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September 30, 2015

Withholding tax, another bane for NSO savers


September 30, 2015

LAHORE: The joint account holders of National Saving Organisation (NSO) are being asked by the NSO staff to provide NTN numbers of each member to avoid withholding tax from their savings returns. If declining profit margins were not worrisome enough, this demand by unaware staff was further increasing the hardships of NSO savers.
Several of the staff members of the branches are not even fully aware of the fact that the FBR allows any one of the joint account holder to be a tax filer. Besides, they are also facing problems due to the delay in update on Federal Board of Revenue’s (FBR) website for online verification.
According to a FBR circular No 2 of 2014 on Income Tax issued on July 17 2014, joint account holders as an entity shall be treated as filer if at least one person in the joint account is a filer.
However, majority of the NSO staff at different centres located in Lahore are completely unaware about this circular. They are asking the savers to provide the evidence of NTN return filing to avoid withholding tax from their profits. When the aware savers argued about illegal tax deduction, they said that the FBR issued instructions to deduct the withholding tax without investigating the matter.
An official of the NSO said that the complaints were received. He accepted that it was due to unawareness on part of some employees in some branches. However, the branches were being updated on the matter.
In NSO, a majority of elderly people own saving accounts that are jointly operated with their spouse, aged parents or children. People invest their entire life earnings in NSO to earn a source of livelihood, and mostly need a younger person to operate it due to their limited physical activity. Therefore, deduction of withholding taxes is perturbing them.
Except last month, when the NSO slightly increased the profit rate on different saving certificates, it was on decline during more than one and half year due to continuous reduction in

mark-up rate by the State Bank of Pakistan.
Abdul Rasheed, a 68-year-old saver, whose son is authorised to operate the account, said that the savers’ amount was already declared with the government. He asked why the government was adding an additional tax on them.
He said that the government should exempt the savings accounts with the NSO from withholding tax. He said aged people can’t file tax returns.

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