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Withdraw tax on widows and pensioners, Dar orders FBR

Updated October 20, 2017

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KARACHI:  A crowded National Savings Centre branch at Numaish Chowrangi. Due to limited number of branches, investors, mostly elderly, have to face great inconvenience during service of their requests.
KARACHI: A crowded National Savings Centre branch at Numaish Chowrangi. Due to limited number of branches, investors, mostly elderly, have to face great inconvenience during service of their requests.

ISLAMABAD: The government on Thursday decided to exempt profits of National Savings’ Pensioners Benefit Account (PBA) and Behbood Savings Certificates (BSC) from the levy of 10 per cent income tax.

PBA and BSC are two National Savings schemes which cater to pensioners and widows and are exempted from withholding tax.

Chairing a meeting to review the performance of National Savings Organisation, Finance Minister Ishaq Dar instructed the Federal Board of Revenue (FBR) to take appropriate measures to remove the anomaly in tax regime which resulted in taxation of yield on PBA and BSC.

The impact on taxation of these schemes was an unintended consequence of certain legal changes introduced in the Finance Act, Mr Dar told the meeting.

Presently, holders of BSC get 9.36 per cent rate of return per annum. On an investment of Rs100,000, the profit is Rs780 per month. This rate of profit has remained unchanged since October 2016.

According to available data, the rate of return which was 14pc from January 2014 to November 2014, with per month profit of Rs1,170 declined to 9.36pc to-date.

Director-General National Savings Zafar Masud briefed the meeting on the organisation’s performance during last one year. The briefing covered progress made in areas like financial inclusion through automation, introduction of new products and improving the customer service and outreach.

The meeting was informed that National Savings has emerged as a formidable vehicle for financial inclusion with introduction of popular welfare oriented products and registering a large number of customers of which more than 50pc were women.

After successful roll out of Rs40,000 Premium Prize Bond, the Rs100,000 denomination bond is on the cards. Launch of ‘Shuhada Families Welfare Account’ and extension of BSC to disabled persons is also on the cards. Moreover, the Overseas Pakistanis Savings Certificates and Sharia-compliant products are also being considered.

Mr Masud informed the meeting that for customer facilitation, SMS service, access through social media and revamping of the institution’s website has been carried out.

He said that a complaint resolution cell has been established at the director-general’s office which disposes of public complaints on daily basis.

Published in Dawn, October 20th, 2017