Depositors in National Saving Schemes (NSS) termed imposition of higher rate of withholding tax on non-filers (at 17.5 percent) effective from the current budget as highway robbery, an anecdotal survey carried out by Business Recorder revealed. The government in budget 2015-16 imposed withholding tax on non-filers with savings of Rs 5 lakh or above at 17.5 percent from the 10 percent on filers and non-filers alike that has been levied since more than decade. The only exemption from the tax is on Behbood Account which is for those above the age of superannuation.
In spite of assurances to the contrary the government's decision to impose withholding tax with effect July 1, 2013 on savings banked in NSS schemes by non-filers in excess of 5 lakhs has been deplored by the depositors. "This is breach of confidence in government assurances," one pensioner told this correspondent. "People investing in NSS are not organised compared to other groups like All Pakistan Textile Mills Association, Flour Mills Association, trader bodies, cement, fertiliser and other industrial sectors so imposing a tax on us is not too difficult. What can we do other than protest at the branch we go to collect our profit?" said Abdullah Khan who has invested Rs 0.5 million in National Savings Scheme.
Another depositor Raja Meharban, a retired government employee, said that the withholding tax as well as reduction in NSS profit rates had hit him hard as the profit from those schemes was his main source of income. Many who bank in NSS are not liable to file returns, yet now have to pay higher rates of withholding tax due to their treatment as non-filers.
An official of the NSS at National saving Directorate said that the amount mobilised in November 2014 under the NSS was Rs 90.3 billion which fell to Rs 22.5 billion in December 2014 and reached the lowest level of Rs 8.4 billion in April 2015. He added that measures such as imposing a 17.5 percent tax discourage people: "savings are must for investment, and the government must revisit its decision," he said On October 1, 2015 the government slashed the rates of return on various National Savings Schemes by up to 68 basis points in the wake of falling inflation and resultant declining interest rates.