IT waiver for investment in savings

The government has offered income tax (IT) waiver up to Tk 5.0 lakh investment in pensioners saving certificate and wage earners development bond to increase sales of saving instruments, official sources said.
Bangladesh Bank (BB) issued a circular in this regard on Wednesday in line with the government decision on income tax waiver.
The circular issued by the Department of Debt Management of BB said, the investors who invested Tk 5.0 lakh in pensioners saving certificate and wage
earners’ development bond would get the facility from July 1, this year.
The tax waiver has been provided to bring changes in the particular clause of Income Tax Ordinance-1984.
BB has sent a copy of the circular to the regional branches and chief executives of all the commercial banks asking them to comply with the new government order.
“The government has offered the tax waiver on the saving instruments to encourage the small savers as well as to increase sales of such instruments,” a senior BB official told The New Nation.
He also said that higher sales of such instruments would help the government borrow less from the banking system.
Although the government has offered the income tax waiver up to Tk 5.0 lakh investment in pensioners saving certificates and wage earners development bond, it will continue to slap a 5.0 per cent tax at source for over Tk 5.0 lakh investment in other saving certificates, according to the circular.
Currently, the Department of National Savings (DNS) is selling four types of saving products–five years Sanchayapatra, three monthly Sanchayapatra, Pensioner Sanchayapatra, Paribar Sanchayapatra– and four types of development bond– Wage Earner Development Bond, Bangladesh Prize Bond, U.S. Dollar Premier Bond and US Dollar Investment Bond.
Meanwhile, the net sales of savings instruments rose almost 14 times in the first eleven months of the last fiscal year as the government offered higher interest rates to the savers in the investment of such products.
The government sold Tk 10,018 crore worth savings instruments in the July-May period of fiscal year 2013-14, while the amount for the same period of the fiscal 2012-13 Tk 735.19 crore, according to a data of DNS.
The government is offering higher interest rates in the investment of various saving tools than the deposit rates offering by the commercial banks. The average deposit rate offered by banks came down to 8.01 per cent in May while the rate for savings instruments remained above 13 per cent, according to a DNS official.
“The difference of rates is attracting people to invest more in the savings instruments pushing up the net sale of saving instruments,” he added.