The highest annual tax rebate on investments in listed securities will be reduced by one-fourth, or 25 per cent, to Tk 0.75 million if the draft Income Tax Act 2027 is approved by parliament.
Under the proposed act, the maximum eligible investment will be capped at Tk 7.5 million a year, with 10 per cent of that amount rebated.
At present, taxpayers are allowed to invest up to 20 per cent of their taxable income or Tk 6.67 million, whichever is lower, to enjoy tax rebates of as much as 15 per cent of investments made in eligible instruments.
The proposed act, however, raises the investable portion to 30 per cent of taxable income while lowering the rebate rate to 10 per cent.
For instance, an investor with a taxable income of Tk 25 million will be able to invest a maximum of Tk 7.5 million in listed securities to avail of a rebate worth Tk 0.75 million. If the taxable income is Tk 5 million, the eligible investment will be Tk 1.5 million - 30 per cent of the income - yielding a rebate of Tk 0.15 million. In other words, only investors with a taxable income of Tk 25 million or above can claim the maximum rebate of Tk 0.75 million by investing Tk 7.5 million in listed companies.
Separate investment ceilings apply for other instruments. Eligible investments in government securities will be capped at Tk 0.5 million, as will investments in mutual funds, while the ceiling for deposit schemes will be Tk 0.12 million.
Under this structure, an investor who has already put Tk 0.5 million into government securities can show a further Tk 7.0 million in listed companies to claim the highest rebate of Tk 0.75 million against aggregate eligible investments of Tk 7.5 million.
However, the proposed act stipulates that investors will not be entitled to a tax rebate if they encash instruments before maturity. A senior official of LankaBangla Securities said this provision may make investors prefer listed companies as a vehicle for claiming tax rebates.
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