Cut source tax on small fixed deposit income
The government imposed 10pc tax at source on interest income for the twelve digit TIN holders and 15pc tax at source for non-TIN holders from financial year 2013-14 for any amount of money deposited. Before that 10pc tax at source was imposed on interest income. Bank and other financial institutions have drastically reduced interest on deposits in recent years. In most cases the rate of interest has come down to 6pc to7pc on fixed deposit, which was above 10pc three-four years back. In Bangladesh we are experiencing 6pc inflation in recent years. That is, when the rate of inflation is deducted from interest income in real term depositors get no income at all from fixed deposits. In Bangladesh there are a good number of small depositors who live on their small fixed deposits in bank or financial institutions. In such a low interest bearing situation it become difficult to live on deposit bearing income and if depositors have to pay tax at source on the interest income they will lose from principal amount. Therefore, source tax provision on fixed deposit income irrespective of income generation from deposit amount needs review.
Government should help the small fix depositors by withdrawing tax at source on deposit of Taka up to one million fixed deposits.
Md. Ashraf Hossain
Dhaka
