• Monday, Sep 23, 2019
  • Last Update : 12:45 am

5% tax at source for up to Tk5 lakh in savings tools, says Mustafa Kamal

  • Published at 09:52 pm July 29th, 2019
Planning Minister AHM Mustafa Kamal
File photo of Finance Minister AHM Mustafa Kamal Mahmood Hossain Opu/Dhaka Tribune

The 10% tax at source provision included in the budget would  remain unchanged for investment exceeding Tk5 lakh

The government will deduct only 5% tax at source on interest income from the savings instruments up to Tk5 lakh with effect from July 1, Finance Minister AHM Mustafa Kamal said on Monday.

The 10% tax at source provision included in the budget would  remain unchanged for investment exceeding Tk5 lakh, he added.

In the current Finance Bill, a uniform 10% tax at source on interest income from investment in savings schemes was incorporated.

"The savings schemes were introduced for the benefit of small savers. So, the investment up to Tk5 lakh will be subject to only 5% tax. Higher investment in savings schemes will face higher tax," Mustafa Kamal told reporters during a press briefing at his secretariat office.

He said the Bangladesh Bank would issue gazette notification in this regard with a view to bringing the tax rate effective from July 1, this year. 

ACC to scan higher investment under multiple accounts in savings schemes

The finance minister said the sources of money invested in the savings schemes through multiple accounts would be scanned by the Anti Corruption Commission (ACC).

"We have a database of the investors (in savings instruments). Rich people have opened multiple accounts and purchased savings instruments. ACC will scan the sources of money of such investments," Mustafa Kamal said.  

AHM Mustafa Kamal said the initiative of scanning was aimed at stopping corruption.

He said the government introduced the savings schemes to benefit small investors as they had limited investment scopes.

He said investment opportunity in savings instruments was being misused as rich were enjoying more benefit through investing in the savings tools.

"We want low-income people having small deposits to continue investing in savings schemes and rich people to deposit in banks so that the money goes to manufacturing sector through banks’ lending," he said.

The finance minister said the government would create bond market like India as an alternative to savings schemes.

Cash incentives for inward remittance 

The finance minister said all inward remittance would enjoy a 2% cash incentive with effect from July 1 this fiscal year.

He said cash stimulation was announced in the budget and the Bangladesh Bank (BB) was working on it.

"Since this type of cash incentive is new for us, it will take 2-3 months to issue a circular to this effect. We want to stimulate remittance inflow. Anyone remitting Tk100 will get Tk102 in return, with incentive amount," he said.