NBR examines scope for tax rebate on sukuk income

The National Board of Revenue (NBR) is examining the scope for giving tax  rebate on the income of individuals who are investing in the shariah-based sukuk bond, said a senior official of the tax authority yesterday.

It was recommended by the Finance Division, which cited that such a benefit was already in place for treasury bonds.

The government raised Tk 8,000 crore issuing sukuk bonds for the first time in fiscal year 2020-21 to lure investors who are reluctant to put their money into interest-bearing T-bills, bonds and other government securities.

During the current fiscal year, the government borrowed Tk 5,000 crore by sukuk, said officials.

The aim was also for making use of excess liquidity that Shariah-based banks were sitting on for years as they were are unable to invest the funds in the T-bills and bonds.

A sukuk is an Islamic financial certificate, similar to a treasury bond and structured to generate returns in compliance with Islamic finance principles.

In its letter to the NBR in October last year, the Finance Division said sukuk was an Islamic security issued by the government.

But there is no provision for tax benefits for individuals' investment in the tool, it said, suggesting on providing the opportunity of tax rebates such as that for treasury bonds.