Top bankers seek investment ceiling on govt securities lifted, capital gains on T-bills waived

The Association of Bankers Bangladesh
Limited (ABB) has proposed a series of tax relief measures and policy reforms,
including removing the investment cap on government securities for individuals
and exempting capital gains from treasury bills and bonds.
In its pre-budget
recommendations for the 2026-27 fiscal year, the association presented a
14-point proposal to the National Board of Revenue (NBR) during a meeting in
Dhaka today (1 April).
The pre-budget
discussion was attended by NBR Chairman Md Abdur Rahman Khan and senior
officials of the revenue authority.
ABB Chairman and Managing Director of City
Bank Mashrur Arefin urged authorities to introduce measures aimed at
strengthening the financial sector and encouraging investment.
Among its key
proposals, the ABB called for the withdrawal of the existing Tk5,00,000 ceiling
on individual investment in government securities for tax rebate purposes,
arguing that the restriction limits investors from fully utilising available
tax benefits and discourages participation in a traditionally safe investment
segment.
The association
noted that instruments such as treasury bills, bonds, savings certificates,
debt securities and Shariah-based sukuk remain highly attractive to investors,
but the cap has reduced incentives, adversely affecting government cash flow.
The ABB also
proposed that capital gains earned from treasury bills and bonds be made
tax-free, instead of being taxed at the current rate of 15%. It argued that
such a move would help develop a vibrant bond market and attract foreign
investors, thereby supporting foreign exchange reserves.
In addition, the bankers' body recommended recognising provisions against
non-performing loans as allowable expenses for tax purposes, reducing corporate
tax rates to 30% or below, and removing limits on corporate social responsibility
(CSR) expenditure.
Under current
rules, CSR spending is capped at 10% of total income or Tk8 crore, whichever is
lower, with only 10% tax rebate. The ABB suggested treating such expenditure as
fully tax-deductible and lifting the ceiling altogether, stating that increased
CSR spending would contribute to broader socio-economic development, including
in education, healthcare, disaster management and environmental protection.
The association
further called for the withdrawal of the requirement to submit proof of
submission of income tax return for accessing banking services such as loans
and fixed deposits, and reinstating the previous system of electronic Taxpayer
Identification Number (e-TIN) submission.
At present,
individuals without taxable income must submit proof of submission of income
tax return to obtain loans exceeding Tk20 lakh or to open and maintain fixed
deposits above Tk10 lakh.
The ABB argued
that this requirement has negatively affected retail and CMSME (cottage, micro,
small and medium enterprise) clients, pushing many towards informal lenders due
to fewer documentation requirements.
It warned that
such a trend could drive CMSMEs outside the tax net, whereas facilitating
easier access to formal banking could boost future tax revenues, including
income tax, VAT and excise duties, while also generating employment.
'Super tax' on stock dividends
The ABB also
sought the withdrawal of the 10% "super tax" on stock dividends and
retained earnings transfers by listed companies. Currently, companies face
additional tax if stock dividends exceed cash dividends or if retained earnings
transferred exceed 70% of post-tax net income.
The association
argued that such taxes hinder banks' ability to strengthen their capital base,
noting that scheduled banks are required to maintain a minimum capital adequacy
ratio of 12.5% of risk-weighted assets.
The ABB also urged
the NBR to allow provisions against classified and unclassified loans to be
treated as tax-deductible expenses, recalling that such provisions were
recognised as allowable expenses under earlier tax regulations before the
2006-07 fiscal year.
















