Muhith gives NBR detailed guidelines about next budget

FE Report

Finance minister AMA Muhith on Wednesday gave the revenue board detailed guidelines for preparing budget for fiscal 2010-11 and achieve tax collection target for current fiscal.

The finance minister held meetings with director general of National Saving Directorate (NSD) and chairman of the National Board of Revenue (NBR) to discuss on reduction of interest rates of savings instruments and land tax.

A high-powered committee has been working on bringing down the interest rates of saving certificates at a rational level from existing 12 per cent.

The finance minister has discussed about the reduction of existing land tax to 9.0 per cent from 13 per cent.

The NBR will issue a Statutory Regulatory Order (SRO) shortly on reduction of the land tax.

Revenue officials said concealment of actual land price will be minimized and land tax collection will go up significantly with the cut of land tax.

But, the tax officials have predicted an adverse effect on economy and society after cut in interest rates of saving certificates. It was one of the suggestions of International Monetary Fund (IMF) to remove distortion in credit market.

Currently, banks offer maximum 9.0 per cent interest on deposit while the small savers have been getting 12 per cent from investment on NSD.

Ceiling of tax-free interest rates on saving certificates up to Tk 150,000 is likely to be reduced for raising tax collection from this sector, they said.

The revenue board deducts 10 per cent tax at source from the interest amount of saving certificates if it exceeds above Tk 150,000.

A senior tax official said national savings would fall significantly if the government reduced the rates from next fiscal.

“People will invest in share market and spend more on purchase of land, gold instead of saving money with NSD,” he said.