Savings Certificates

5pc extra tax on interest likely to be revoked

Shakhawat Hossain | Published: 00:55, Jun 24,2019

 
 

The government is likely to withdraw extra five per cent tax proposed on interest from saving certificates in the new budget amid criticisms inside and outside of the ruling party.

Finance minister AHM Mustafa Kamal faces criticism after he made a proposal during the budget to increase tax on interest from savings certificates to be 10 per cent from existing 5 per cent. 

On June 20, former agriculture minister Matia Chowdhury while taking part in a discussion on budget in parliament expressed surprise with the imposition of extra tax when she also appreciated some proposals by Mustafa Kamal.

She said additional tax would hurt the interest of many helpless widows and insolvent women.

The proposal is likely to be annulled on June 30 as the proposed national budget is scheduled to be passed on that day, said finance ministry officials.

The government has been looking for ways to check the sales of saving certificates to overcome the mounting pressure on the debt management.

The government spent Tk 18,154 crore in interest payments from July 2018 to March 2019.

Commercial banks are also in trouble to attract deposits due to lower interest rates on deposits with them.

Former finance adviser to the caretaker government Mirza Azizul Islam described the proposal as sad to check the high growth in sales of savings certificates.

He suggested that the government should limit the sales of savings certificates.

Policy Research Institute executive director Ahsan H Mansur, too, said that the government should stop the sales of saving certificates once the projected income is fulfilled.

Extracting higher revenue from interest looks bad as many small investors depended heavily on it because of growing mistrust about the banks, said former national board of revenue chairman MA Mazid.

Saving certificates holders especially women have rushed to Bangladesh Bank and others banks to realise the interest before the imposition of extra tax.

The government is providing interest rates ranging from 11.04 per cent to 11.76 per cent against the saving certificates.

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