Tax return filing must for
- Bank loan of more than Tk5 lakh
- Credit cards
- Uber, Pathao drivers
- To take gas connection
- Savings certificate investment over Tk5 lakh
- More than Tk10 lakh savings in bank
- Parents who send their children to English version
Fatema Jerin, a housewife from the Shewrapara area of the capital, sells clothing items and bags online through Facebook. Although her annual sale is less than Tk2 lakh, she has to file income tax return from now on as the government has made it mandatory for online sellers in the proposed budget for fiscal year 2022-23.
Industry insiders say about three lakh small and medium entrepreneurs like her will come under the proposed provision.
They say the imposition of mandatory income tax returns on small entrepreneurs who sell goods and services online could be detrimental to the rising sector.
"The decision would not increase the government's revenue. But it would leave negative impacts on the sector and reduce employment opportunities," AKM Fahim Mashroor, head of bdjobs.com and ajkerdeal.com, told The Business Standard.
"At present, about three lakh entrepreneurs are directly involved in this sector and half of them are women. However, the number of people who are indirectly involved in the sector is more than 1.5 million," he added.
Currently, e-commerce companies with an annual turnover of over Tk1 crore are subject to source tax.
Over the last few years, the government has taken various steps to increase tax collection including imposing hefty fines and giving increased authority to the tax officials. The proposed budget of 2022-23 FY reflects the policy.
The proposed budget has also made it mandatory to file tax returns in case of having a credit card, taking bank loans of Tk5 lakh, having more than Tk5 lakh investment in savings certificates, and having Tk10 lakh in the bank account.
Moreover, tax returns have also been made mandatory for Uber and Pathao drivers, and to get gas connections. People who ever had a trade licence but are no longer in business also have to submit a tax return.
Extensive steps have been taken in the proposed budget to increase the scope and collection of taxes which can create additional pressure on people with low and non-taxable income.
In some cases, the privacy of the taxpayer recognised under the Income Tax Act cannot be protected. For example, earlier, businesses have been asked to keep TINs in their shops or offices, but now they have to keep the tax return document in display, which would violate the taxpayer's confidentiality, which is recognised by law.
Currently, the taxpayer identification number (TIN) is mandatory for 37 types of economic activities, some of which were exempted from the obligation to submit returns. In the new budget proposal, almost all of them have been brought under mandatory tax return.
Officials at the National Board of Revenue (NBR) said the measures have been taken as part of ensuring tax compliance and include the grey economy into the formal economy. They said that those who do not have taxable income do not have to pay tax, but the government should obtain all the information.
"Never before has there been such a drastic legal step to ensure tax compliance. Many people have been forced to take TIN (taxpayer identification number) who do not have taxable income such as Uber or Pathao drivers, credit card holders, savings certificate buyers, trade licence holders, small online entrepreneurs etc," said Dr Syed Md Aminul Karim, former NBR member (tax policy).
"From such people, the revenue impact is zero. But submitting a tax return would increase their compliance costs and harassment," he noted and added that such decisions have been cruel to small and middle-income taxpayers amid inflation."
"The obligation to file tax returns on low-income people is likely to increase harassment on them," said Dr Ahsan H Mansur, executive director at the Policy Research Institute (PRI).
"However, if the NBR makes a provision not to question the new taxpayers for the next three years, it could reduce harassment," he added.
Many bankers say that the obligation of submitting returns for credit cards or loans could have a negative impact on these activities.
However, Naser Ezaz Bijoy, CEO of Standard Chartered Bank and president of Foreign Investors Chambers of Commerce and Industry (FICCI), told The Business Standard, "The initiative was needed to bring transparency to the economy."
At present, there are 75 lakh TIN holders, of which only one third submit returns. NBR officials hope the new initiative will increase the number of taxpayers to 50 lakh in the next two years.