Both the new and old buyers of savings certificates will have to pay the source tax on the profit at a flat rate of 10 per cent, clarified the National Savings Directorate on Tuesday.
The directorate clarifies the matter as the savings bond investors were in confusion since the proposed national budget for the fiscal 2019-20 was passed in parliament on 30 June.
The rule has already been implemented from 1 July, the first day of 2019-20 fiscal, it said.
“There were questions whether those who paid 5 per cent source tax until now will also have to pay the tax in 10 per cent rate. What would be the rule for those who haven’t withdrawn their profit money? That is why we made the clarification that the tax rate would be flat, 10 per cent for all, both the old and new investors,” Abu Taleb, director of National Savings Directorate, told Prothom Alo.
An investor in savings bond, Nazrul Islam, said, “Most of the buyers of savings certificates are people of higher income bracket. This increase of source tax won’t affect them at all but this decision is going to affect us badly.”
Experts, however, said something else.
Policy Research Institute (PRI) executive director Ahsan H Mansur thinks the decision will bring consistency in tax rates between the bank and savings bond.
“If someone’s five-year-term savings bond has validity for two more years, then it would be logical to impose 10 per cent tax on the profit for that period beginning from 1 July,” he said.
Otherwise it would be violation of international tax laws, Ahsan Mansur added.
The government also has introduced new online system for buying savings bonds from 1 July.
Earlier, the Bangladesh Bank and National Savings, following the finance ministry, issued circular for three times saying no dealings about savings bonds can be made without the online system.
According to the new system, the profit will be deposited directly to the investor’s bank account through electronic fund transfer (EFT) system.
The Bangladesh Bank issued a new circular yesterday giving 1 July as date of its publication in this regard.
The central bank reiterated what the finance division of finance ministry said in a letter sent to the Bangladesh Bank, National Savings Directorate, postal department and Sonali Bank Ltd on 29 May.
The BB circular has not said what would be done in the district and upazila level though another letter by the finance department on 29 May directed all the districts to be prepared by May to sell savings bond online and upazilas by June.
Finance department and National Savings Directorate sources said from now on the investor in savings bond must have national identity card, tax identification number (TIN) and a bank account. The government has introduced the system to bring discipline in the sector.
However, TIN will not be necessary to buy savings bond worth Tk 100,000.
*This report published in print edition of Prothom Alo, has been rewritten in English by Shameem Reza