A new tax rebate system for savings certificates is being implemented by the NBR

A new tax rebate system for savings certificates is being implemented by the NBR

Special Desk :    |    ০১:৫৯ পিএম, ২০২১-০৮-২৬

In order to verify the information on the investments on the savings certificates reported in the tax returns, the National Board of Revenue (NBR) has connected with the Directorate of National Savings (DNS).

The purpose of this step is to prevent tax rebates from being misused.

A taxpayer identification number (TIN) will allow the new system to quickly detect hidden savings certificates included in tax returns.

Several states have already tested this method of cross-checking tax return information with DNS data from a pilot project across 31 tax districts. Tax regions have been provided with user IDs and passwords by the DNS for this purpose.

The tax rebate on savings certificates is provided according to law. For taxpayers investing 25% or more of their income in savings certificates, they receive a 15% tax rebate.

According to NBR spokesperson Syed A Momen, an application programming interface (API) between the government organizations has been completed to exchange data.

In his remarks, he stated, "Each tax zone has been instructed to verify the authenticity of the taxpayers' investments on the DNS database and submit them to the NBR in a formatted form every 15 days."

The NBR recently wrote to the zonal tax authorities in this regard, saying that taxpayers could take legal actions under the Income Tax Ordinance through DNS user IDs and passwords, including tax increases, desk audits, and field audits.

We must make sure that marginal investors, including taxpayers, are not harassed in any way.

In this case, an additional commissioner or a joint commissioner must supervise the work.

In the letter, the officials were also requested to send investors' information in the form of a chart.

A report with the name of the taxpayer, the taxpayer's TIN, income year, amount invested in a savings certificate, whether the taxpayer has filed a return or not, and the amount invested in a savings certificate must be sent every 15 days.

AB Mirza Azizul Islam, the former finance adviser to the caretaker government, said: "Savings certificates are the best way to save for the poor and middle class.". The investment in savings certificates is already increasing as the bank's interest rate has dropped.

Due to the high interest rate on investment, it also comes with tax rebate benefits. But rich people are often taking illegal advantage of this. All in all, the government has to think about it from every angle, he added.

“It is often seen that many decisions are not implemented due to the lack of coordination among government agencies, but they are eventually done very slowly. This will increase transparency and efficiency between the two government agencies,” he said.

“I believe that this new venture will catch fake investments and those who do not intend to evade taxes with false information should not have any complaints about it,” he further said.

The latest DNS data shows that the total sales of savings certificates were Tk99,557 crore in the first 11 months (July-May) of FY2020-21, breaking the previous record of Tk90,342 crore in FY2018-19.

Considering this high selling and the low-interest rates of bank deposits, Bangladesh Bank (BB) recently passed an order.

In that notification, the central bank said that the inflation rate should be taken into account during the determination of interest rates on fixed-term deposits with periods of three months and above to protect the interest of depositors and to prevent an imbalance of liabilities in the banking sector.

In the current fiscal budget, the NBR relaxed the tax measure on the savings certificates for savers. Now, savers will need to submit TIN only if they buy Tk2 lakh or more worth of savings certificates. Earlier, people had to submit TIN regardless of how much they spent on savings certificates.

Executive Director of the Policy Research Institute (PRI) Dr. Ahsan H Mansur told the media that tax implications on investors in savings tools are nominal. So, they should disclose the information in tax returns without concealment, unless the investors have fears of getting increased tax liability, having wealth in another sector.

According to NBR sources, a large portion of the taxpayers who file returns every year demand tax rebates against investments in savings certificates.

So far, it has not been possible for the tax department to verify the authenticity of the investment. It was difficult to identify whether the taxpayer has any declared investment at all, or has taken tax rebates with false information.

In case of doubt, the accuracy of the investment would be verified by letter to the DNS on a case-by-case basis. For this reason, tax rebates were misused in savings certificates.

But from now on, it will be easier and more transparent.