Source tax on savings certificate interest lowered to 5% for investments up to Tk 500,000

Pensioners will continue to earn tax-free interest on savings certificates up to Tk 500,000

The National Board of Revenue (NBR) has said interest on National Savings Certificates (NSCs), popularly known as “Shonchoypotro”, for investments up to Tk 500,000 will be subject to a 5 percent source tax, not 10 percent.

A senior NBR official confirmed on Tuesday that the board sent a letter to the director-general of the Department of National Savings to make the matter clear.

The letter said pensioners’ NSCs up to Tk 500,000 will continue to earn interest without any source tax. For investments exceeding Tk 500,000, interest will be taxed at 10 percent.

Allegations had surfaced that since January, source tax at 10 percent was being deducted on profits from NSCs up to Tk 500,000. The NBR’s clarification settles the issue.

Earlier this year, the government briefly reduced interest rates on some NSC investments for the first six months, but withdrew the cuts following criticism.

Customers are now receiving the same interest as in the previous six months.