Review tax on interest income
THE finance minister placed the national budget for 2012-13 in Jatiya Sangsad on June 7. Along with other measures, he proposed a flat 15 per cent tax on interest income. The decision, if approved by Jatiya Sangsad, would adversely affect small depositors who run their family only on interest income against deposits with bank and financial institutions.
The interest income is mostly offset by high inflation, which until recently was in double digits. The interest given by bank and other non-banking institutions is not profitable. Getting no other safe way, small depositors invest their micro-savings in bank and non-banking institutions.
A significant number of old people are dependent on small interest income to run their families. Moreover, high tax on interest income will discourage savings.
Today’s economists agree that savings is a force of economic development. The government should take such measures so that people fill encouraged to save money whenever possible.
To relive the small depositors a certain amount of interest income, maybe Tk 100,000 per annum, needs to be exempted from the proposed tax. Interest income over Tk 100,000 may be subject to the proposed 15pc tax.
Mohammad. Ashraf Hossain
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