DMD Circular Letter No. 06: Regarding Auto Reinvestment in 5-Years Term Bangladesh Schanchyapatra

Department of Money Management
Bangladesh Bank
(Central Bank of Bangladesh)
Head Office
Motijheel, Dhaka-1000
Bangladesh
26 Bhadra, 1427 Bangla
Ref: DMD Circular Letter No. 06 Date: ---------------------- 10 September, 2020 Chief Executive Officer/Managing Director All Scheduled Banks Operating in Bangladesh Regarding auto reinvestment in 5-years term Bangladesh Schanchyapatra.

Dear Sir,

In reference to the Memorandum No. 08.00.0000.041.22.008.02-58/1(3) dated 20/08/2020 issued by the Savings Division, Ministry of Finance, Internal Resources Department, regarding the deduction of tax at source on auto reinvestment in 5-years term Bangladesh Schanchyapatra, you are requested to take necessary action according to the following decision of the National Board of Revenue:

(1) According to Section 52U of the Income Tax Ordinance, 1984, tax must be deducted at source when paying profit to non-taxpayers. That is, tax must be deducted at the prevailing tax rate on the date of profit payment. Here, payment (payment) means transfer, credit, adjustment, or order/instruction for payment;

(2) In case of auto reinvestment of 5-years term Bangladesh Schanchyapatra in the 2nd tenure, the net profit and principal together will be considered as the total investment;

(3) If the accumulated investment (total investment including net profit due to auto reinvestment) exceeds BDT 500,000 on the date of profit payment, tax at source at the rate of 10% must be deducted during profit payment at any time after July 1, 2019;

(4) If the accumulated investment (total investment including net profit due to auto reinvestment) does not exceed BDT 500,000 on the date of profit payment within the purchase period, tax at source at the rate of 5% must be deducted during profit payment; and

(5) In case of auto reinvestment of 5-years term Bangladesh Schanchyapatra in the 2nd tenure, if the amount of accumulated investment (total investment including net profit due to auto reinvestment) exceeds BDT 500,000, tax at source at the rate of 10% must be deducted during profit payment.

Yours faithfully,
(Md. Khurshid Alam)
General Manager
Phone: 9530131
Department of Money Management