There was a lot of restlessness among the pensioners, widows and small savers when the government decided to reduce the profit on government saving instruments sold under various schemes by the National Savings Organisation.
In order to allay the complaint that profit has been reduced by more than four percent, Federal Finance Minister Shaukat Aziz, last year launched a special scheme for weaker segment of society known as Bahbood Certificate/Accounts; it gives 1.5 percent more then is earned by individuals on Defence Saving Certificates or Special Savings Accounts.
The corrective action by Shaukat Aziz in Budget 2004-05, for the benefit senior citizens, widows and pensioners, involves three actions. (a) Investment in Bahbood Certificates/Accounts has a new maximum limit of Rs 2 million (it was Rs 1 million before); (b) The withholding tax of 10 percent in these certificates and accounts have been abolished; and (c) the limit to avail the full limit in one go has been done away with.
In addition to lowering the tax on their savings, the Budget 2004-05 permits senior citizens of age 65 years and above to avail 50 percent concessions on their tax liability upto a limit of Rs 300,000. Previously, the limit was Rs 200,000.