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National Saving Certificates

Govt to withdraw 5 per cent additional tax on interest

Published : Thursday, 20 June, 2019 at 12:00 AM  Count : 1919

The government has decided to withdraw 5 per cent tax at source on income from national savings certificate as proposed in the budget for the 2019-20, Finance Ministry sources said on Wednesday.
Besides this, the transaction of national saving certificates will come under an automated system through online from July 1, they said.
Those who have already invested in saving certificates and bonds will have to operate transactions through an automated system to draw profits. The most popular among 11 saving certificates are: 5-year Bangladesh Sanchayapatra (11.28 per cent yield), 3-monthly Profit Bearing Sanchayapatra (11.04 per cent), Family Saving Certificate (11.52 per cent), and Pensioner Sanchayapatra (11.76 per cent yield).
According to sources, the Finance Minister on June 13 imposed 5 percent additional tax at source on income or interest to be derived by persons who have invested in national saving certificate. As a result, the common people, especially the low income people, pensioners and housewives have become panic and protest are coming from all quarters. They are in fact living on income regularly receiving from saving certificates.  
In this reality, the government has decided to withdraw 5 percent additional tax on income from saving certificates, they said.
The government is selling more savings certificates every year surpassing budgetary targets.  Its main reason is to increase social security. But statistics of the past few years show more wealthy people are taking advantage of this social security instruments in absence of a sound policy. So some new rules have been devised to stop such misuse.
A senior official of the Finance Ministry told the Daily Observer that common people will be affected if tax to be doubled from earlier 5 percent to 10 percent on income or interest from  saving certificates. The Finance Ministry and NBR have taken the matter into consideration.
In fact to protect common people the savings certificate schemes have been put in place. For this reason the rich must be stopped from misuse of the facilities, said an official.
It also asked all organizations to start the online operation of the automated system at divisional level in April and all over the country by next June. It also prohibited all kinds of transaction of saving certificates offline from July 1.
So far the Motijheel Branch of Bangladesh Bank (BB) and Sonali Bank, Bureau Office (Gulistan) of Directorate of National Savings and head office of Bangladesh Post Office already started the experimental operation of the online services.
After the completion of the database, buyers should submit their national identification number (NID) and tax identification number (TIN) which are mandatory for such transaction. Buyers would be required to make payment in cheque for saving certificates worth above Tk 50,000. Buyers will also require bank accounts and mobile numbers while purchasing national saving certificates and bonds.
According to the Department of National Savings (DNS) data, the net sales of savings tools in the July-March period of 2018-19 fiscal year stood at Tk 397.33 billion, up from Tk 367.09 billion in the corresponding period a year earlier.

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