Modalities soon on savings tools interest refund

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FE Report
The authorities will soon formulate modalities of refunding the money that was deducted earlier as tax at source from the interests on savings instruments to the respective investors.
The relevant agencies, including the Bangladesh Bank, the National Board of Revenue (NBR), the National Savings Directorate (NSD), Posts Office and banks will sit Sunday to discuss the mode of repayment.
Official sources, however, indicated that a circular was expected to be issued after the meeting, outlining the payback procedures.
The central bank has called the meeting following the hike in the tax-exempt ceiling on interest income from national savings instruments and bank deposits.
An official also said the meeting is also expected to discuss whether or not the investors will require to make any declaration about their total volume of investment in the savings tools for availing such tax-exempt facility.
The government issued an order Tuesday, raising the tax-exempt ceiling of interest on savings tools to Tk 150,000 from the previous level of Tk 25,000.
Earlier, the government had imposed the 10 per cent tax deductible at source on interest from various savings certificates and bank deposits, which came into effect from July 1, 2007.
Against the backdrop of strong criticism and opposition from various quarters over such move, the council of advisers at its meeting on October 6 gave its nod to the proposal for the amendment to the Income Tax Ordinance 1984 in order to increase tax-exempt ceiling from the interest income from national savings instruments.
"The concerned banks, post offices and sales booths of the NSD find themselves in a difficult situation to repay the tax, which was deducted from investors under the previous provision," said an official source.
There is urgent need for setting the procedures so that the respective investors can get their money back.
Pursued by individuals, many banks have already started querying about the repayment process from the central bank, bank sources said.
Meanwhile, the overall investment under the state-run savings certificates marked a significant fall following the imposition of such tax, official mentioned.