ISLAMABAD: The Central Directorate of National Savings (CDNS) has announced a revision in the profit rates for Short Term Savings Certificates (STSCs), which will take effect from March 2025. This adjustment is part of the government’s broader financial strategy to align investment returns with prevailing economic conditions.
The federal government introduced Short Term Savings Certificates in 2012 to address the short-term funding needs of individual and institutional investors. These certificates are designed to offer flexible investment opportunities with maturity periods of three months, six months, and one year.
One of the key advantages of STSCs is their accessibility. Both Pakistani nationals and Overseas Pakistanis can invest in these certificates, making them a convenient option for a wide range of investors. The minimum investment amount for these certificates is Rs10,000, with no upper limit, allowing both small-scale and large-scale investors to participate. Moreover, investors have the option to pledge their Short Term Savings Certificates as collateral for securing loans, adding to their financial utility.
Revised Profit Rates for March 2025
Under the updated structure, the profit rates for Short Term Savings Certificates have been revised as follows:
- Three-Month Maturity Certificate: The new profit rate stands at 11.12 percent, meaning that an investment of Rs100,000 will yield Rs2,780 upon maturity. This reflects a slight increase compared to the previous rate of 11.08 percent.
- Six-Month Maturity Certificate: The profit rate remains unchanged at 11.08 percent, generating a return of Rs5,540 for every Rs100,000 invested.
- One-Year Maturity Certificate: Investors opting for a one-year term will now receive Rs10,960 in profit for every Rs100,000 invested.
Taxation on Profit Earnings
The taxation on profits from these certificates is determined by the investor’s tax compliance status. Individuals who are listed in the Active Taxpayer List (ATL) are subject to a withholding tax rate of 15 percent on their earnings. On the other hand, non-filers—those who are not included in the ATL—face a significantly higher withholding tax rate of 30 percent. These tax rates apply uniformly, irrespective of the investment amount or date of purchase.
Previous Profit Rate Adjustments (February 2025)
The CDNS had previously revised the profit rates for Short Term Savings Certificates in February 2025. During that period, the rates were structured as follows:
- Three-Month Maturity Certificate: The profit rate was 11.24 percent, offering a return of Rs2,810 on an investment of Rs100,000. This marked a decrease from the earlier rate of 12.76 percent.
- Six-Month Maturity Certificate: The revised rate stood at 11.32 percent, yielding Rs5,660 for every Rs100,000 invested. This was lower than the previous rate of 12.74 percent, which had provided Rs6,370 in returns.
Implications for Investors
These periodic revisions in profit rates reflect the government’s response to changing economic conditions, inflationary pressures, and interest rate trends. Investors looking for secure, short-term investment options may find STSCs an attractive choice, especially given their flexibility and accessibility. However, potential investors should also consider the tax implications and compare alternative investment opportunities before making financial decisions.
As the CDNS continues to adjust rates in line with economic developments, investors are advised to stay updated on future announcements to optimize their returns and financial strategies.
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