Withdraw tax on interest and deposit in bank
In the last couple of months Bangladesh Bank has been advocating to reduce interest on lending by commercial banks and financial institutions to stimulate business activities. Most of the private commercial banks and financial institutions have reduced 3(three) per cent interest on term deposits from beginning of May'09. Gradually the lending interest will also be reduced in near future. For better business environment reduction of bank interest is acceptable from macro economic point of view.
If one looks at it from micro economic point of view, one would see that the depositors would get less return from their savings. The retired non-government service holders and older women who meet their family expenditure on interests against deposit in bank would be affected negatively. It is known to all that a few years back government imposed 10% tax on bank interest and has been cutting it on source. Before May'09 the private commercial banks used to pay 13 % to 13.5 % interest for one-year term deposit. A depositor used to get, say (13-1.3) or 11.7 % net interest on one's deposit after one year. As the government has not withdrawn tax on earned bank interest in proposed budget, a depositor will get (9-0.9) or 8.1 % after one year. In addition to that for deposit of Tk.1, 00,000.00 in a bank Tk. 250.00 was cut as government excise duty and for a deposit, which was more than Tk. 1,00,000.00 but up to Tk.10,00,000.00 in a bank, Tk. 500.00 was cut as government excise duty. If this excise duty is not withdrawn the small depositors will be adversely affected.
I would like to urge the Ministry of Finance and Jatiyo Sangsad to withdraw income tax and excise duty on term deposit of up to Tk.10, 00,000.00 in the budget, which is under consideration of Jatiyo Sangsad now. It will give some relief to small depositors who run their families from interest on small fix deposit in banks.
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