Bangladesh Bank has warned banks to deduct tax at source (TDS) at the correct rate under the income-tax law on interest or profit paid on deposits, and to deposit it into the state treasury within the set time. It has also directed them to properly preserve the tax-deduction information and necessary documents.
A circular letter to this effect was issued on Monday (10 August) by Bangladesh Bank’s Banking Regulation and Policy Department-1, asking the managing directors and chief executives of all scheduled banks operating in Bangladesh to comply with the instructions.
Bangladesh Bank said lapses had recently been seen in some banks in deducting tax at source from interest or profit paid on deposits and in depositing the deducted tax into the treasury on time. Failure to deduct tax at the correct legal rate was later creating complications in tax adjustment and audit, and in some cases the government was being deprived of revenue because tax had not been properly deducted.
The circular said that under Section 102 of the Income Tax Act 2023, banks must deduct tax at source at the rate applicable to the type of recipient from interest or profit paid on customers’ savings, fixed, term or any other deposits.
It added that under Section 142 of the Income Tax Act 2023, if a taxpayer fails to provide proof of submission of return (PSR), tax must be deducted or collected at a rate 50% higher than the applicable rate.
Bangladesh Bank directed that the deducted tax at source must not be held in banks’ own accounts but deposited into the state treasury within the set time.
Under Section 8 of the Source Tax Rules 2023, tax deducted or collected between July and May of a fiscal year must be deposited into the treasury within two weeks of the end of the month of deduction or collection. Tax deducted or collected between the 1st and 20th day of June must be deposited within seven days of the day of deduction or collection, and tax deducted or collected on any other day in June must be deposited the very next day.
Bangladesh Bank made clear that deducted tax at source may under no circumstances be kept in a general ledger or any other account beyond the set deadline, and must be deposited into the treasury within the set time.
Banks were also directed to properly preserve tax-deduction information and to submit the necessary statements and copies of challans to the authorities concerned.
Bangladesh Bank added that the other applicable provisions of the Income Tax Act 2023 and the Source Tax Rules 2023 must also be properly followed in deducting tax at source and depositing it into the treasury. The instruction was issued under the powers granted by Section 45 of the Bank Company Act 1991.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report