Can I record withholding tax deducted on cash withdrawals?

Hi there, @faiza.manzoor.

You can use a credit memo to charge off the withholding tax as an expense. Let me show you how.

To start, create an expense account to track the transaction. Here's how: 

1. From the Gear menu, select Chart of Accounts.
2. Select New.
3. From the Account Type drop-down, select Other Expense.
4. Click the Detail Type drop-down, then select Other Miscellaneous Expense.
5. Enter the name of the account (Ex. Withholding Tax Expense), then hit Save and Close.

After that, refer to the following steps to set up a withholding tax expense item: 

1.  Select the Gear menu and click Products and Services.
2. Select New, then choose Service.
3. Enter the name of the item, like Withholding Tax.
4. From the Income account drop-down, select the withholding tax expense account that you’ve just created.
5. Hit Save and close.

Once done, create and apply the credit on the right invoice.

For additional reference, I've attached some articles you can use to record customer's refund, as well as credit card refunds: 

• Post a customer refund 

• Refund a credit card payment

Feel free to leave a comment below if you have additional questions. I'll be happy to help you some more.