BASICS OF TAXATION

(Income Tax Ordinance, 1984):

Updated till Finance Act. 2013
by Prof. Mahbubur Rahman
Of all the direct taxes, Income Tax ranks foremost. By nature and heritage,
many of us tend to be just free riders in the society. We are little
emotional and sometimes unreasonable in demanding more and more state
services without the mentality to yield our due share to the cost of the
exchequer. Tax laws and personnel connected therewith are many often
thought to be inimical by the taxpayers. But its a reality that to safeguard
our existence and interest in the society, every one of us must pay tax
according to our abilities to keep the statecraft running.
Taxation is not only a major means of public nance but also it plays a
crucial role in ensuring a social and economic justice. The incidence of
direct taxes Viz. Income-Tax, gift-tax cannot be shifted on others and it has
to be borne by the person on whom it is levied. My efforts today will be to
enlighten the participants of this course on the different aspects of the
direct taxes. We shall conne ourselves to the contents only without going
into the details of relevant sections of the laws which can be had from the
IT. Ordinance, 1984 as amended from time to time through annual Finance
Act.
Income-Tax:
Income Tax is a dynamic but mostly a practical subject. It is indeed a
difcult task to acquire within this short time at least a working knowledge
of income tax especially when the laws of it originate from more than
one source, such as:
1. Income-Tax Ordinance, 1984 as amended from time to time through
annual Finance Act - Part I
2. Income-Tax manual - Part II
3. Supplementary Regulatory Order (SRO), Circulars, Notications etc.
4. Precedents of decided Case laws.

Classication of Taxpayers: Corporate and Non-Corporate

For the purpose of socio-economic stabilization, taxpayers have been
classied either as corporate or non-corporate. Companies, banks,
corporations and other statutory bodies have been taken as corporate and
the rest e.g. Individuals, rms, H.U.F, A.O.P are designated as non-
corporate.
Tax rates, residential status, tax exemptions, rebates etc. and in many other
areas, the two groups of taxpayers also differ.
Tax is levied on income. But what is income? The term income is easy
to understand but difcult to dene in view of the complexities of tax laws.
For our discussion today, we shall conne it to any sort of receipts in the
form of money or moneys worth chargeable to tax under any
provision of the IT. Ordinance. Otherwise, anything that comes in
except those which are excluded by tax laws, are included in income.
[Income: Any sort of receipts either in cash or in kinds unless
exempted by Law]
Sec. 2(34): Income includes-
Any income, prots or gains, from whatever source derived,
chargeable to tax under IT Ordinance; 84;
Any loss of such income, prots or gains;
The prots and gains of any business of insurance carried on by a
mutual insurance association computed in accordance with the IT
Ordinance; 84:
Any sum deemed to be income, or any income arising or received or
deemed to accrue or arise or be received in Bangladesh.

New provision; 2002: Provided however, that Bonus or Bonus Shares
issued/ declared by a company shall not be included as income of the
recipient shareholder.
Income may be assessable or non- assessable. Non-assessable are
totally ignored by tax laws Viz. pension income, receipts of accumulated
balance from recognized provident fund etc. as have been declared as non-
assessable income by the Govt. from time to time. Assessable income is
again divided into taxable and non-taxable income. Non-taxable income is
taken into total income for taxation rate purpose but no tax is to be paid on
this part of income, rather, a proportionate rebate is allowed on this income
as is included in the total income. Non-taxable income like share income
of partnership rm, share income from Hindu Undivided Family etc.
(Salary income of Govt. servant was deemed to have been tax paid till
30.06.2010 but it has been made taxable by Finance Act. 2011) are
included in the total income of the tax payers only to raise the income
ceiling and the tax rates as and when applicable. For example, a tax payer
with an income of Tk.220,000/- would not be at all taxable (below taxable
ceiling) but it shall be taxable due to inclusion of his share income of a
rm (already taxed at rms stage), say another Tk.180,000/-. But with the
inclusion of his non-taxable income (taxed share income), the total income
works out Tk.4000,000/- and the tax as per Finance Act., 20013 is Tk.
18,000/-. But he has not to pay Tk.18,000/-rather, a proportionate rebate
for this inclusion of the said non-taxable income (18,000/4000,000) X
1,80,000/=8,100/- is to be deducted from the tax payable i.e. net tax Tk.
(18,000-8,100)=9,900 remains to be payable instead of Tk.18,000/- as
calculated above on his total income of Tk.400,000/-.
The inclusion of Non-Taxable income into the total income may give rise
to higher income ceiling with higher taxes or it may give rise to higher
rates of taxes of the existing tax payers.

Who is to pay tax? Residential Status Sec. 2(55)
Taxability of a person is determined on the basis of his residential status.
Anyone staying in the taxable territory for 182 days or more in the income
year or 365 days at a time or consecutively within 04 years immediately
before the income year just preceding the assessment year plus a minimum
of 90 days in the income year, shall be deemed to be resident. Otherwise, a
non-resident.
Non-resident except a Bangladeshi non-resident has to pay tax at the
maximum rate of 25% irrespective of total income. Moreover, a Non-
Resident shall not be entitled to any sort of tax rebate like investment tax
rebates etc.

Companies and other statutory bodies shall be resident if their control and
management is wholly situated in Bangladesh. HUF, rms or other
Association of Persons shall be resident in Bangladesh if its control and
management is situated wholly or partly in Bangladesh in that year.

Assessment year means the Govt. nancial year just following the income
year when the assessment is to be made.

Who and when to submit return & where?
Any assessee being taxed at any time within the last 03 years and assesses
having got taxable income for the current year shall have to submit I.T.
return. Admitted tax has to be deposited along with return (Sec. 74). A
person owing a building of more than one story and with a plinth area of
more than 1600 sft. Or a motor car or having an ISD telephone
connections, contesting the elections of local bodies or of the Parliament or
being a member of a club registered under VAT ACT, 1991, has also to
submit IT return (Sec.75 (1)/(75)(1A).
In the case of an individual, such returns including the returns under
Universal Self Assessment, shall be accompanied by particulars of his
personal and family expenditures as per the prescribed form IT-10BB.
Penalty for non-submission of return (Sec.124):
Any person failing to le the return within time may have to pay a penalty
of 10% of the last assessed tax but in no case it shall be lesser than Tk.
1000/- plus in cases of continuous defaults, a further sum of Tk.50/- per
day till the default continues.
For assesses other than companies and statutory bodies, the last date xed
by law for submission of return is 30th September each year. The
companies, banks and other statutory bodies like TCB, BCIC, Grameen
Bank etc. have to submit their returns within 06 months from the end of its
income year or within the next 15th July, whichever is later. Non
submission of returns within due date unless extended by the NBR or by
the Dy. Commissioner of Taxes in individual cases for a maximum periods
of six months, shall entail a mandatory penalty as stated before and in
addition, a summary assessment by the Deputy Commissioner of Taxes
(DCT) may be made u/s 84 ex-parte to the best of his judgment. However,
the DCT shall not extend any time in case of a return under Universal Self
Assessment u/s 82BB. The return has to be submitted to the income tax
circle concerned. The whole of the taxable territories have been divided
into Zones, Ranges and Circles. For example, Dhaka Zones 1 to 8,
Chittagong Zones 1 to 3, Rajshahi & Khulna Zones etc. Zones and Ranges
are headed by Commissioners and Addl./Joint commissioners and the
Circles by Deputy/ Asst. Commissioners on the basis of its revenue
importance. An assessee has to le the return to the concerned income tax
circle under whose jurisdiction the assessee falls as per order of the Tax
Authorities.
Total Income and its Sources (Sec.43)
Any income subjected to tax must fall within a denite source as dened
U/S 20 of IT Ordinance, 84. These are income from salaries, profession or
vocation, interest on securities, house property income, agriculture, capital
gains and income from other sources. Except the last two heads, all others
are more or less self-explanatory. An income from other sources is one,
which cannot be attributed to any of the dened sources as above. For
example, income from gambling, lotteries, dividends, royalties or any
income deemed to be as such for reasons of investments and expenses not
being adequately explained. Trading Liabilities and personal loans/gifts
over Tk.500,000 unless received through a crossed cheque or bank
transfer, shall be deemed to be income of the assessee on the 4th year if it
is not paid off within three years from the end of the income year when it
was accrued/received (Sec.19(21).
Interest received from Fixed Deposits in Postal Savings Banks or any other
scheduled Banks, Dividend income are also specied as income from other
sources u/s 33 and included in the total income.
Sec. 43(2):
All non-taxable income shall be included in total income but not the non-
assessable income. Non-assessable income is totally ignored for tax
purposes.
Sec. 43(4):
Income of wife or minor children shall have to be included in total income
of the husband or father unless it can be reasonably explained. The only
exception is in the case of wife or minor child when such income arises
from assets transferred by way of registered gift by the husband or father.
Capital Gains (Sec. 31):
Capital gains arise as a result of disposal of capital assets except personal
effects like wearing apparel, jewellery, furniture, equipments and vehicles.
It also does not include gains from agricultural lands beyond ve miles of
the radius of an urban area, call it municipality, city corporation or
otherwise. The law provides that if the sale value shown falls short of the
fair market value by more than 15%, the DCT may, with prior approval of
his joint commissioner, estimate the fair market value. If this difference
goes further to more than 25%, the Govt. may opt to buy it as per the
provisions of Income Tax Ordinance 1984. All these are there just to check
the gross under valuation of properties so sold off.
The rates of capital gains tax have also been simplied. Capital gains
arising out of disposal of assets within ve years of acquisition shall fetch
tax at normal rate along with other income. If the gains as such, accrue
after ve years the tax payable by an individual shall be the normal tax
along with other income or the normal tax on other income if there be any,
plus 15% on the portion of capital gains, whichever is benecial for the tax
payer. A company shall pay tax on capital gains @ 15%. It has been also
provided that tax deducted at source @ 3% in city corporation areas, 2% in
municipal areas and 1% else where on the Deed Value at the time of
registration of the sale deed. It is further provided that the capital gain
arising from sale of lands where from tax at has been realized by the sub-
register at the aforesaid rates shall not be further taxed because, taxes so
deducted shall be deemed to be the nal discharge of tax liability under
this head u/s 82C except where the same capital gains have been
reinvested under sub section 10 of section 32 in the equity of a new
industry.
a. If the sale proceeds of the scrapped assets fall below the written
down value, the deciency shall be deemed to be obsolescence
allowance u/s 19(16).

** The excess of sale proceeds over the written down value, subject to
deduction of a maximum depreciation amount allowed so far, shall be
taken to be the capital gain u/s 31 and the deducted amount of depreciation
shall be deemed to be a business income u/s 28.
** Capital gains arising to an individual from the transfer of Govt.
securities and stock and shares of public limited companies listed with the
stock exchanges of Bangladesh are exempted from tax. This exemption
shall also be available to a Non-resident if similar benet is available for
him in his home country. Sec.32(7) further species that Capital gains
arising from transfer of shares and stocks to a company shall be however,
taxed at a concessional rate of 10% from assessment (F.A. 2010).


Total Income:
Tax is levied on the basis of total income of an assessee i.e. taxpayer. For
individuals, Firms etc., the minimum ceiling for taxable limit has been
now xed at Tk.200,000/- from the asst. year of 2012-2013. For
companies, banks and other statutory bodies, there is nothing like
minimum tax ceiling, which means otherwise that these bodies will have
to pay tax for any amount of income. The rate is also different as is
prescribed by annual Finance Act. Taxability of a resident shall be
determined on the basis of his total world income; and its the local income
only for a non-resident taxpayer. From 2008-2009 to 2010-2011, the
minimum ceiling for tax exemptions for a non-corporate tax payers was
Tk. 1,65,000/- and for Ladies and senior persons aged 65 years and above,
it was Tk.1, 80,000/-. But for 2012-2013 assessment year, the two groups
as above shall enjoy the minimum tax exemption ceiling at Tk.200,000 &
Tk.225,000/- respectively. A retarded person shall enjoy tax exemption
ceiling of Tk.275,000 for 2012-2013. But from 2013-2014, the rates have
been changed to 220,000, 250,000 & 300,000 for individuals, women &
Sr. citizen over 65 and the retarded person respectively. The next slabs for
calculation of taxes for these tax payers shall remain to be Tk.3,00,000/-,
4,00,000/-, 3,00,000/- and the maximum rate of 25% as before.
Total world income means any income arising to a Resident anywhere in
the world
Tax rates have been given at the end of this write up.
Assessment year is the year when the assessments are made. Assessment
year must conform to a govt. nancial year. It is the year just following
the income year.
Income year is the year when the income is earned. Different tax payers
may have different income year but each tax payer must fall within a
particular assessment year. Income year is otherwise the year just
preceding the assessment year.
Assessment:
Assessment means the computation of total income and the determination
of tax liability of a taxpayer. The assessment order shall be framed
within 30days from the end of the hearing and the DCT shall
communicate to the assessee the same order within next 30days.
Section 81: Provisional assessment may be made by the Dy.
Commissioner of Taxes on the basis of return submitted or where no return
has been submitted, on the basis of the latest assessed income. Regular
assessment in such cases shall have to be made subsequently.
Section 82: Where the Dy. Commissioner of Taxes has the reason to
believe that the return submitted is correct and complete, he may assess
and accept the total income shown as per return.
Section 82B: Assessment as per IT return if the Board so directs the
Deputy Commissioner of Taxes to do so
Section 82BB: Universal Self Assessment - if the return submitted by an
assessee appears to be correct and complete, the DCT shall accept it as it
is. And the receipt given as acknowledgement to the submission of the
said return shall be deemed to be as an assessment order of the DCT.
However, any such return is also subjected to audit only on the prior
approval of the NBR.
Section 83: Assessments after hearing of cases: notices are issued,
compliance is asked for, accounts and evidences are veried and the
assessments are nally made subject to other norms and procedures
(Normal Assessment).

Sec. 84: Best judgment assessment: For non-submission of returns or for
non-compliance of notices after the assessment proceedings began, the
DCT shall complete the assessment to the best of his judgment and
determine the total income and tax payable.
If the best judgment assessment of the DCT lacks of proper evaluation
of legal and factual aspects in the opinion of the Board, the actions of the
DCT shall be construed as misconduct. [Sec. 84(2)]
Sec.30: No expenses shall be allowed u/s29 from income earned through
Business or profession unless certain tax regulations are obliged by the tax
payer i.e. non deductions of taxes & VAT at source (TDS) from specied
heads. For example; TDS from Salaries, House Rents, Imports, Payment to
Contractors and on Supplies of goods and services etc.
Sec.30A: The DCT cannot disallow any claim of the assessee without
ascribing specic reasons for any such disallowance of any item of
expenditure. (Finance Act, 2002.)
Sec.93: For concealment of income/underassessment or for undue relief
having been enjoyed in the past, the Deputy Commissioner of Taxes,
subject to certain conditions and restrictions may re-open the case within
06 years (FA 2012) from the end of year of completion of the assessment
and determine the income of that year and may further start penal
proceedings as per law leading to imprisonments or ne or the both.
Sec.94: Assessments shall be made within 02 years from the end of the
assessment year in which the income was rst assessable (in case of Audit/
re-opened cases) otherwise, after the expiry of 06 months from the end of
the assessment year in which the return is submitted (normal assessment).
However, in a case where transfer pricing is involved, the assessment shall
be made within 03years from the end of the concerned assessment year.

Sec. 94(4): If the DCT fails to give effects to appellate decision within 30
days, it shall be construed as misconduct.

Sec. 123 to 131:
Sec. 164 to 171:
These sections deal with the penalties and prosecutions for various
offences and irregularities committed by the taxpayers in respect of their
income tax assessments.
The punishment ranges between monetary penalties to 05 years
imprisonment but in no case, the minimum imprisonment shall be less than
03 months.

Appeals by aggrieved tax payers:
An aggrieved assessee, other than a company, may prefer an appeal to the
appellate Joint/Addl. Commissioner of Taxes within 45 days from the date
of receipt of the impugned assessment order. (Sec.153)
An appeal fee of Tk.200 (Finance Ordinance, 2007) to be deposited to
govt. a/c under code no.1-1143-0010-1876 and the admitted liability U/S
74 shall have to be paid before ling the appeal. A company will le the
appeal direct to the Commissioner of Appeals with similar conditions. Sec.
153(1A)

The aforesaid appeals shall be deemed to have been accepted unless an
order is passed by the appellate authorities within 150 days from the end of
the month in which the appeal was led [sec.156(6)]
Sec. 121A: Revisional powers of the Commissioner
This section was deleted by Finance Ordinance, 2007, but again
reintroduced by Finance Act. 2009. The Commissioner may call for any
case record wherein the order has been passed by any ofcer subordinate
to him and may pass an order as he deems t. On the other hand, the tax
payer may also le a revision petition to the Commissioner of Taxes within
60 days from the date of receipt of the impugned order along with a fee of
Tk.200/-. The undisputed tax under sec. 74 has also to be paid before ling
the petition.
The aforesaid review petition shall be deemed to have been accepted
unless an order is passed by the Commissioner within 60 days from the
date of ling the review petition. This revision petition is subject to the
condition that the applicant has to forgo the right to further appeals to
Appellate Joint/Addl. Commissioner of taxes or the Commissioner of taxes
(Appeals) or to the Taxes Appellate Tribunal as stated earlier.

Taxes Appellate Tribunal: (Sec.158)
Taxes Appellate Tribunal shall be constituted by members being recruited
from amongst retired members, NBR, retired Commissioners of Taxes,
existing Commissioners of Taxes, Chartered Accountants & ICMAs with
at least 08 years practice, retired District and session Judge and practicing
Tax Lawyers of enormous experience. Subject to norms, procedures and
limitations, an assessee can appeal to Tribunal within 60 days and on
payment of an appeal fee of Tk.1000/- to be deposited to govt. a/c against
the orders of the Appellate Commissioners/Additional commissioners/Joint
commissioners of taxes. The appeal shall be deemed to have been accepted
unless any order is passed on such appeal by the Tribunal within 06
months from the end of the month in which the appeal was led.
Provided however, that no appeal shall lie to the Tribunal unless 10% of
the amount representing the difference between the tax as determined on
the basis of the order in the 1st appeal (revised assessment u/s156) and the
tax payable u/s74 as per return is paid. It is further provided that the
Commissioner of Taxes may however, waive such payment of taxes u/s
158(2) in a manner as he deems t on cogent grounds (F. Act. 2011).
Reference to the Honble Supreme Court. (Sec.160, 162)
Such references only on questions of law may be made within 90 days and
on payment of a fee Tk.2,000/-
Provided however that no reference under sub sec. 01 shall lie against the
order of the Taxes Appellate Tribunal unless the following taxes have been
paid.
25% of the difference between taxes payable under sec. 74 and the
taxes due after the disposal of the case by the Tribunal (taxes u/s.
159) when such taxes does not exceed Tk.10,00,000/-,
50% of the difference between taxes payable under sec. 74 and the
taxes due after the disposal of the case by the Tribunal when such
taxes exceeds Tk.10,00,000/-

Conclusion:
Tax laws are highly cumbersome and full of juggleriess of repetitions and
renewals, which have made it difcult for a commoner to understand. A
BCS (Taxation) Cadre ofcer has to undergo 02 years probation before
being posted to the charge of assessments. Therefore, I have no reason to
be very much enthusiastic as to the sort of ongoing knowledge the
participants may gather from this sort of short lived course so hopefully
organized by the management of this great institute.

Rates of Taxes as per Finance Act, 2009.
Individual / Firm / Hindu Undivided Family / Association of Person
(AOP)
First Tk.165,000 -----------------------------------Nil
Next Tk.275,000 ---------------------------------@ 10%
Next Tk.325,000-----------------------------------@ 15%
Next Tk.375,000-----------------------------------@ 20%
On the balance ----------------------------------@ 25%
Provided however, that a lady tax payer or a
Senior person over 65 shall enjoy the initial
exemption of Tk.180,000/- Provided further
that an assessee who paid taxes in the
maximum rate in the last year shall get a
rebate @ 10% on the additional tax
attributable to any excess income shown at
more than 10% this year over last year.

Rates of Taxes as per Finance Act, 2011.
Individual / Firm / Hindu Undivided Family / Association of Person
(AOP)
First Tk.180,000 ----------------------------------------Nil
Next Tk.300,000 -----------------------------------@ 10%
Next Tk.400,000-------------------------------------@ 15%
Next Tk.3000,000------------------------------------@ 20%
On the balance ------------------------------------@ 25%
Rates of Taxes as per Finance Act, 2012.
Individual / Firm / Hindu Undivided Family / Association of Person
(AOP)
First Tk.200,000 ----------------------------------------Nil
Next Tk.300,000 -----------------------------------@ 10%
Next Tk.400,000-------------------------------------@ 15%
Next Tk.3000,000------------------------------------@ 20%
On the balance ------------------------------------@ 25%
Rates of Taxes as per Finance Act, 2013.
Individual / Firm / Hindu Undivided Family / Association of Person
(AOP)
First Tk.220,000 ----------------------------------------Nil
Next Tk.300,000 -----------------------------------@ 10%
Next Tk.400,000-------------------------------------@ 15%
Next Tk.3000,000------------------------------------@ 20%
On the balance ------------------------------------@ 25%

Provided however, that a lady tax payer or a
Senior person of 65 and above shall enjoy the
initial exemption of Tk.250,000 and a retarded
person shall enjoy the minimum ceiling of Tk.
300,00. Other slabs remain as usual.

Non-residents except a Bangladeshi Non-resident, (NRB) shall be charged
to tax at the maximum rate of 25%. The NRB shall be taxed at normal
rates as applicable to a resident of Bangladesh.
But in no case, tax shall be lesser than Tk.3,000
in any city corporation areas, Tk.2,000 in
municipalities and Tk.1,000 in other places.

Tax Rates for Corporate Tax payers as per
Finance Ordinance, 2011

Public Ltd. Companies listed with the Stock
Exchange 27.5%
Private Ltd.
Companies
37.5%
Banks, Insurance Companies and other Financial
Institutions 42.5%
Mobile Phone Operators
Companies 45%
Finance Act. 2012: There was no change in the tax rates as above.
Finance Act. 2013: Corporate tax rates also remain to be the same as
above.
But if any Mobile Company offers at least 5% of its shares in the Stock
Market as IPOs, in that case, tax rate shall be @40% Dividend income
shall be taxed @ 20% (for the corporate assesses) other conditions remain
unaltered as last year.
As per Finance Act. 2011, every company irrespective of shown Prot or
Loss, shall pay a minimum tax of 0.50% of the amount representing such
companys gross receipts from all the sources for that year.
An investment tax rebate @15% on 30% of the total income excluding
the employers contribution to Provident Fund (Part B of First Schedule) or
Tk.150,00,000/- whichever is less, shall be enjoyed by an individual
taxpayer. But a corporate Tax Payer is not eligible for any such benet of
investment tax rebate.
Wealth Tax had been abolished (Finance, Act, 1999). But again a surcharge
has been introduced @10% of the tax payable by a person whose total
wealth as per IT-10B exceeds Tk. 02 Crore and @15% of the tax payable if
the said total wealth exceeds Tk.10 Crore for any income year (F.A.2013).

The income earned abroad by a Bangladeshi citizen and the same being
remitted through proper banking channel is totally tax exempted vide
SRO. 216-Laws/Income tax/2004 dated 13.7.2004.
Public Ltd. Companies listed with the Stock Exchange will enjoy a
rebate of 10% from tax payable if it declares dividend of 20% or more
in any year.
Provided further that if a Public Ltd. Co. does not declare a minimum
of 10% dividend, it will pay tax @ 37.5%.
Public Ltd. Company declaring dividend of less than 15% of the
paid up capital in any year shall fetch an additional tax of 5% on
the reserve so made with undistributed prot of the year.

Corporate rates of income tax for ready-made garments
industries has been reduced from 30% to 10% by Finance Act,
2003.
Tax rate for textile industries: @ 20%.

Assesses other than the above i.e. individuals rms etc. used to get an
initial exemption of Tk.40,000 (non-assessable) from dividends and
the balance was to be taxed at normal rate applicable to that assessee.
This ceiling of exemption had been raised to Tk.100,000 by Finance
Act, 2001. And again reduced to Tk.25,000 by Finance Act, 2002.
Again total exemptions of dividend has been allowed by Finance Act,
2003. But in the F.A.2012, an exemption of Tk.5,000 from dividend
was again introduced and this exemption of Tk.5,000 has again been
raised to Tk.10,000 by F.A.2013 i.e. effective from asst. year:
2013-2014.
From now onward, there will be an exemption of Tk.10,000 and the
balance if there be any shall be added to total income. Dividend
income shall be taxed @ 20% for Corporate tax payers (Companies
etc.) and an individual shall be taxed at normal rates as applicable to
him/her.
50% of income earned through export business shall be non-
assessable.
Income from Software development is exempted up to 30 June, 2014

Taxability of interests on saving Certicates

Interests credited/paid to the holders of Saving Certicates of any category
other than Wage Earners Development Bond, USD premium bond etc.
were subjected to 05% deduction of tax at source till 31.12.2003 and the
taxes so deducted were considered to be the nal discharge of tax liability
u/s 82c(4).
But Certicates purchased after 31.12.2003 were immuned from such
deductions of taxes at source till 30.06.2007. The interests earned there
from were as usual added to total income and taxed accordingly.
Finance Act. 2011 had brought another amendment to sec. 52D whereby
interests on any saving instruments including Wage Earners Development
Bond, USD premium bond shall be subjected to a 5% deduction of tax at
source and the provision for nal discharge of tax liability u/s 82C was
also withdrawn. Even the interest from pensioners savings certicate shall
be taxed as usual with 5% tax deduction as aforesaid. But no tax is
deductable u/s 52D if the savings instruments are purchased by an
approved superannuation fund or pension fund or gratuity fund or a
recognized provident fund or a workers prot participation fund.
Henceforth, all such interests shall face tax deductions@5% for onward
credit from the tax payable.
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