FEDERAL Board of Revenue has slapped a uniform WHT (withholding tax) of 15% on filers and 30% on non-filers for profit on National Saving Certificates, which will not serve any purpose but further lead to decline in savings — rate of which is already very low in our country when compared to other regional countries.
Previously, WHT rate was 10% for profit up to Rs 500,000 for filers and 20% for non-filers and this upward revision indeed would further discourage people from investing in different instruments of National Saving Schemes (NSS).
According to an official estimate, investments in the NSS have already been declining with Central Directorate of National Savings (CDNS) recording Rs 86 billion outflows during nine months of last fiscal year as opposed to a net inflow of Rs 258 billion in the corresponding period a year earlier.
In this backdrop, we will suggest the government to reverse its decision and restore the old rate of WHT on saving schemes.
National savings are critically important to help maintain a higher level of investment that is a key determinant for economic uplift and growth.
Hence, instead of taking steps that discourage people from making investments in the NSS, government must offer higher returns as well as extend other facilitation to encourage savings.
The CDNS is also a department that has been neglected for long and there is a dire need to revamp it as per modern day requirements.
By spreading its network to small towns and cities, government can easily promote not only savings but also achieve the target of financial inclusions.
Then most importantly, there is a need to fully automate the CDNS on the pattern of banks enabling customers to take out returns/profits from ATMs instead of standing in long queues.
