• Saturday, Oct 19, 2019
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Sale of savings tools falls by 62.72% in August due to higher tax

  • Published at 11:01 pm October 9th, 2019
national savings certificates (NSC)
Representational image of national savings certificates (NSC)

In August last year, the net investment in savings certificate was Tk4,022 crore

The net sales of national savings certificates (NSC) fell by 62.72% or Tk2,522.63 crore in August, the second month of the current fiscal year (2019-20), compared to the same month in the last fiscal year, owing to an increase in tax on income from the investment in the instruments.

In August this year, the government sold NSCs worth Tk5214.40crore. For this, Tk3,715.03 crore was spent on the cost of the previous purchase saving certificate and interest payment, creating a net debt for the month of Tk1499.37crore, according to the latest data of Department of National Savings.

In August last year, the net investment in savings certificate was Tk4,022 crore. 

Increase in tax on interest income from investment on savings tools might be the reason for the fall in NSC sales in August. NSC sales also dropped by 57% in July, the first month of the current fiscal year, said a Bangladesh Bank high official. 

Talking to Dhaka Tribune, Pubali Bank Managing Director and CEO Md Abdul Halim Chowdhury said that the sales of NSCs dropped significantly in the July and August of the current fiscal year due to strict rules and regulation imposed by government for purchasing in saving tools.

In the Finance Bill-2019, the government increased the tax at source on savings instruments to 10%. After a few days later, the government slashed the tax at source on interest income from investment on NSC worth up to Tk5 lakh to 5% from 10% with an effect from August 28.

However, savings instruments over Tk5 lakh will incur 10% tax at source. 

According to new rules imposed by the government, investors for purchasing saving tools should submit E-tin certificate and national identity card. If the amount of money is more than one lakh, they must pay the money through bank check. 

In the budget for FY20, the revenue collection target was set at Tk3,77,810 crore, leaving deficit at Tk1,45,380 crore. 

To meet the deficit, the government planned to borrow Tk63,848 crore from overseas sources and the rest Tk77,363 crore from domestic sources mainly from banks and saving certificates. 

Of the amount to come from the domestic sources, Tk27,000 crore will come from National Savings Schemes, and Tk3,000 crore from non-bank sources.

In FY19, the government’s net sales of savings certificates reached Tk49,939.48 crore against the net sales of Tk46,530.30 crore in FY18.

The government is giving interest at 11.04% to 11.76 % rates against the NSCs.

Currently, the Department of National Savings is offering four saving schemes — 5-year Bangladesh Sanchayapatra, 3-month Profit Bearing Sanchayapatra, Family Savings Certificate and Pensioner Sanchayapatra