FATA Residents Stumble in Bid to Avoid Withholding Tax on Savings

Residents of the former Federally Administered Tribal Areas (FATA) face disappointment as their attempt to avoid withholding tax on National Savings Centre (NSC) certificates hits a snag. Their argument, based on the pre-amendment status of the Income Tax Ordinance in FATA, was rejected by the tax department.

Here’s why:

FBR’s Argument:

  • NSC schemes are considered “government-security” under the 2001 Ordinance.
  • Income from these schemes accrues in Pakistan, making it subject to withholding tax.
  • Duty of NSC: The Directorate, not individual centers, manages the funds and earns income. Centers merely facilitate public access and pay out profits.

Residents’ Plea:

  • Withholding tax on NSC certificates was deemed illegal due to the pre-amendment tax laws in FATA.


  • Tax department prevails, upholding the applicability of withholding tax.
  • FATA residents need to comply with the existing tax regulations on NSC investments.


  • This sets a precedent for taxation of similar schemes in FATA.
  • Residents seeking tax exemption on NSC investments need to explore alternative strategies.

Leave a Reply

Your email address will not be published. Required fields are marked *