Many taxpayers buy savings bonds for income tax relief and safe returns . But don’t understand how to show the profit from this savings account in income tax return. Again, many people think that income tax has to be paid on the profit received from the savings certificate while filing the income tax return. This blog will discuss such topics.
First of all let us say that no income tax has to be paid on the profit received from the savings certificate while filing the income tax return. Because the Bangladesh government deducts tax at source from the profit received on the savings certificate. That is, the profit is paid to the individual taxpayer by deducting tax at the same time as the profit from the savings certificate. Therefore, no income tax has to be paid on the profit received from savings certificates.
Now the question comes that how to accurately show the savings certificate, profit from savings certificate and deduction of tax at source on that profit in income tax return? Below is a related example:
I think Mr. Rahman bought a savings bond of 100,000 Taka on July 1 . Then from 1st July to 30th June for the financial year at the rate of 10% , the amount of profit received on the savings bonds purchased would be = (1,00,000 * 10%) = 10,000 Taka and the amount of tax at source on the profit received at the rate of 10% = ( 10,000 * 10%) = BDT 1,000.
Now while preparing income tax return through Taxfile BD BDT 10,000 profit received on savings account under Other Sources, Sanchaypatra Income section. Then the information of tax deducted at source of BDT 1,000 on the deposit slip should be given under Other Sources, TDS From Sanchaypatra section. It should be remembered that the information of tax deducted at source on savings account has to be given twice for preparation of income tax return correctly. Otherwise, wrong income tax or tax will come. Therefore, the amount of tax deducted at source on the savings certificate is BDT 1,000 to be paid again in the Tax Deducted At Source section.
Assuming no, Mr. Rahman will file his income tax return on August 30. As he will file income tax return on the current income year, he can claim income tax rebate on the savings bonds purchased. In order to claim income tax rebate, he has to provide the information of BDT 1,00,000 under Investment in Savings Certificates / Sanchaypatra under Tax Rebate. Then Taxfile BD ‘s automated software will calculate the income tax allowance. It should be remembered that Mr. Rahman will not get any income tax rebate on this savings bond purchased for Tk 1,00,000 in the next year. However, if Mr. Rahman buys savings bonds again in the new income year, he will get income tax rebate only on the newly purchased savings bonds in the next year.
Since savings account is an asset, it must be shown in the asset section of the income tax return. So Mr. Rahman has to select Savings Certificate/Unit Bond/Bond under Assets in the automated software of Taxfile BD and provide the information of this savings certificate purchased for BDT 1,00,000. And description (Description) box should be written in English Saving Certificate.
Since Tax Deducted At Source is an expense for the individual taxpayer, Mr. Rahman will provide the information of Tk 1,000 tax deducted at source on the savings slip under the Tax At Source section under Expenses. This will ensure that Mr. Rahman’s expenses related to tax deduction at source are shown correctly in the income tax return.
For many, investment in savings bonds, profit earned on savings bonds and tax deductions at source on those profits are a complex and time-consuming matter to accurately show in income tax returns. Hence, individual taxpayers can prepare their income tax returns very easily and at very low cost using Taxfile BD ‘s automated software. The automatic software of Taxfile BD will do all the calculations correctly only if the correct amount is placed in the specified cell . Also , individual taxpayers can get their income tax returns reviewed by experienced tax consultants of Taxfile BD to avoid mistakes in income tax returns . This will greatly reduce the possibility of mistakes in the income tax return.
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