CIRCULAR NO 12 OF 2004

(Income Tax)

Subject: EXEMPTING “PROFIT ON DEBT” ON BEHBOOD SAVINGS CERTIFICATES AND PENSIONERS BENEFIT ACCOUNTS FROM WITHHOLDING TAX

The “yield” or “profit on debt” arising on investment in the Behbood Savings Certificates or Pensioner’s Benefit Account was liable to withholding tax at the rate of 10% of the amount of yield or profit which was adjustable against final tax liability of the concerned person. In order to relieve the senior citizens, pensioners & widows from the inconvenience of obtaining the refunds of tax so deducted, a new clause (36A) has been inserted in Part IV of Second Schedule to the Income Tax Ordinance, 2001 through Finance Act, 2004 to exempt profit or yield of Pensioner’s Benefit Account or Behbood Savings Certificate from deduction of withholding tax with effect from July 01, 2004. This facility would be applicable to “yield” or “profit” arising on new as well as existing investments in both of these schemes on or after July 01, 2004. However, income arising from Behbood Saving Certificates and Pensioner’s Benefit Accounts shall be required to be declared in the return of total income by the concerned persons. The tax, if any, payable thereon would be paid as per normal tax rates along with the return of total income.

Muhammad Ashfaq Ahmed

Secretary (WHT)