NSD investors to enjoy tax cut on interest income

The National Board of Revenue (NBR) has allowed investors in national savings Deposits (NSDs) and exporters to enjoy reduced tax rates on their interest income and cash incentives.

It has also allowed certain corporate taxpayers, who are exempted from submission of tax returns, enjoy source tax on bank deposits as a 'finally paid' one, according to a Statutory Regulatory Order (SRO) that came into effect on Wednesday.

From now on, the source tax on interest income would be considered finally paid tax and investors of the tools would not have to pay any further tax on the income.

The provision was in the Income tax Ordinance-1984. The NBR had scrapped it by introducing the new Income Tax Act-2023 to consider the income tax as a 'minimum tax' to be added with the actual income of a taxpayer, officials said.

Similarly, the exporters' earnings from cash incentives were considered as finally paid tax in the previous act to reduce tax burden on exporters. Now, the NBR reinstated the provisions considering increased tax burden of the taxpayers.

Source taxes paid against interest amount of Deposit Pension Scheme (DPS), fixed deposits, etc. would be considered as finally paid taxes from now on for some specified corporate taxpayers.

Bangladesh Bank, government's provident funds and pension funds, expatriates having no fixed-base in Bangladesh, local authorities, MPO-listed educational institutions having no English curriculum, the government universities, state-owned corporations, government authorities or autonomous bodies, having no income except interest income from bank deposits or government funds, and income except interest amount of bank deposits would be entitled for the benefit, officials said.

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