Law: Income Tax Ordinance, 1979

Section: Second Schedule,Part-I,Cl.77C

Law: Income Tax Ordinance, 2001

Section: 151,159,239(14)

Income Tax Ordinance (XXXI of 1979)----Second Schedule, Part-I, Cl. 77-C [as amended vide S.R.O.1135(I)/91, dated 7-11-1991 & S.R.O. 1012(I)/99, dated 3-9-1999], C1.77-C(a) [as inserted by S.R.O. 1343(I)/99, dated 16-12-1999] & C1.78-E---Income Tax Ordinance (XLIX of 2001), Ss.151, 159 & 239 (14) [as amended by Finance Act (I of 2003)] & Second Sched. Part-I, C1.(83)---S.R.O. No.100(I)/93, dated 2-2-1993---Profit/interest accrued on National Saving Schemes---Investment made in such Schemes on or before 1st July, 2001---Deduction of income tax from such profit/ interest---Validity---Such profit would 'enjoy continuous exemption from levy of income tax under Income Tax Ordinance, 1979 and Income Tax Ordinance, 2001---Such exemption would be available in case of "Mahana Amdani Account", where monthly instalment does not exceed Rs. 1000---Any person paying such profit/interest would not be obliged to deduct tax at source nor recipient thereof would be required to produce exemption certificate under S. 159 of Income Tax Ordinance, 2001---Principles. THIS JUDGMENT DELIVERED BY: NASIM SIKANDAR, JUSTICE--------------- By this judgment I intend to dispose of Constitutional Petitions Nos. 1803, 5511, 5486, 6483 and 4993 of 2004. 2. The petitioners have invested in various schemes of the National Savings Organization. They are aggrieved of deduction of withholding tax from the profits paid under these schemes at the rate of 10% with reference to rule 9 of Finance Division Notification S.R.O. 100(I)/93 dated 2nd February, 1993. It appears that earlier some of them approached the Organization against the said deduction without any success. 3. According to the petitioners the profit/interest accrued on National Savings Schemes has all along been exempt from levy of income tax. Therefore, the Organization could not deduct withholding tax with reference to the aforesaid S.R.O. which is patently against the' statutory exemptions granted to these schemes. Learned counsel for the petitioners while tracing the history of exemption from levy of income tax on the yield of National Savings Schemes and Certificates states that on the enforcement of Income Tax…

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