Finance Act, 2021: through black money and stock market-friendly investment opportunities!
Due to the continuous downfall in the stock market of the country, in order to stabilize the stock market and increase the number of new investors, opportunities have been created to invest in securities without explaining the source of money through Income Tax Ordinance 1984, Section 19AAAA. In the case of application of this section, securities shall mean the shares, shares, mutual fund units, bonds, debentures, and other securities of the companies approved and listed by the Bangladesh Securities and Exchange Commission and all government securities and bonds for sale in the capital market.
According to the new provision, if any individual-taxpayer invests in any securities in the capital market by paying tax at the rate of 25% of the amount invested, no other authority including the income tax authority can raise any question about the source of the money invested.
An additional tax of 5% of the amount of tax will be levied on the amount invested in the capital market as 25%. That means tax has to be paid at the rate of 26.25% on the invested money.
Advantages of money investing in the stock market under this section:
- Opportunity to invest money by paying tax at the rate of 26.25%.
- Acquisition of new assets.
In this section, the conditions for investing money in the stock market are:
- Investments in the stock market and withdrawals cannot be made as to the liquid within a minimum period of 1 July 2021 to 30 June 2022 (both days included, 1 year).
- 26.25% which is much higher than the prevailing tax rate.
- Investment means The money deposited in the B.O. account must be invested in securities for a minimum of 365 days, otherwise, it will be considered as a withdrawal.
- Reluctance to invest in this sector due to instability in the country’s stock market.
However, under Section 19AAAAA of the Income Tax Ordinance, 1984, through the Finance Act, 2021, the opportunity to show undisclosed assets by paying tax at a fixed rate as per Table-1, Table-2, Table-3 of this section on cash, undisclosed assets, etc.
Payment of tax at the rate of 26.25% on cash, bank deposits, financial schemes and instruments, all types of deposits or savings deposits, saving instruments or certificates as per Table-3 of section 19AAAAA of the Income-tax Ordinance, 1984 through Finance Act, 2021. Resources can be shown. In this case section, 19AAAAA is much more convenient and profitable in both cases as compared to 19AAAA.
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