The National Board of Revenue (NBR) is now on the hunt for those who either have concealed information of their vehicle purchases or shown lower than actual prices in income tax returns in order to dodge tax.
The Income Tax Department has already got its hands on some data on concealment of income and investment in purchases of cars by a number of vehicle owners in their respective tax returns.
For example, under a tax circle in Dhaka, the department through an investigation recently came to know that 200 out of 5,000 taxpayers invested in vehicle purchases but did not mention that info while filing their income tax returns, thus evading Tk2.76 crore in taxes, according to sources at the Income Tax Department.
There are 600 income tax circle offices under 31 tax zones across the country.
Tax officials hope an across-the-board scrutiny into such types of tax dodging will be completed in the next few months. The scrutiny is expected to unearth evaded taxes amounting to around Tk700 crore in the purchase of at least 3,000 vehicles over the last six years through hiding sources of investment and income.
After getting information on vehicles and their purchasing prices from the Bangladesh Road Transport Authority (BRTA), income tax officials are cross-checking those with the income tax returns of the vehicle owners. It is mandatory to inform the BRTA about a vehicle's price during its registration.
The NBR and the BRTA now have access to each other's server to scrutinise information of vehicle owners for checking if there is any tax evasion by them. The integration has also helped in stopping the use of fake e-TIN for vehicle registration and renewal.
Seeking anonymity, a high official at the Income Tax Department told The Business Standard that the department has been investigating whether taxpayers provided false information in their income tax returns in the last six years.
The department will start issuing evaded tax claims based on information that it will get through a thorough investigation that might end in June next year, he said.
Under the Penal Code, anyone concealing investment in income tax returns will get three months to three years in jail and also have to pay evaded taxes and fines, according to the Income Tax Ordinance. But the implementation of such a punishment is rare.
As per NBR law, the Income Tax Department can tax the concealed investment terming it as income and impose a 15% fine a year on it – up to the previous six years.
According to sources, at the end of last year, the NBR had identified the registration of 4.85 lakh vehicles using fake e-TINs.
According to NBR sources, the NBR is now moving towards a data-driven method and has already started sharing data with the National Savings Directorate. Besides, it is also collecting information from the Office of the Registrar of Joint Stock Companies and Firms (RJSC), city corporations and other departments.
Tax officials think it will be much easier to bring many eligible people under the tax net in this process.
Lauding the initiative, former NBR chairman Muhammad Abdul Majid told TBS that it should have been done much earlier. "It is easy to detect tax evasion through integration with different organisations and the NBR has the right to do that," he said.
Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said increasing coordination between all parties involved will make it easier to cross-check income, expenditure or assets of a person.
Currently, there are 67 lakh e-TIN holders, while the number of income tax return submissions stood at around 22 lakh last year.