The government's net borrowing through public savings instruments declined by 82 per cent in the last fiscal year mainly due to deduction of advance income tax (AIT) at source and reduction of rates of return on different types of its administered savings schemes.
Official figures showed that the government's net borrowing through its savings instruments reached only Tk 20.56 billion during fiscal year (FY) 2010-11 compared to Tk 115.26 billion in FY 2009-10.
National Savings Directorate (NSD) officials attributed such a drastic fall in the net sales of savings certificates, one of the government's domestic borrowing tools, to the deduction of AIT at source on their interest/profit gains.
The imposition of the taxes had resulted in withdrawal of a large volume of investment from most savings instruments, except for a couple of investment tools, in the last fiscal, they said.
Officials, however, said enhancement of interest rates on deposit by commercial banks, coupled with a bullish trend in the stock market during the first-half of fiscal 2010-11, was also responsible for the decline in the investment under savings instruments.
According to official figures, savings instruments amounting to Tk 151.75 billion were encashed by investors during the last fiscal year as against the NSD's sales of such instruments to the tune of Tk 172.32 billion during the same period.
The officials said the net sale last year was very little against the target of Tk 74.76 billion.
The government in the budget for fiscal 2010-11 made the provision for deduction of AIT at the rate of 10 per cent on income earnings or returns from all types of savings instruments except 'Family Savings Certificate' and Pensioners' Savings Certificates that were introduced in the recent past.
Apart from such a provision, the government also reduced the rate of return by, up to 2.0 per cent, on such savings tools.
The government in a move to attract more savers to the public savings schemes introduced social safety-net premium as well as increased the rate of return on some such savings tools in the on-going fiscal year.
The social safety net premium will cover five savings schemes up to 1.07 per cent in which rate of return have been increased up to 0.5 per cent on four different savingscertificates, according to the Internal Resources Division (IRD) figures.
Apart from the premium, government has reduced the deduction of AIT at source to 5.0 per cent from earlier 10 per cent for FY 2011-12. The fresh tax structure will cover each of the savingscertificates.
The measures will be applicable for the savings certificates from July 1, 2011.
http://www.thefinancialexpress-bd.com/more.php?news_id=145657&date=2011-08-09
Official figures showed that the government's net borrowing through its savings instruments reached only Tk 20.56 billion during fiscal year (FY) 2010-11 compared to Tk 115.26 billion in FY 2009-10.
National Savings Directorate (NSD) officials attributed such a drastic fall in the net sales of savings certificates, one of the government's domestic borrowing tools, to the deduction of AIT at source on their interest/profit gains.
The imposition of the taxes had resulted in withdrawal of a large volume of investment from most savings instruments, except for a couple of investment tools, in the last fiscal, they said.
Officials, however, said enhancement of interest rates on deposit by commercial banks, coupled with a bullish trend in the stock market during the first-half of fiscal 2010-11, was also responsible for the decline in the investment under savings instruments.
According to official figures, savings instruments amounting to Tk 151.75 billion were encashed by investors during the last fiscal year as against the NSD's sales of such instruments to the tune of Tk 172.32 billion during the same period.
The officials said the net sale last year was very little against the target of Tk 74.76 billion.
The government in the budget for fiscal 2010-11 made the provision for deduction of AIT at the rate of 10 per cent on income earnings or returns from all types of savings instruments except 'Family Savings Certificate' and Pensioners' Savings Certificates that were introduced in the recent past.
Apart from such a provision, the government also reduced the rate of return by, up to 2.0 per cent, on such savings tools.
The government in a move to attract more savers to the public savings schemes introduced social safety-net premium as well as increased the rate of return on some such savings tools in the on-going fiscal year.
The social safety net premium will cover five savings schemes up to 1.07 per cent in which rate of return have been increased up to 0.5 per cent on four different savingscertificates, according to the Internal Resources Division (IRD) figures.
Apart from the premium, government has reduced the deduction of AIT at source to 5.0 per cent from earlier 10 per cent for FY 2011-12. The fresh tax structure will cover each of the savingscertificates.
The measures will be applicable for the savings certificates from July 1, 2011.
http://www.thefinancialexpress-bd.com/more.php?news_id=145657&date=2011-08-09
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