The government has proposed doubling the tax on profits earned from savings certificates, a move that is expected to reduce the disposable income of millions of middle-class families, retirees and pensioners who depend on returns from such investments.

According to the proposed budget for FY2026-27, the advance tax rate on profits from savings certificates will be increased to 10 percent from the existing 5 percent. The proposal was included in the Finance Bill presented in Parliament on Thursday.

Currently, a 5 percent tax is deducted at source and treated as the final tax liability. Under the new proposal, the deducted amount will be considered an advance tax, meaning investors will have to adjust their actual tax liabilities through income tax returns.

Experts warn that the measure could place an additional burden on middle-income households already struggling with inflation. A large number of savings certificate investors are not regular taxpayers and do not have Tax Identification Numbers (TINs), making it difficult for them to claim refunds of excess taxes.

Former senior government official and savings certificate investor Anwar Hossain said the decision would increase financial pressure on middle-class families, many of whom rely on income from savings certificates to meet household expenses.

According to banking and NBR sources, a significant portion of savings certificate investors includes retired government employees, homemakers, widows and fixed-income earners who depend on monthly profit payments for their living expenses.

For example, under the Family Savings Certificate scheme, investments of up to Tk 750,000 currently earn an interest rate of 11.93 percent. For every Tk 100,000 invested, the monthly profit is about Tk 994. After a 5 percent tax deduction, investors receive around Tk 945. If the proposed 10 percent tax is implemented, the amount received would fall to below Tk 900.

However, Finance Secretary Md Khairuzzaman Mazumder said at a post-budget press conference that no new measures regarding savings certificates had been introduced in the budget.

According to the National Board of Revenue (NBR), amendments to Section 163 of the Income Tax Act, 2023, will allow investors to claim refunds if the deducted tax exceeds their actual tax liability. Refund applications will require bank account details, and the government has proposed returning the excess amount within 120 days after verification.

At present, four types of savings certificates are available under the National Savings Directorate: Family Savings Certificate, Pensioner Savings Certificate, Five-Year Bangladesh Savings Certificate, and Three-Month Profit-Based Savings Certificate. The profit rates on these instruments currently range between 11.77 percent and 11.98 percent.