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Deduction at Source from Interest on Securities under Section 106 of the Bangladesh Income Tax Act 2023—A practical guide to TDS rules, compliance requirements, and tax obligations. |
Deduction at source from interest on securities under Section 106 | Bangladesh Income Tax Act -2023
As per section-106(ITA-2023),
Deduction
of Tax at Source from Interest on Securities
Any person responsible for issuing Government securities or securities approved
by the Government or the Bangladesh Securities and Exchange Commission shall
deduct tax at the rate of 5% (five percent) from any discount,
interest, or profit payable on such securities at the time of payment or
credit, whichever occurs earlier.
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Frequently Asked Question (FAQ):
1. What is deduction at source from interest on securities under Section 106?
Section 106 of the Bangladesh Income Tax Act 2023 requires tax to be deducted at source when interest is paid on eligible securities. The payer must deduct the applicable tax before making the payment to the recipient, following the prescribed tax rate and legal requirements.
2. Who is responsible for deducting tax under Section 106?
The person or organization paying interest on securities is responsible for deducting tax at source under Section 106. They must deposit the deducted tax to the government within the prescribed time and comply with reporting requirements.
3. Which types of securities are covered under Section 106?
Section 106 generally applies to interest earned from securities that fall within the scope of the Bangladesh Income Tax Act 2023. The exact coverage depends on the legal definition and any applicable exemptions provided by the Act or related rules.
4. Why is tax deducted at source from interest on securities?
Tax is deducted at source to ensure timely collection of government revenue and improve tax compliance. It allows the government to collect tax when the interest payment is made rather than waiting until the recipient files an income tax return.