Taxpayers are now barred from claiming rebate on investment of previously earned profit gains from savings instruments in the current fiscal year's (FY) tax return.
Officials said those who have already submitted income-tax returns have to get those revised following the latest stance of the revenue authority.    Â
In a recent clarification, the National Board of Revenue (NBR) said previously earned profit or yields amount from savings certificate will not be allowed to be included in the calculation on the income worthy of tax rebate.
However, investment rebate for small savers remains in place for investors in the savings instruments.
The clarification came as taxmen had found widespread confusions in different quarters over the matter.
In the current fiscal budget for 2015-16, the tax authority has levied a pared-down rate of 5.0 per cent tax at source on savings instruments as finally-paid tax.
"As the investors in the savings instruments will enjoy the reduced tax rate on profits from savings instruments in FY 2015-16, the tax-rebate claim has been barred on previous profit gains," said a senior tax official.
Under the existing income-tax law, a taxpayer can invest maximum 30 per cent of his total income. He can claim tax rebate up to 15 per cent of his allowable investment shown in the tax returns.
In the clarification, the NBR made it clear that taxpayers cannot claim profit amount of savings instruments in calculation of 30 per cent investment for tax rebate.
The tax official said the government has offered a cut-down tax rate of 5.0 per cent for savings certificate investors, but taxpayers could claim up to 15 per cent tax rebate.
Thus, taxpayers could have enjoyed a higher tax rebate than the tax rate on savings instruments, he said.
"In the current budget, the NBR has made tax at source on savings instruments a 'finally paid tax'. Investors in the savings tools will not have to pay tax on total income from the investment," he said.
For example, if a taxpayer invests Tk 10 million in savings tools and has profit income of Tk 1.0 million from the previously purchased certificates, 'she/he can claim investment rebate for the 10 million principal instead of Tk 11 million. Â
Submission of individuals' income-tax return started on July 01 and is scheduled to expire on September 30.
Meanwhile, many of the individual taxpayers have submitted their tax returns claiming investment rebate for the entire amount in their tax files as they were unaware on the matter.
Officials said they will have to correct the tax returns and pay or adjust the tax amount.
Since July 01, the small savers have been paying 5.0 per cent tax on profits earned from the four types of savings instruments.
Until last fiscal, taxpayers were required to add the profit earned from savings tools to other incomes in the tax returns. The tax paid at source on savings tools was needed to be adjusted with the payable taxes.
The tax relief was offered in the budget following the cuts in the yield rates on savings tools, officials said.
doulot_akter@yahoo.com
No rebate on invested profit from savings tools
Doulot Akter Mala | Published: September 20, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
Share if you like