The IMF recommendation to the government of Pakistan to withdraw the 0.2 percent withholding tax on cash drawings from banks exceeding Rs 25,000, being not conducive to banking sector deposit growth and hurting its liquidity system, has been hailed by the Towel Manufacturers' Association of Pakistan (TMA).
In a statement to the press issued here on Wednesday, the TMA said the account holders of banks are normally persons who pay taxes to the government in the shape of income tax as well as double taxation in the nature of deduction on cash drawings of over Rs 25,000 which is absolutely baseless.
Collection of tax in this way has not resulted yet in improvement of the country's economy; rather its negative impact has been witnessed as government sector deposits with banks have been reduced considerably. On the other hand, the government has slashed down national savings schemes depositors' returns that are mostly from middle and lower class segment of society.
Apart from all this, there is a big difference in the rate of return offered by banks to their customers, whereas banks lend money unjustifiably on higher rates to private sector. On the basis of these facts, TMA has urged the government to offer better returns to the depositors on their savings, which would improve savings habit among masses having better impact on country's cash flow and economic activities.-PR
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