Bangladesh Bank has requested the National Board of Revenue for not deducting tax at source at the rate of 10 per cent on commission commercial banks receive on sales of prize bonds and national savings certificates, BB officials said. They said that deduction of tax at source would cause double taxation on same income of the banks. In a letter to the revenue board, the debt management department of the central bank on May 6 requested the NBR to inform its decision on the issue as soon as possible.
The revenue board in March directed the central bank to deduct 10 per cent income tax at source on commission payable to commercial banks on sales of prize bonds and savings certificates.
The deduction of tax at source will be applicable to the commission the banks have been getting since July 1, 2011 on sales of those two investment schemes, according to the NBR decision.
The BB in its letter stated that the article 52AA of the Income Tax Ordinance-1984 would not be applicable to the sector on sales of prize bonds and savings certificates.
The article deals with some specific services and payment of commission on sales of prize bonds and savings certificates is not relevant with it, it said.
On the other hand, banks pay 42.5 per cent corporate tax on its annual income calculated including different types of commission and fees.
So deduction of tax at source will not be applicable to the commission, the letter stated.
Officials of the revenue board said that the article would applicable to the sector under other services category.
The NBR, however, will examine the request made by the central bank, they said.
-With New Age input
