BANGLADESH has had the rare distinction of bringing down the rate of extreme poverty from 45 per cent to 12.9 per cent in 45 years after its independence in 1971. The government, NGOs and private sector worked hard together to achieve this commendable feat. But at the same time, a major chunk of our population still remains poor. The democratic government of Bangladesh must devise policies to reduce the burden of financially weak population. The provision of tax at source on fixed deposit incomes irrespective of income generated from deposited amounts should be reviewed. The government imposed 10.0 per cent tax at source on interest income for the twelve digit TIN holders and 15 per cent for non TIN holders from financial year 2013-14 for any amount of money deposited. Before that 10 per cent tax at source was imposed on interest income. Banks and other financial institutions drastically reduced interest rates on deposits in recent years. In most cases, the rate of interest has come down to 6 to7 per cent on fixed deposits which was more than 10 per cent a couple of years ago. Bangladesh has been experiencing 6.0 per cent of inflation in recent years. That means, when the rate of inflation is deducted from interest income, the depositors are left with no income at all from their fixed deposits. There are a good number of small depositors who live on the interest income from their small fixed deposits. In a situation like this it becomes difficult for them to live on interest income and if depositors have to pay tax at source on the interest income they will continue to lose a part of their principal amounts. The government can help them by withdrawing the provision of tax at source on fixed deposits up to Tk1.0 million.
Md. Ashraf Hossain
120, Cemtral Bashabo, Dhaka-1214.
mah120cb@yahoo.com
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Source: The Financial Express