5pc source tax for savings certificates up to Tk 5 lakh

Five percent source tax will be deducted from now onwards on interest earnings on savings certificates up to Tk5 lakh. 

If the investment on saving certificates exceeds Tk5 lakh, the tax will be 10 percent.  

Bangladesh Bank issued a gazette notification in this regard on Wednesday. Prior to that, the National Board of Revenue (NBR) issued a SRO (statutory regulatory order) as per the instructions of the bank and financial division of the Finance Ministry.

Earlier, both banks and investors were in doubt about source tax for savings certificates. 

Moreover, there was confusion regarding tax on savings certificates that have matured before the start of this fiscal year. The Finance Ministry has removed the confusion.  

The notification excludes pensioners, and says that if the investment is less than Tk5 lakh, the source tax for all savings certificates up to Tk 5 lakh will be 5 percent, down from the 10 percent that it was before.  

If the investment is more than Tk5 lakh, the tax will be 10 percent.  

But the finance ministry did not clarify if investors who invested less than Tk5 lakh but paid 10 percent tax will get back the extra tax that they paid.

The sale of savings certificates reduced by half in July compared to the corresponding month in the previous fiscal year, due to restrictions on buying savings certificates.

Savings certificates worth Tk 2,160 crore were sold in July.