In case of investments not exceeding Tk5 lakh, source tax would be deducted at the rate of 5%
Profit along with principal would be treated as a fresh investment in case of auto reinvestments in five-year national saving certificates (NSC) and the applicable source tax will be determined based on the invested amount, according to the Bangladesh Bank.
For auto reinvestment of five-year national saving certificates, source tax at the rate of 10 percent would be deducted if investments exceed Tk5 lakh for any payment after July 1, 2019.
In case of investments not exceeding Tk5 lakh, source tax would be deducted at the rate of 5 percent.
A central bank circular issued on Thursday to the country's banks said that the deduction of source tax was a must as per the section 52D of the Income Tax Ordinance, 1984.
Banks were asked to deduct source taxes at the applicable rate when the interest on the NSC would be paid to the customers.
"Transfer, credit, adjustment and payment orders or instructions would be treated as payments," reads in the circular.