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From now on, if that amount is more than Tk 5 lakh when combining the previous investment and accrued interest, then the source tax will have to be paid at a rate of 10 percent of the reinvestment.
Of the four existing types of savings certificates, only the five-year Bangladesh Savings Certificates can be automatically reinvested.
The central bank on Thursday issued a directive to banks clarifying the matter in light of an order from the Finance Ministry.
Withholding tax deduction at a rate of 10 percent on earnings for investing more than 5 lakh Tk in all types of savings certificates for the financial year 2019-20 has been foreseen. And if the investment amount is less than this, the tax is deducted at a rate of 5 percent.
Previously, there was a 5 percent tax on any investment amount.
‘Unusual’ increase in savings certificate sales
Even during the epidemic, the sale of savings certificates increased by 39.22%
However, an official from the relevant department of the central bank said the directive was issued to clarify whether the directive would also be effective in the case of reinvestment.
He told bdnews24.com with an example: “Suppose someone buys a five-year Bangladesh Savings Certificate worth 3.5 million taka in the first period. After five years, his forward position stood at 5 lakh 10 lakhs. This amount was automatically reinvested as no interest was withdrawn and capital was withdrawn. In this case, when it comes to withdrawing money in savings certificates with second-term interest, you have to pay a 10 percent withholding ”.
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