5% Source Tax on Profit for Savings Certificates up to BDT 500,000

Staff Report: PNN

The National Board of Revenue (NBR) on Tuesday clarified that the source tax on profits for savings certificates up to BDT 500,000 is not 10 percent but 5 percent. The matter was clarified by sending a letter to the Director General of the National Savings Directorate.

The NBR letter also stated that, as before, there will be no source tax on the profit from pensioners’ savings certificates if the investment remains within BDT 500,000.

Since January, savings certificate holders had complained that a 10 percent source tax was being deducted on profits up to BDT 500,000. This caused dissatisfaction among many investors. After NBR became aware, the clarification was made today.

The letter mentions that according to the 2019 notification, for all savings certificates, if the investment is within BDT 500,000, the source tax on the profit will be 5 percent. Only for pensioner savings certificates, no source tax will be applied if the cumulative investment remains within BDT 500,000.

According to Section 105 of the Income Tax Act 2023, if an individual’s total annual investment in all types of savings certificates exceeds BDT 500,000, the source tax on profit will be 10 percent.

Currently, the National Savings Directorate offers four types of savings certificates:

• Family Savings Certificate

• Pensioners’ Savings Certificate

• Five-Year Bangladesh Savings Certificate

• Three-Month Interval Profit-Based Savings Certificate

Except for the Family Savings Certificate, individuals and institutions can invest in the remaining types.

This clarification from NBR is expected to reassure customers and reduce confusion regarding investments in savings certificates.