5pc source tax for savings tools: Finance Minister

Special Correspondent: Finance Minister AHM Mustafa Kamal has said that 5 percent tax at source would be applicable to all types of savings certificates, including family savings certificates, up to Taka 5 lakh investment to facilitate the small savers and pensioners.

“We’ll take tax at source at 5 percent rate against all types of savings certificates including family savings certificates up to Taka 5 lakh and an SRO will be issued soon in this regard making it effective from July 1, 2019,” he said.

The Finance Minister said this in press briefing at the Finance Division conference room at Bangladesh Secretariat on Monday.

National Board of Revenue (NBR) Chairman Md Mosharraf Hossain Bhuiyan was present there.

He said initially the idea of launching the savings certificates was noble and it was to help the marginalized people who are not solvent.

“But, we found that the savings certificates are being misused as many are enjoying benefits after opening various accounts in different banks without providing proper names and addresses. We also found that the rich class is enjoying its benefits more instead of the marginalized people,” he added.

Mentioning that the existing scheme for the pensioners would remain intact, Kamal said that the tax rate would be 10 percent in case of the savings certificates over Taka 5 lakh.

“We want to run the savings certificates much more transparently since this is a strong area of the country’s economy,” he said adding that the government would later consider raising the ceiling of 5 percent tax if it is deemed insufficient.

Like India, the Finance Minister said the government is planning to launch here the bond market as an alternate source of investment for the small savers.

“Investment in the bond market is good and if we can launch this bond market, then the investors will get fixed interest and there would remain no ambiguity… there will be multiplier effect in the bond market and the country’s economy will be further deepened,” he added.

Answering a question, he said that the investors would not be subjected to harassment in case of their investment in the bond market and they would get their interests in every six months to one year.

Kamal said it is yet to be finalized and work is going on to enact a law on bond. He also informed that the government will have a database in place to properly monitor the savings certificates.

Earlier in the budget for fiscal 2019-20, the government increased the tax at source on the profit on savings certificate to 10 percent from previous five percent.

risingbd/Dhaka/July 29, 2019/KMA Hasnath/AKA