With around 1.5 lakh more tax return submissions, the National Board of Revenue fetched around Tk3,250 crore in income taxes – Tk729 crore less than last year – as the deadline ended Sunday, according to officials.
If more people submit returns, revenue collection is supposed to increase proportionately. But the revenue board's collection fell this time.
Economists say revoking a blanket money whitening scope and Covid-led income crunch in the fiscal 2020-21 drove down the overall income tax collection.
According to the revenue board, around 23 lakh people and organisations having tax identification numbers (TIN) submitted returns until Sunday. Besides, some 3.62 lakh TIN-holders applied to the board, seeking "time prayer" for return submissions.
Revenue board Chairman Abu Hena Md Rahmatul Muneem told the media recently that there were 67 lakh TIN-holders in Bangladesh, while the number was around 62 lakh until June last year. In that case, 63% of the TIN-holders did not submit the returns within the stipulated time.
"Fall in income tax collection is not unusual as many people lost their income during the pandemic. Besides, cancelling the money-whitening opportunity could be another reason," Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told The Business Standard.
Requesting anonymity, a tax commissioner told TBS, "As many as 300 individuals availed the money whitening facility in my zone alone. But none showed up this year with the undisclosed income."
In previous years, the government had allowed legalising undisclosed income with taxes up to 30% plus a 10% fine. Though the revenue officials would not question the wealth, other government agencies such as the Anti-Corruption Commission (ACC) could look into it later on. The "hassle even after paying the penalty" deterred the potential taxpayers with black money.
In the face of the pandemic, the government in FY2020-21 came up with a blanket immunity, allowing whitening of money by paying only 10% tax. The untaxed money-holders would not be questioned by any agency either.
The facility paved the way for 12,000 individuals who whitened a record Tk20,500 crore, while the revenue board received Tk2,064 crore in taxes. The facility was revoked the next year amid a growing criticism over the government taxation ethics.
Ahsan H Mansur believes there should not be any blanket immunity for undisclosed incomes even if the revenue collection falls.
By 30 November each year, TIN-holding taxpayers in Bangladesh submit their income and spending details for the past fiscal year ending in June. The process is known as tax return submissions as the revenue board has been observing the deadline as "Tax Day" for the last couple of years.
Due to the pandemic, the deadline last year was extended by one month to 31 December, which continued this year too. However, as 31 December 2021 was a Friday, the deadline was extended to the next working day on 2 January 2022.