ISLAMABAD, May 6: The federal government is likely to reduce the limit of withholding tax exemption on incomes from National Savings and Post Office Savings schemes from the next financial year.

Informed sources told Dawn that a decision to this effect was expected in the finance bill 2002.

The IMF has asked the government to reduce the withholding tax exemption limit on these savings schemes.

This is one of the IMF’s conditionalities for releasing the next tranche of the Poverty Reduction and Growth Facility (PRGF) loan.

Explaining further, the officials said that the investment made in such schemes and the profit gained through these schemes would be taxed at a rate of 10 per cent.

It would be very difficult for the government to fulfil its commitment made with the IMF to implement the decision in letter and in spirit, the sources said. It was the part to the Letter of Intent so the government had been left with no option but to reduce the exemption limit from the next fiscal, the sources said.

The National Savings Scheme mostly included Defence Savings Certificates, Special Savings Certificates, Savings accounts or Post Office Savings accounts.