Excise duty on bank accounts to double next fiscal year

The government is considering doubling the excise duty on bank accounts with large debit or credit balance in fiscal 2017-18 to boost revenue collection.

Accounts with balance between Tk 1 lakh and Tk 10 lakh at any time of a year may be slapped with Tk 1,000 excise tax, up from existing Tk 500, as per the proposal of the Internal Resources Division.

For accounts with balance between Tk 10 lakh and Tk 1 crore, the excise duty would be Tk 3,000. 

The excise duty would double to Tk 15,000 for balance between Tk 1 crore and Tk 5 crore and to Tk 30,000 for accounts that record over Tk 5 crore balance.

Accounts that record up to Tk 1 lakh in balance, debit or credit, may be exempt from excise duty. At present, no excise duty is charged on balance of up to Tk 20,000.

Finance Minister AMA Muhith is considering the proposal, said a senior official of the finance ministry.

The move to increase the excise duty comes at a time when the number of bank accounts and the average balance on accounts are rising as more and more people come under the banking network thanks to expansion of branches and the government's push for financial inclusion.

In 2016, the number of accounts increased 7 percent to 8.14 crore in 2016 and the average deposit per account 6 percent to Tk 110,457, according to data from the Bangladesh Bank.

In the first eight months of the fiscal year, Tk 1,480 crore was collected as excise duty, up 16 percent from a year earlier, according to data from the National Board of Revenue.

Bank accounts are the largest contributor to excise duty. The last time the revenue authority raised the excise duty rates was in fiscal 2015-16: by 40-50 percent. 

The government is also planning to increase the excise duty on overseas travel.