NBR chairman clarifies savings tools tax-exemption issue

FE Team | Published: October 09, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Doulot Akter Mala
The government's recent decision on enhancement of tax-exemption ceiling for investment on saving instrument will not be considered as 'final settlement', said the National Board of Revenue (NBR) Chairman Badiur Rahman.
The NBR has raised tax exemption ceiling to Tk 150,000 from the previous level of Tk 25,000 on interests or profit on investment of savings certificates, deductible at source at the rate of 10 per cent.
The investors, who have income generated only from the interest amount of saving instruments, will have to pay 10 per cent tax at source from the income above Tk 150,000, the NBR Chairman said.
But, if any taxpayer has income above Tk 150,000 from other sources and saving instruments together he/she has to pay tax as per normal rate.
However, the paid tax at source on saving certificates will be readjusted in his tax return.
"With the amendment of the decision, deduction of the tax at source is no more a final settlement for the taxpayers," the NBR chief said.
On Saturday, the Council of Advisers approved the proposal on an increase of the tax-exempt ceiling of the interest income from national savings instruments.
The government has amended the Income Tax Ordinance 1984 for this purpose as the decision has created panic among the fixed income group, which is largely dependent on such income from savings instruments for their living, the NBR chairman said.
The government had imposed 10 per cent tax at source on interest income from the government savings instruments, which came into effect from July 1, 2007.
"We have found that it will amount to discrimination to those small savers, who have only income from the profit of saving instruments," he said.
As per earlier decision, a small saver has to pay 10 per cent tax for his income above Tk 25,000 although he/she has no taxable income.
"Although the government has assured those small investors, who have income only from saving tools, will get refund of the paid 10 per cent tax at source through submission of tax return, there was confusion among them," he said.
The small savers might not be much confident about the refund of the paid tax, which forced the government to amend the order, he said.
The NBR had proposed to the government to increase the ceiling as the government's earlier decision has created resentments among the small savers, he said.
The NBR issued the order on July 10 last imposing 10 per cent tax, which is deductible at source on annual interest income exceeding Tk 25,000 from savings instruments.
Under the tax measure, the investors having interest income worth less than Tk 150,000 annually will have to make a declaration to the savings instruments issuing departments that they have not purchased such instruments from any other institutions and that the total interest income from the same will not exceed Tk 15,0000 annually.