THERE is hardly the need to mention that the decision to impose a 10 per cent tax on government-operated savings certificate schemes was a harsh one. The millions of small savers were affected this or that way by it. The savers include pensioners, housewives, small job holders, operators of small businesses and other categories of small people with modest incomes. In this connection, it is a wise move on the part of the government to ensure the refund of tax money that were earlier deducted at source against interest accrued from savings instruments with individual holdings thereof being below the tax-exempted limit of Taka 1,50,000. The National Board of Revenue (NBR) is actively considering the proposal. The sooner the refund is made, the better will be its outcome. This will instil confidence among the small investors.
The move to revise the earlier decision relating to tax deductions at source from accrued interests on savings instruments and the latest proposal to refund such collected tax amount up to a maximum of Taka 1,50,000 for an individual is a pro-active one to encourage the middle class savers. The government may also gain from this decision as it requires large scale borrowing to meet its budget deficit.
Small savers like retired government officers and others are usually found investing their life savings and accumulated monetary benefits obtained after retirement from services in the risk-free government saving schemes. An amount of half a million taka deposited by one such person in a saving scheme annually fetches an income of, say, fifty-five or sixty-five thousand taka. From this amount a retired person has to meet his living expenses which are rising faster than the interest he earns from saving. Furthermore, he has to meet other major expenses in many cases like meeting the education costs of grown up children, expenses on marriage of daughters, on health care, etc.
Thus, the interests are modest really compared to the need. A modest middle class saver should therefore not be forced to surrender ten per cent of his or her interest income as tax.
The stock market with its frequent crashes has not provided any better alternative to small investors. In this situation, they had hardly any choice other than opting for the government saving instruments considering their relative safety or dependability.
Jamilur Rahman
Section-3, Uttara, Dhaka
Refund of tax deducted from savings tools
FE Team | Published: December 11, 2007 00:00:00 | Updated: February 01, 2018 00:00:00
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