New measures to bring Tk 8,380cr in additional tax

Govt sends IMF an estimate
The new measures taken for some sectors to boost income tax collection in the current fiscal year will bring in an additional Tk 8,380 crore, according to the National Board of Revenue.

The government has sent the estimate to the International Monetary Fund as the global lender wanted to know about the fresh tax measures.

However, the NBR’s income from some sectors will fall by Tk 204 crore, compared to the previous year, due to the new measures. Of the amount, cuts in corporate tax from 37.5 percent to 35 percent will cause a loss of Tk 100 crore.

An IMF mission will be in Dhaka on a two-week visit from September 16 to review Bangladesh’s progress under the lender’s Extended Credit Facility programme.

Finance ministry officials said the mission’s main focus will be on the reform programmes taken by the NBR as the tax collector saw a big deficit of Tk 4,500 crore from its target last year.

However, the tax collection target rises 25 percent year-on-year to Tk 149,720 crore this fiscal year.

An utmost priority has been given to income tax from where around 38 percent of the total NBR revenue would come.

The lion’s share, Tk 3,000 crore, of the additional tax would come from the hike in the advanced income tax (AIT) rate for sales of lands and buildings, and the imposition of 1 percent AIT on sales of agricultural lands.

The NBR has for the first time brought the transfer of agricultural lands under its tax net in an attempt to boost receipts and curb tax-dodging.

The measure came amid allegations that non-farm lands outside the municipality areas are handed over in the name of agricultural lands to evade tax.

Sellers of farmlands in rural and suburban areas will have to deposit 1 percent of the deed value of the property to the state coffer as tax.

Apart from the imposition of tax on farmlands, the NBR raised the rate of tax on property transfers, including buildings, in city corporations and municipalities.

The NBR hiked the rate of capital gains tax from 3 percent to 4 percent of the deed value in Rajuk and Chittagong Development Authority areas.

The rate of tax has been hiked to 3 percent of the deed value from 2 percent for land transfers in Gazipur, Narayanganj, Munshiganj, Manikganj, Narsingdi, Dhaka, Chittagong districts and city corporations except for Dhaka North and South.

Ownership transfers of land in areas under municipalities at the district headquarters will face tax of 3 percent of the deed value in place of the existing 2 percent.

The tax rate for municipalities situated in other areas such as the upazila level will be 2 percent of the quoted prices in place of the existing 1 percent.

Various autonomous bodies earlier paid a 37.5 percent tax but the rate has come down to 25 percent this year, while some new autonomous bodies have been brought under the tax net.

Around Tk 2,000 crore in additional tax would be realised from 29 such autonomous bodies under the new measure.

Wealth surcharge has been raised to 25 percent from 15 percent, and the ceiling for individual tax rate has been hiked to 30 percent, from 25 percent, to collect more tax from the rich.

The government told the IMF that an additional Tk 850 crore would come from the wealthy people.

The tax administrator has also introduced a 5-percent tax deduction at source (TDS) on treasury bonds and treasury bills, which will bring in an additional Tk 500 crore.

The TDS rate has been raised for some sectors, while it has been introduced for some areas such as travel agency commission, online advertising, life insurance policy payment and revenue-sharing amounts paid by mobile operators.

An additional tax of Tk 600 crore will be collected due to these measures.

Another large chunk, Tk 400 crore, would be realised through improvements of quality of audit reports by chartered accountants.

The NBR has tightened rules on accounting standards for companies to check widespread accounting manipulation by a large number of local firms.

Besides, an increase in presumptive tax rates on land and water transport, and a hike in travel tax would bring Tk 400 crore together.

The NBR said the additional tax expected from compliance on transfer pricing regulations would be around Tk 100 crore.

Rejaul Karim Byron

Leave a Reply