5pc source tax on savings certificates up to Tk 500,000: NBR

The National Board of Revenue (NBR) has clarified that the source tax on profit from savings certificates up to Tk 500,000 should be 5 per cent, not 10 per cent.

The directive was issued today, Tuesday, via a letter from the NBR to the director general of the National Savings Directorate.

The letter further confirmed that, as previously, no source tax will be deducted on profits from pension savings certificates up to Tk 500,000.

Since January, consumers have been complaining that a 10 per cent source tax was being levied on profits from savings certificates up to Tk 500,000, causing considerable frustration among certificate holders.

Several investors brought this issue to the attention of this correspondent as well.

Following these complaints, the NBR has issued a clear explanation regarding the correct tax rate.

According to the letter, under the 2019 notification, if the total investment in all savings certificates does not exceed Tk 500,000, the source tax on the profits will be 5 per cent.

And, for pension savings certificates, if the total investment in any fiscal year does not exceed Tk 500,000, the source tax on the profit will be zero per cent—meaning no source tax is applied.

Under Section 105 of the Income Tax Act 2023, if a person’s total investment across all types of savings certificates in a fiscal year exceeds Tk 500,000, a 10 per cent source tax will be applicable on the profit earned.

Currently, the National Savings Directorate offers four types of savings certificates: family savings certificate, pension savings certificate, five-year Bangladesh savings certificate and quarterly profit-based savings certificate.

Apart from the family savings certificate, the remaining certificates may be purchased by both individuals and institutions.