Does your bank tax you for saving money?


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Posted by on Saturday June 29, 2013 at 14:5:40:

I got an sms today from my bank that my savings account has been debited for tax and I was wondering what sort of tax this is.

Is it a Federal, state or local govt tax? Is it Fashola, Jonathan or Sanusi's tax? Why does someone have to pay tax just for saving money in a savings account?

Based on what I understand tax to be, it is something which the government solely has rights over so a bank can't tax you unless they are doing so on behalf of the government with the goal of remitting the money to them later on. However in this my case, I'm still not sure why they put a tax on my savings account when I know that my second bank doesn't charge me any tax just for saving money. I guess, this is one of the reasons why Nigerians move from one bank to another. When one bank fraudulently deducts money from your account without a good or transparent reason, you have the right to move to another bank.

How it actually happened was that first of all I received a credit alert for interest capitalized and the subsequently received a debit alert for tax but it wasn't clear what type of tax it is.

Well, now that I'm looking back at it, it seems that the tax is probably withholding tax for interest paid on my savings and in this case, I've not really lost money. Why didn't they just say it was Withholding tax rather than just tax?

Anyway, do banks really charge tax on interest paid on your savings? Well, I think they do and I actually thought it only had to do with Fixed deposit accounts.

    Re: Does your bank tax you for saving money? Reply by Prosper on Sunday October 6, 2013 at 13:10:43:

    Please Felix, when you say withholding tax, what does that actually implies? Are there other kinds of tax and what are they called and their meaning respectively. Thank you as you respond

    Re: Does your bank tax you for saving money? Reply by Felix Okoli on Sunday October 6, 2013 at 13:10:43:

    Withholding tax simply means tax that is held by the payer of money on behalf of the government. It is tax deducted at source during a payment and then remitted into government account later. Dividends and interest on Fixed deposit are subject to Withholding tax which is currently at 10% in Nigeria

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