Excise duty would be applicable to every deal under lending facilities and trade facilities like loan against trust receipt, said National Board of Revenue.
NBR, in a letter to Bangladesh Bank governor Fazle Kabir, on Wednesday said that banks must deduct the duty at applicable rates on the highest balance of trade facility or lending facility deal.
Value-added tax wing of NBR also requested the governor to issue an instruction to all banks for deducting excise duty as per directive of NBR.
‘The issue is very important for the sake of revenue collection,’ it said.
It also asked its field-level VAT offices to monitor the collection of excise duty from the sector.
Officials of the revenue board said that they issued the explanation following an application of Standard Chartered Bank seeking clarification on the issue.
In the application, SCB wanted NBR decision whether excise duty would be applicable only on master client account or every single deal or account created under LATR or similar lending facility, they said.
NBR arranged a tripartite meeting on the issue where central bank noted that excise duty would be applicable on every deal if a bank disbursed the loan creating a new account against the client.
The duty would be applicable once a year if the transactions were completed through the master client account, they said.
NBR officials said that the explanation would be applicable on banks based on the models the banks follow to disburse the loan.
Some banks create a master client account with approved lending limits for a year but later create separate deals or accounts for completing each of the transaction under the approved limits.
Each account created against a deal is dissolved once the transaction is completed.
On the other hand, some banks maintain a single master client account for the purpose.
‘The main point of the explanation is that the excise duty will be applicable on every account, debit or credit,’ a senior NBR official told New Age on Sunday.
He said that the clarification would remove ambiguity of banks on the issue and help deducting the duty before closing date of bank scheduled on December 27.
According to NBR, there is no excise duty on any types of bank accounts — savings, current, loan and other accounts — if the highest balance does not exceed Tk 1 lakh in any time a year.
The rate of duty will be Tk 150 per year for balance between Tk 1,00,001 to Tk 5 lakh.
Clients have to pay Tk 500 for balance between Tk 500,001 to Tk 10 lakh, Tk 2,500 excise duty for balance between Tk 10,00,001 to Tk 1 crore, Tk 12,000 duty for annual balance between Tk 1,0,000,001 to Tk 5 crore and Tk 25,000 excise duty will be applicable on balance Tk 50,000,001 and above.
According to the Excise and Salt Act, the excise duty is deducted once a year if the balance exceeds the slabs.
Source: New Age.