Bankers seek withdrawal of excise duty on loans, credit cards from next fiscal year

The Association of Bankers Bangladesh (ABB) has asked the National Board of Revenue (NBR) to withdraw excise duty on bank loans and credit cards in the upcoming fiscal year 2024-2025 (FY25).

The bankers' platform also asked the revenue board to bring the corporate income tax rate for banks down to 30% from 37.5% and enact a uniform corporate tax rate for all listed companies in the next fiscal year.

The association sent a letter to the NBR in these regards today (6 February).

Under the existing law, the excise duty is applicable on all bank deposits, loans, and credit cards. 

At present, an account holder has to pay excise duty of Tk150 for deposits of Tk1 lakh to Tk5 lakh in a bank account. The excise duty rate stands at Tk500 for deposits between Tk5 lakh to Tk10 lakh; Tk2,500 for Tk10 lakh to Tk1 crore, Tk12,000 for Tk1 crore to Tk5 crore; and Tk25,000 for any amount above Tk5 crore.

Bankers feel that the excise duty on bank loans and credit cards are unfair.

In the letter to NBR, the ABB said, "We are all aware of the importance of revenue generation in the long-term economic development of the country and the contribution of the banking sector to the national exchequer.

"The banking sector has been loyally contributing to the government for many years.

"Apart from paying a substantial amount of direct and indirect taxes to the revenue board every year, banks are engaged in collection and payment of taxes from depositors, customers, suppliers, service providers and bank employees. We believe that banks can play a leading role in increasing government tax collection."

In the letter, the ABB also proposed making PSR submissions for bank loans above Tk50 lakh and credit cards above Tk5 lakh.

They also sought waiver of obligation to file proof of submission of income tax return in respect of opening and maintaining fixed bank deposit accounts.

The ABB also proposed that provisions against loans should be treated as allowable expenditure as per the guidelines of the Bangladesh Bank: withdrawal of tax levied on income earned by recognised provident funds and recognised gratuity fund; bringing banks to be brought under tax incentives for investing in zero-coupon bonds;  considering entire CSR expenditure as allowable for tax purposes; raising the approval limit of incidental expenses or perquisites of the company to Tk15 lakh.

Furthermore, the bankers' association wants incentive bonuses given by the employer to the employee to be excluded from the scope of perquisites as before.

They also proposed listing the security custodial services provided by banks as VAT exempt services.