Withdrawing source tax on small fixed deposit income

A democratic government must work for the welfare of its citizens. It must formulate policies to reduce the burden on its countrymen. Source tax provision of the government on fixed deposit incomes should be amended to follow this welfare philosophy. The government imposed a 10 percent tax at source on interest income for twelve digit TIN holders and 15 percent tax at source for non-TIN holders from FY2013-14. Before that, a 10 percent tax at source was imposed on interest income. Bank and other financial institutions have drastically reduced interest on deposits in recent years. In most cases, the rate of interest has come down to 6 to 7 percent on fixed deposit, which was above 10 percent three years back. 

In Bangladesh, we have been experiencing 6 to 7 percent inflation in recent years. That is, when the rate of inflation is deducted from interest income, in real terms depositors get no income at all from fixed deposits. In Bangladesh there are a good number of small depositors who live on their small fixed deposits in bank or financial institutions. In such a low interest bearing situation, it becomes difficult to live on deposit bearing incomes, and if depositors have to pay tax at source on the interest income, they will lose out on the principal amount. The government can help them by withdrawing tax at source on deposit of money from up to three million fixed deposits.

Mohd. Ashraf
Ramna, Dhaka