When a bank advertises a DPS or FDR rate, that is usually a gross rate. The amount you actually keep can be lower because two different charges may apply:
- Source tax / WHT on the interest or profit
- Excise duty on the bank balance
They sound similar because both reduce your payout, but they work very differently.
Source tax is on interest
Source tax is deducted from the profit/interest part. PwC's Bangladesh withholding-tax table lists deduction at source from saving deposits and fixed deposits as 10% for a person other than company, trust or AoP. Other rules can change the effective rate where proof of return submission is not given or where a special exemption applies.
For a simple FDR:
Gross interest - source tax = interest after tax
So if an FDR earns ৳50,000 interest and 10% source tax applies, ৳5,000 is deducted at source.
Excise duty is on balance
Excise duty is not based on profit. It is a yearly charge based on the highest bank balance during the year. That means it can apply even when your interest is small.
This is especially important for:
- long FDRs,
- DPS accounts where the balance grows every year,
- large savings balances kept idle,
- accounts that briefly cross a higher balance threshold.
DPS has an extra caveat
Some government-approved DPS products may have source-tax exemptions or special treatment. Bank practice can vary, and the exact product terms matter.
So for DPS, treat tax as an estimate unless your bank confirms the current rule for that exact scheme.
FDR vs DPS: what to compare
| Question | DPS | FDR |
|---|---|---|
| Deposit style | Monthly | One-time lump sum |
| Interest tax basis | Interest/profit | Interest/profit |
| Excise duty basis | Account balance each year | Principal + accrued balance |
| Best use | Habit-building | Parking a lump sum |
The right comparison is not "which has a higher gross rate?" It is "which gives me better net money after source tax, excise duty and timing?"
Try it yourself
Use DPS Calculator, DPS Compare and FDR Calculator. If you already have a bank quote, enter the quoted rate and compare the net maturity amount.
Sources checked
General guidance only, not tax or banking advice. Banks may apply product-specific terms, and tax/excise rules can change through Finance Act, SRO or circular.