In a major move to support small-scale savers and retirees, the government has reduced the tax deducted at source (TDS) on profits from savings certificates, popularly known as Sanchaypatra, from 10 percent to 5 percent for investments totaling up to BDT 5 lakh.

The National Board of Revenue (NBR) issued a formal clarification this week following widespread complaints from investors that banks and savings offices were incorrectly applying the higher 10 percent rate to smaller holdings.

Officials confirmed that this revised rate is intended to align with the Income Tax Act 2023 and ensure that those with modest savings are not unfairly burdened.

The NBR specified that the lower 5 percent tax rate applies only when an individual’s cumulative investment across all types of savings certificates does not exceed the BDT 5 lakh threshold.

For any combined investment amount above this limit, a 10 percent TDS will continue to be deducted at the time of profit disbursement, in accordance with Section 105 of the tax law.

This distinction is expected to provide significant financial breathing room for low-income individuals and senior citizens who rely on these government-backed instruments for their monthly or quarterly livelihoods.

Furthermore, the Department of National Savings has reassured investors that the rules for Pensioner Savings Certificates remain favorable and unchanged.

Under this specific scheme, investments of up to BDT 5 lakh continue to benefit from a zero percent tax rate, meaning no tax is deducted from the profits earned.

The department currently manages four primary investment options: Family Savings Certificates, Pensioner Savings Certificates, 5-Year Bangladesh Savings Certificates, and Three-Month Profit-Based Savings Certificates.

Institutional investment is permitted in all of these categories except for the Family Savings Certificate, which remains reserved for individual female investors.