The decision to reduce tax on Sukuk bonds to increase capital market investment

Sharebarta24.com, Dhaka: The government has decided to provide tax rebate on sukuk bonds to increase investment in the capital market. It has been decided to increase capital market investment. Although investors will have to wait until the next budget year to get this benefit.

Meanwhile, the Finance Department has sent a letter to the National Board of Revenue (NBR) to take necessary steps in this regard. A letter was sent to NBR from the Finance Department on October 8.

It is learned that a meeting of the Cash and Debt Management Committee (CDMC) was held on September 14 under the chairmanship of Finance Secretary Abdur Rauf Talukder. It was decided to withdraw income tax rebate and VAT to attract investment in Sukuk bonds. A letter has been sent to the NBR in this regard.

The letter said some taxpayers have invested in Sukuk bonds issued by the government in the fiscal year 2020-21. An individual gets income tax rebate if the taxpayer invests in government securities such as treasury bonds. Sukuk is also an Islamic securities of the government like treasury bonds. But the provision has not been introduced to consider the investment of individual taxpayers as income tax deductible. Therefore, it is advisable to consider the money invested in Suku as a treasury bond as a discount.

Alamgir Hossain, a member of the NBR’s Income Tax Policy Division, told the media that the CDMC’s decision was being reviewed. Since the imposition and withdrawal of taxes is the prerogative of Parliament. So if you want to give tax rebate facility on Sukuk bonds, you have to wait till the next budget.

Sukuk bonds were issued for the first time in the country last fiscal year as part of a fundraising drive for government development projects. The government and the central bank have jointly released the bonds.

The central bank has withdrawn money from the Tk 6,000 crore bond in two phases. This money is being invested in the government’s water purification project. Its profit rate is 4.69 percent. Ordinary investors can also invest in these bonds. However, you have to buy at least 10 thousand rupees.

It is learned that at present, tax concession is available by investing in 9 sectors including savings certificates. An investment or donation of up to 25% of a taxpayer’s total annual income is considered tax deductible. If you invest more than this, you will not get additional tax deduction. In this case, if the annual income of the taxpayer is less than Tk 15 lakh, 15 percent tax exemption will be available for the investment. And if the income is more than 15 lakh, tax exemption will be available at the rate of 10 percent.

Areas where tax exemption is available for investment: The sectors in which tax exemption is currently available for investment are- Life Insurance Premium; Contributions to the provident fund of government officials; Employer and officer contributions to recognized future funds; Contributions to welfare funds and group insurance funds; Contributions to the Super Innovation Fund; If you deposit a maximum of Tk 60,000 per annum in public and private banks; Purchase of savings certificates; Investing in shares, stocks, mutual funds or debentures of companies listed on the stock exchange; Tax exemptions are available if you invest in government-approved treasury bonds.

Sukuk bonds are quite popular worldwide for Shariah-based financing. Of these, Malaysia has invested the most. 36.9 percent of the total global investment. Saudi Arabia 14.5 percent, Turkey 7.9 percent, Kuwait 7.5 percent, the United Arab Emirates 6.1 percent, Iran 4.6 percent, Qatar 3.8 percent and Bahrain 2.8 percent.


Source: Share Barta 24 by www.sharebarta24.com.

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