Tax benefit for farmers' deposits planned

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FE Report
The government has planned to offer tax benefits to nearly nine million farmers who have opened bank accounts to receive state subsidies.
As per existing rules, bank account holders require paying excise on having a certain amount of balance determined by the revenue board.
The central bank governor Atiur Rahman recently sent a proposal to the National Board of Revenue (NBR), seeking waiver of the excise duty on the bank accounts opened by farmers.
"It would be a burden for farmers if excise duty is not deducted from their bank account. Farmers will be discouraged to run the account," said Dr. Atiur Rahman in a letter to the revenue board chief.
The central bank chief has made the request to ensure easy access to subsidy to be provided to the farmers.
Currently, nearly 9.0 million farmers have opened bank accounts with Tk 10 in a special offer by the central bank.
The BB had earlier instructed all commercial and specialised banks to allow farmers to open bank account with a minimum deposit of Tk 10. There will be no requirement of minimum balance and all charges were waived.
The central bank has been disbursing subsidies to the farmers through the accounts opened across the country.
"The BB has decided to disburse loan through the bank accounts to ensure accountability in farm loan disbursement," the BB chief said.
NBR officials said the board has slapped a "negligible" tax on the bank deposits.
"Last year, we have lowered the ceiling of excise duty to help small savers but raised the tax for big deposit holders," said a senior VAT official.
He said the revenue board will consider the central bank chief's request for waiver only if tax affects farmers.
In 2009 budget, the government raised the threshold level for imposing excise duty on bank deposits to Tk 20,000 instead of Tk 10,000. No tax will be charged for account balance below Tk 20,000.
In 2004, the revenue board had slapped excise duty on two sectors - bank deposits and air tickets. No change was made in the excise duty, although cash flow in banks increased manifold over the last four years, revenue officials said.