Profit rates on savings certificate will not be reduced

The government will keep the profit rates on all types of Savings Certificates unchanged for the next six months. As a result, the existing profit rates will remain in force, ranging from 11.77 per cent to 11.98 per cent.

The revised profit rates were due to take effect from 1 July this year, that is, yesterday, Wednesday. Many had expected the government to reduce the rates again.

However, it has decided not to do so. The authorities may issue a new official notification within the next few days confirming that the current rates will remain unchanged.

When Prothom Alo asked Finance Minister Amir Khasru Mahmud Chowdhury about the matter at the Parliament Building on Tuesday, he said that the existing profit rates on Savings Certificates would continue and that the government would not revise them.

He explained that many middle-income families depend on income from Savings Certificates to meet their household expenses. "Had we reduced the rates, we could have saved Tk 20 billion (2000 crore)," he said.

Savings Certificates represent one of the principal investment options for middle-income families. Many retired employees purchase these certificates and rely on the returns to support their households.

At the same time, the government borrows through Savings Certificates to finance part of its budget deficit.

For the 2026–27 fiscal year, the government has set a target of selling Savings Certificates worth Tk 8.5 billion (8500 crore).

The government reviews the profit rates on Savings Certificates periodically. In January 2025, the interim government increased the maximum profit rate to 12.55 per cent, with all categories offering returns of more than 12 per cent.

On 1 July 2025, the Internal Resources Division (IRD) of the Ministry of Finance issued a circular reducing the profit rates. The circular also announced that the government would review and reset the rates every six months.

Accordingly, on 1 January this year, the authorities issued a new notification reducing the rates further. However, they withdrew the notification three days later and reinstated the previous rates.

Under the existing rules, investors who invest smaller amounts receive comparatively higher profit rates, while those making larger investments receive slightly lower returns.

The threshold stands at Tk 750,000. Investments of Tk 750,000 or less qualify for the higher rate, whereas investments exceeding Tk 750,000 receive a lower rate.

Among the various Savings Certificates administered by the National Savings Directorate, the Family Savings Certificate remains the most popular.

An investment of less than Tk 750,000 in this scheme earns an annual profit rate of 11.93 per cent upon maturity after five years. Investments exceeding Tk 750,000 earn a profit rate of 11.80 per cent.

The National Savings Directorate offers several other types of Savings Certificates, each with slightly different profit rates.

The Budget for the new fiscal year introduces a significant change to the taxation of profits earned from Savings Certificates.

Previously, the government treated the 10 per cent advance income tax deducted at source from these profits as the taxpayer's final tax liability. Consequently, customers could not claim a refund even if they had no taxable income.

Under the new budget, the tax deducted at source from profits on Savings Certificates will no longer constitute the final tax liability and taxpayers may adjust it when filing their annual tax returns.

If the amount deducted exceeds the taxpayer's actual tax liability, the taxpayer may claim a refund.

To obtain the refund, taxpayers must provide their bank account details when submitting their income tax returns. Tax officials will verify the claim and refund the eligible amount to the taxpayer's bank account within 120 days.

However, many middle-income investors in Bangladesh purchase Savings Certificates without obtaining a Taxpayer Identification Number (TIN). As they have no taxable income, they have traditionally invested without a TIN.

Under the new arrangement, many of these investors will face a different reality. To claim a refund of excess tax deducted at source, they will need to obtain a TIN and submit an income tax return.

Although many investors previously purchased Savings Certificates without a TIN because they had no taxable income, they will now have to enter the tax system if they wish to recover any excess advance tax deducted from their investment returns.