Govt eyes bringing another 10 lakh under tax net

The government is going to make the Electronic Taxpayer's Identification Number (e-TIN) mandatory for four more potential taxpayer groups from the next fiscal year as the National Board of Revenue (NBR) is aiming to bring another 10 lakh taxpayers under the tax net.

Officials at the finance ministry said under the new move e-TIN will be mandatory for buying savings certificates and postal savings deposits worth a minimum Tk2 lakh each, obtaining registration of co-operative society and approval of any building design from the municipality office.

The budget for the upcoming fiscal year will have an announcement in this regard, they said.

Business leaders have welcomed the move but urged the government to provide more services to the taxpayers.

Commenting on the matter, Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman told The Business Standard, "Such initiatives are always welcome.

"We have been demanding for a long time to expand the tax net to give relief to the existing taxpayers."

The DCCI president said the NBR feels a pressure to collect more tax every year, so they put pressure on the existing taxpayers to achieve their target. Expanding the tax net will reduce that pressure on the existing taxpayers and encourage them to disclose their assets and properties.

Echoing Rizwan, the Business Initiative Leading Development's (BUILD) Chairman Abul Kasem Khan said it is a good initiative and the government should think about more uses of the e-TIN as well as the national identification number.

He said the high-value transactions should be brought under the banking channel. For example, buyers should pay through the banking channel for purchasing cars. This will be helpful to make the taxpayers more accountable and bring them under the tax net.

Shams Mahmud, former president of the DCCI, said making the e-TIN mandatory for purchasing savings certificates will enable the government to find out if anyone invests black money in them.

However, this initiative might appear difficult for the retired persons and rural women who do not have e-TIN, said Shams Mahmud, also the managing director of Shasha Denim.

He also said a number of multi-level companies are doing business in the name of the cooperative society, and now the government will find them out easily.

Sources said the Department of National Savings is taking the e-TIN information from customers while they sell savings certificates. The NBR has taken the new initiative to bring it under the legal structure. 

Besides, currently the e-TIN is mandatory for getting approval for building designs at only the city corporation level and the government has planned to make it mandatory at the municipality level. 

According to the Income Tax Ordinance-1984, currently, obtaining a TIN is mandatory for persons and firms to obtain at least 36 services, including: opening letters of credit; getting credit cards and bank loans above Tk5 lakh; obtaining membership in trade and professional bodies; owning membership of registered clubs and trade bodies; obtaining licences for trade, import and export; obtaining registration and renewal certificates for motor vehicles; participating in tenders, selling land; getting credit cards; elections and supplying goods; and  submitting bills of entry for export and import.

Holding a TIN is also mandatory for government employees getting a basic salary of Tk16,000 and above, employees holding executive or management positions in businesses or professions, and getting commercial gas and electricity connections in a city corporation or municipality.

According to the NBR, there are more than 61 lakh e-TIN holders in the country. Only 24 lakh taxpayers filed their income tax returns in the current FY21. 

According to the income tax law, submitting income tax returns is compulsory for taxpayers who have taxable income or were assessed for tax in any of the immediate past three years.

Income tax ordinance section 75 states, "The submission of an income tax return shall not be mandatory for educational institutions receiving government benefits under monthly payment order, public universities and fund (provident fund) and non-resident individuals having no permanent establishment or no fixed base in Bangladesh."

People should obtain an e-TIN when selling land and getting credit cards, but those who do not have taxable income may only get a waiver from the submission of income tax returns.

The finance ministry said the tax-free income threshold might remain unchanged at Tk3 lakh for individual taxpayers in the budget as the government considered the limit consistent with the per capita income and economic growth.

The tax rates ranging from a minimum of 5% to the highest of 25% for individual taxpayers may also remain unchanged.

The limit was raised to Tk3 lakh in the national budget for the current fiscal year after five years from Tk2.5 lakh, they said.

According to the NBR, the existing tax-free income limit is Tk3.50 lakh for women and senior citizen taxpayers, Tk4.50 lakh for physically challenged people, Tk4.75 lakh for war-wounded freedom fighters.

The government in the last budget reduced the lowest income tax rate to 5% and the highest income tax rate to 25% from the previous 10% and 30% respectively.

Individual taxpayers need to pay 5% income tax on the next Tk1 lakh income after enjoying tax exemption on income of the first Tk3 lakh while the highest income tax rate is 25% on annual income above Tk16 lakh.

The other tax rates include 10%, 15% and 20% based on the annual income.a