Govt cuts source tax on savings certificates for small investors

The government has reduced the tax deducted at source (TDS) on profits from savings certificates, commonly known as Sanchaypatra, to 5 percent from 10 percent for investments of up to Tk 5 lakh, officials said.

National Board of Revenue (NBR) issued a clarification after receiving complaints from investors who alleged that banks and savings offices were deducting 10 percent tax on profits even for smaller investments.

According to NBR, the reduced tax rate applies when an individual’s total investment across all types of savings certificates does not exceed Tk 5 lakh. 

If the combined investment exceeds this limit, a 10 percent TDS will continue to apply under Section 105 of the Income Tax Act 2023.

Department of National Savings said rules for Pensioner Savings Certificates remain unchanged. 

Investments of up to Tk 5 lakh under this scheme will continue to enjoy a zero percent tax rate.

The department currently operates four major savings schemes: Family Savings Certificate (Paribar Sanchaypatra), Pensioner Savings Certificate, 5-Year Bangladesh Savings Certificate and Three-Month Profit-Based Savings Certificate.

Institutional investment is allowed in all schemes except the Family Savings Certificate.

Officials said the clarification is expected to provide significant relief to small investors and retirees who rely on monthly or quarterly returns from these government-backed savings instruments for their income.

SH