Finance Minister AHM Mustafa Kamal has proposed to introduce the provision of TDS (tax deducted at source) at the time of payment of interest and discount on bonds to make the bond market attractive to the investors.
The finance minister said, especially, the problem of balance sheet mismatch in the financial institutions arising out of short-term liability against long-term assets will be mitigated by this.
Therefore, he proposed to introduce the provision of TDS at the time of payment of interest and discount on bonds, he said.
“We have taken steps to develop a strong bond market in the country to provide long-term financing,” Finance Minister AHM Mustafa Kamal said in the proposed budget for the fiscal year (FY) 2020-21 on Thursday.
The minister said the flourishing of the bond market in the country will open up new scopes and opportunities for financing mega projects in public and private sectors.
“It is expected that this will reduce the cost of financing in public and private sectors”.
In addition, instead of the present provision of deducting withholding tax on the value of bond transactions, he proposed the introduction of withholding tax deduction on the commission fixed by the Securities and Exchange Commission (SEC), the regulatory body for the capital market.
“These measures will increase transactions of bonds in the capital market and facilitate the flourishing of a strong bond market in the country,” he hoped.
