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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 finance 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
confine 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 difficult 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, Notifications etc.
4. Precedents of decided Case laws.

Classification of Taxpayers: Corporate and Non-Corporate


For the purpose of socio-economic stabilization, taxpayers have been classified either as
corporate or non-corporate. Companies, banks, corporations and other statutory bodies have been
taken as corporate and the rest e.g. Individuals, firms, H.U.F, A.O.P are designated as noncorporate.
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
difficult to define in view of the complexities of tax laws. For our discussion today, we shall
confine 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, profits or gains, from whatever source derived, chargeable to tax under IT
Ordinance; 84;

Any loss of such income, profits or gains;

The profits 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 firm, 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 firm (already taxed at firms 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 nonresident.
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, firms 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. financial year just following the income year when the
assessment is to be made.

Who and when to submit return & where?


Any assesses 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 file 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 fixed 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 file 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 definite source as defined 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 defined 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 specified 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 five 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 simplified. Capital gains arising out of disposal of
assets within five years of acquisition shall fetch tax at normal rate along with other income. If
the gains as such, accrue after five 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 beneficial 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% elsewhere 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 final 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
deficiency 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 benefit is available
for him in his home country. Sec.32(7) further specifies 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 assesses i.e. taxpayer. For individuals, Firms etc.,
the minimum ceiling for taxable limit has been now fixed 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. financial 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 verified and the assessments are finally 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 specified 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 specific 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 fine or the both.
Sec.94: Assessments shall be made within 02 years from the end of the assessment year in which
the income was first 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 assesses, 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.11143-0010-1876 and the admitted liability U/S 74 shall have to be paid before filing the appeal.

A company will file 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 filed
[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
officer subordinate to him and may pass an order as he deems fit. On the other hand, the tax
payer may also file 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 filing 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 filing 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 filed.

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 fit 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 difficult for a commoner to understand. A BCS (Taxation) Cadre officer 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 Profit 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
benefit 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 profit of the year.

Corporate rates of income tax for ready-made garments industries have been
reduced from 30% to 10% by Finance Act, 2003.

Tax rate for textile industries: @ 20%.

Assesses other than the above i.e. individuals firms 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 Certificates


Interests credited/paid to the holders of Saving Certificates 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 final discharge of tax
liability u/s 82c(4).
But Certificates 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 final discharge of tax liability u/s 82C
was also withdrawn. Even the interest from pensioners savings certificate 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 profit participation fund.
Henceforth, all such interests shall face tax deductions@5% for onward credit from the tax
payable.

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