Bank clients with relatively small-sized savings are worried as the government is set to hike excise duty on deposits in banks and financial institutions by up to 100 per cent in the national budget for the next fiscal year of 2017-2018.
Finance minister Abul Maal Abdul Muhith is going to put forward a proposal in this connection in his budget speech on June 1, officials of the finance ministry said.
The planned rise in excise duty has made the depositors worried and many of them said that the decision, if passed in parliament, would make them financially loser as they were paying different types of service charges and the rate of interest on deposit declined sharply.
‘It is totally absurd to double the duty on the balance in a time when the interest rate for deposit products has declined to below 5 per cent,’ said Nessaruddin, a depositor.
If the duty is increased, he said, many small depositors would not get any returns after deduction of charges, income tax and excise duty from their bank deposits.
Depositors, who first came to know the planned hike through media reports last week, have been expressing their concerns and criticising the National Board of Revenue for placing the proposal to the finance minister without considering its impact.
Bankers also said that the planned hike would increase the burden on depositors.
According to the finance ministry officials, the excise duty may be increased to Tk 200 a year from the current Tk 150 if the balance, credit or debit, in accounts with banks and financial institutions exceeds Tk 20,000 but remains less than Tk 1 lakh at any time during the year.
Balance below Tk 20,000 is exempted from the excise duty.
For Tk 1,00,001 to Tk 10 lakh in balance, the payable excise duty may be increased to Tk 1,000 a year from the existing Tk 500.
The duty may be hiked to Tk 3,000 for balance between Tk 10,00,001 and Tk 1 crore from the current duty of Tk 1,500.
Account holders may have to pay Tk 15,000 a year as excise duty instead of Tk 7,500 for balance between Tk 1,00,00,001 and Tk 5 crore.
For balance ranging from Tk 5,00,00,001 to above, the rate of excise duty may be increased to Tk 30,000 from the existing Tk 15,000 in the next fiscal year.
Earlier, the government increased the duty by up to 67 per cent in the budget for the 2015-2016 fiscal year.
Banks and financial institutions usually deduct the duty from the accounts when the balance crosses the limits.
Excise duty on services rendered by banks and financial institutions, and air ticket sales is imposed under the Excises and Salt Act-1944.
Meghna Bank managing director Nurul Amin told New Age on Sunday that the proposed higher excise duty would put a new burden on the depositors as they were already counting different types of service charges.
Common people will be reluctant to open accounts with the banks due to the higher excise duty as the tax would create a pressure for them, he said.
Amin, a former chairman of the Association of Bankers, Bangladesh, said that the depositors would have to count the duty if they held the balance for a single day in a bank.
Similarly, the borrowers would also face the excise duty that would play a role in increasing their cost of fund, he added.
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