Tax return time extension likely

The National Board of Revenue (NBR) is considering extending the deadline for filing tax returns beyond 30 November, given the ambiguities on various issues arising from the new income tax law and the non-filing of expected tax returns. The duration of the potential extension, however, remains uncertain at this time.

According to relevant sources in the NBR, the ongoing political turmoil and changes in tax calculation under the new income tax act may lead to an extension of the time limit for tax return submission. An official announcement regarding this matter is expected from the NBR on the last day of income tax return submission, which is 30 November.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the country's apex trade body, has already requested an extension from the NBR for various reasons, including political unrest in the country. The tax lawyers' association has also submitted a request for an extension of the time limit.

Sources within the NBR have indicated that the rate of income tax return submissions is below the expected level.

Md Zafar Imam, joint commissioner of tax zone-5 in Dhaka, told The Business Standard, "With the provisions added in the new law, we hope to collect about 15% more tax returns this year than last year. In this tax zone, 86,000 tax returns were submitted last year, but as of 26 November, less than 40,000 have been submitted."

However, TBS did not receive any statistics from the NBR regarding the overall number of tax return submissions.

A senior field-level official told TBS, "The time should be extended. NBR may announce it on the last day."

30 November is the tax day, marking the final day for tax return submission. However, the NBR has extended the time even beyond this in the past, and paying tax within that extended period would not incur any penalty.

However, if a taxpayer has a valid reason, they can apply for a time extension from the Deputy Commissioner of Taxes (DCT) of the respective tax office. A penalty of 2% per month on the applicable tax would have to be paid if the income tax return is filed within that period.

But with the new income tax law, the opportunity to seek time has been abolished. Returns can be submitted at any time throughout the year. But if the return of the relevant income year is filed after 30 November, a penalty of 4% will be payable.

Besides, taxpayers will not get any of the investment rebates they were supposed to get, so they will have to pay more tax.

Many have questioned the rationale of such a provision in the Income Tax Act.

Currently, there are around 90 lakh Tax Identification Number (TIN) holders in the country, and out of them, 36 lakh have filed their tax returns.