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The Bank of Bangladesh has clarified the deduction of taxes at the origin of the automatic reinvestment in Savings Certificates of Bangladesh to five years.
From now on, if the previous investment and accrued interest exceed Rs 5 lakhs, the investor will have to pay a 10% withholding tax. In other words, if the total investment, including net profit, exceeds Rs 5 lakhs, a tax of 10 percent will be due.
The Bank of Bangladesh has issued a circular in this regard on Thursday. The circular also asked banks to take the necessary measures regarding the new decision of the National Revenue Board.
In accordance with Section 52D of the 1974 Income Tax Ordinance, withholding tax must be deducted while the Savings Invest earnings are paid. That is, the origin tax must be deducted at the tax rate existing on the date of payment of the profit. Payment here means transfer, credit, adjustment or order or payment instruction.
According to the circular, the five-year Bangladesh Savings Certificate will be treated as net profit and actual combined total investment as a result of automatic reinvestment in the second period. If the accumulated investment exceeds Rs 5 lakh on the winnings payment date, the 10 percent withholding tax will have to be deducted at any time from July 1 of last year.
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