Ministries and divisions have started instructing all employees under their purview including peons, guards and office assistants, to obtain Electronic Taxpayer Identification Numbers (e-TINs) and file tax returns by 30 November, otherwise their salaries will be suspended.
Previously, filing income tax returns was not mandatory for all government employees. It was only required for those whose basic salary exceeded Tk16,000.
However, the government has introduced a new income tax law in the current financial year, which stipulates that all public servants must file tax returns.
Proof of return submission is now mandatory for receiving salaries and allowances. Non-compliance will result in salary suspension, as per the Income Tax Law 2023.
Several officials state that lower-tier government employees without taxable income are in a state of panic due to the directives, especially those with significant personal savings or investments despite having low salaries.
However, experts believe that the provision of mandatory return submission for all government employees is a logical step. They argue that many low-wage workers have substantial assets, such as multiple apartments and buildings, and may have additional income sources beyond their salaries.
By making return filing mandatory, the government will gain insights into these assets and ensure that all income is properly taxed, they say.
This move is expected to increase the number of tax returns filed, expand the tax net, and bring low-wage employees with undisclosed income and assets under the tax purview, ultimately leading to increased revenue collection, according to experts.
Officials of the National Board of Revenue (NBR) said that employees whose salary is less than the tax limit will not have to pay any tax. But everyone has to file a return.
According to data from the Ministry of Public Administration, there were 13,96,818 government officials and employees as of last year. Out of this number, 12,17,264 fall within the 11th to 20th grade pay scales. The starting basic salary for these grades ranges from Tk8,250 to Tk16,000, which is below the current fiscal year's tax-exempt limit of Tk3.50 lakh per annum.
Ahsan H Mansur, executive director of the Policy Research Institute, told The Business Standard, "In our country, many peons own two to three houses. While government jobs offer lower salaries, these individuals may have additional sources of income. Considering this, it is logical to make return submission compulsory for all public employees."
Mansur emphasised the need for a balanced approach, ensuring that no one is unduly harassed during the process.
He said, "If someone has a significant amount, such as 10 lakh or 20 lakh taka, they should not be harassed. It is crucial to recognise that even low-salaried individuals can accumulate such sums over time through diligent savings."
However, such employees with substantial unexplained wealth should be subject to scrutiny, he added.
Tax consultant Snehasish Barua said the new income tax law will expand the number of return filers, consequently broadening the tax net. He emphasized that individuals who have accumulated significant wealth despite modest salaries will now be required to submit asset declarations, bringing them under the purview of tax compliance and accountability.
He acknowledged that some government employees with lower educational qualifications may face challenges in independently completing their tax return forms.
He suggested that in such cases, engaging professional assistance may incur additional financial strain. To alleviate this burden, Barua encouraged these individuals to utilise the online tax filing system, enabling them to fulfill their tax obligations without incurring unnecessary expenses.