DHAKA: National Board of Revenue (NBR) exempted small savers having bank balance below Tk 0.5 million from paying tax.
The NBR has estimated that income tax wing will count a loss of nearly Tk 5.73 billion in terms of revenue collection if the government exempts small depositors from paying tax at source on interest.
Currently, all bank depositors, including small savers, having Taxpayer’s Identification Number (TIN), have to pay 10 per cent tax at source on their profits they earn from bank deposits.
In case of not having TINs, the bank depositors have to pay an additional 5.0 per cent tax at source. But bank depositors who have deposits below Tk 0.1 million don’t need to pay additional 5.0 per cent tax on their interest.
However, the paid tax is adjustable with the actual payable tax at the time of submission of annual tax returns.
The issue came up for review of the tax authority after Finance Minister AMA Muhith in November last sought opinion of the NBR on the impact of exemption from payment of 10 per cent advance income tax (AIT) to savings accountholders having deposits below the ceiling of Tk 0.5 million.
In its review, the NBR found 90 per cent of the savings accountholders have deposits below Tk 0.5 million as large depositors usually prefer Fixed Deposit Receipt (FDR).
The board sent a summary on AIT to the finance minister. In the summary, signed by NBR chairman Nojibur Rahman, the NBR feared that the tax burden might be shifted to other sector to cope with the loss of revenue if the exemption is offered.
