Investors yet to get back deducted taxes on savings certificates

Taxes on savings certificates that were deducted almost a year ago from hundreds of individual investors, including retired persons, are yet to be refunded in accordance with a government order.
The government in the 2007-08 fiscal year imposed an advance 10 per cent tax deduction on the interest income exceeding Tk 25,000 on savings certificates, but in October the tax was withdrawn following harsh criticism from the investors and the press. The decision was not applicable for the income below Tk 25,000.
Individual investors blamed the National Board of Revenue's (NBR) inordinate delay in issuing an official circular to this effect to all banks and post offices. But the NBR thinks such a circular is unnecessary.
“The question of issuing a circular does not arise. We have made it clear that the persons have to show their documents for the claim,” NBR Chairman Mohammad Abdul Majid told The Daily Star yesterday.
He said: “Concerned investors have to contact their respective deputy commissioner of taxes to claim their deducted money back.”
“Those who do not maintain income tax files have to show their documents only,” he added.
According to investors, although the NBR withdrew its controversial and widely criticised decision of deducting tax from the savings certificate three months after the announcement of the last fiscal's budget, the amount of tax deducted is quite substantial.
“We are yet to get our money back for want of an official circular of the NBR to this effect,” Tawfik Sattar, a sufferer said.
Sattar, who is now leading retired life, said lot of retired poor people are suffering for the excessive delay by the government offices concerned.
Lot of government and non-government employees invest their hard-earned money in savings certificates with an expectation of a guaranteed profit. The maximum interests paid against savings certificate is at 12.5 percent. In fact, most of such people invested their pension/gratuity/provident fund money in government securities and savings certificates, although banks and financial institutions often pay higher interest up to 14 percent.
“The delay in repayment of the deducted tax amount had made the investors, most of whom are retired persons, widows and similar others, frustrated and hapless,” said another investor.
When asked about how much money was deducted, the NBR chairman said: “The figure is not too high as the Board deducted the money for maximum three months before cancelling the decision.”
According to the National Savings Directorate (NSD), investment in saving tools declined by 39 percent in the just concluded fiscal 2007-08.
The NSD received net investment worth Tk 2,516 crore in FY 2007-08, a Tk 1,658 crore drop over the previous fiscal year. The sales also fell short of target by Tk 1,277 crore. The target was Tk 3,777 crore for net investment in saving instruments.
In the first quarter of last fiscal, sales of savings certificates showed a sharp decline, but it picked up in the second half. The directorate received net investment worth Tk 788 crore in July-December period, while the amount was Tk 1,728 crore in January-June period of the last fiscal year, sources said.