Tax on interests on small saving deposits

Print media recently reported that the National Board of Revenue is against exemption of income tax on interest received by small depositors of savings accounts. Tax on interest income derived from deposits below Tk.0.5 million in savings accounts of banks and other financial institutions will continue, as the measure would bring over Tk.5730 millions of revenue for the government in a year. Banks and non-banking financial institutions have drastically reduced interest/ profit on term deposits or fixed deposits in recent years. In most cases, less then 10.0 per cent interest is given now-a-days annually which is offset by current rate of inflation. That means, a depositor gets a negligible profit from fixed deposits in real terms. In Bangladesh, there are many citizens who have negligible income other than the income from fixed deposits. They largely depend on interest from their fixed deposits to meet their living expenses.
In such a low interest-earning situation, they actually lose a part of their real income every year, as they lose in terms of real purchasing power. In this situation, the government should withdraw AIT on fixed deposits up to Tk.1.0 million.
Md. Ashraf Hossain
8/A, Ramna, Dhaka-1000