasury Rules SR-125.

All Chief Accounts and Finance Officers, divisional and district accounts controllers, and Upazila accounts officers across the country have been instructed to implement the necessary measures.

The directive has been forwarded to the Ministry of Finance through the Secretary, with special attention drawn to the Joint Secretary working under Budget-1.

This directive follows a prior letter issued on 7 October by the Internal Resources Division and the National Board of Revenue (NBR), which provided explicit instructions regarding the deduction of tax at source from government salaries.