Universal pension scheme now tax-free

All income from the Universal Pension Scheme, introduced in August, will be tax-free and investors in the scheme will get a tax rebate.

The National Board of Revenue (NBR) issued an order in this regard on 5 November, which was published on the government website on Wednesday.

Sources related to NBR said that this initiative has been taken to make people interested in investing in this scheme.

Currently, investments are allowed for tax rebates in some sectors including savings certificates, life insurance premiums, contributions to the provident fund of government servants, employer and officer contributions to recognised provident funds, contributions to welfare fund and group insurance fund, contributions paid to a superannuation fund, investments in Deposit Pension Scheme (DPS) of bank and non-bank financial institutions, investment in the capital market in primary or secondary shares, stocks, mutual funds, or debentures of companies listed on stock exchanges, and investments in government-approved treasury bonds.

According to section 78 of the new income tax law, 3% of the taxable income of a taxpayer or 15% of the combined investment in the mentioned sectors or Tk10 lakh — whichever is less — will get a tax rebate.

The government rolled out the Universal Pension Scheme in August to ensure a better and more secure life for everyone by bringing the country's people aged above 18 under its coverage.

The universal pension scheme offers a total of four schemes — Probash, Pragati, Surokkha, and Samata.

Although the government launched the Universal Pension Scheme with great enthusiasm, the public response has not been as expected. In the first month, approximately 13,000 people enrolled in various pension schemes, but in the following month, the number dropped significantly to just 2,000.