Excise duty on high-figured bank deposits may rise in the upcoming fiscal year under a government move to tax higher the well-off to narrow gaping income inequality, officials said.
The VAT (value-added tax) wing of the revenue board would restructure the excise duty in the budget for FY 2024-25 for only high-income people while low-and middle-income ones would continue to enjoy the existing rates.
Currently, excise duty for bank deposits ranging above Tk 0.1 million to Tk 0.5 million is Tk 150 while it is Tk 500 for deposits above Tk 0.5 million to Tk 1.0 million. This duty rates are likely to remain unchanged.
Presently, excise duty for amount above Tk 1.0 million to Tk 10.0 million is Tk 3,000. In the next budget, the duty is likely to be Tk 5,000 for deposit worth between Tk 5.0 million and Tk 10 million, they said.
For bank deposits above Tk 10 million and up to Tk 20 million, excise duty would be Tk 10,000.
People having bank deposits above Tk 20 million to Tk 50 million may have to pay excise duty at Tk 20,000.
However, for bank deposits above Tk 50 million, excise duty would remain unchanged at Tk 50,000.
In the budget 2023, the government increased excise duty on higher ceiling of bank deposits by Tk 10,000, from Tk 40,000 earlier.
The National Board of Revenue (NBR) collects excise duties on the principal amount of deposits.
Currently, excise duty is Tk 3,000 for bank deposits amounting to Tk 1.0 million to Tk 10 million.
It is Tk 15,000 for the bank deposits amounting to Tk 10 million to Tk 50 million.
Deputy Managing Director and Chief Financial Officer of BRAC Bank M Masud Rana says the excise duty became one of the major sources of domestic revenue during the last one decade in the form of indirect tax that actually passes on to the consumers.
The banker, however, mentions that excise duty on deposits prevails in other countries, too, but in Bangladesh excise duty is payable on loan account, too, which is not found in other countries.
"Excise duty on loan account increases cost of business", and it is payable whenever trade loan deposits made after three or six months, he notes.
Mr Rana, however, acknowledges government's dire need to mobilise higher domestic revenue in the current economic context.
In February 2024, the Association of Bankers Bangladesh (ABB) urged the NBR, in a letter, to withdraw excise duty on bank loans and credit cards in the next budget 2024-25.
Under the existing law, this duty is applicable to all bank deposits, loans, and credit cards.
Bankers feel that the excise duty on bank loans and credit cards is "unfair".
The NBR targets to collect excise duty worth Tk 49.58 billion in the current fiscal year. Until April 2024, the collection had amounted to Tk 41.64 billion under this head of tax revenues.
The NBR collects excise duty under the Excise and Salt Act 1944 on bank deposits and air tickets.
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