Finance Minister Abul Hassan Mahmood Ali on Thursday said that the proposed Taka 7,97,000 crore budget for the next fiscal year (FY25) is people friendly as the incumbent Awami League government is a government which belongs to the country's people.

The finance minister said this while addressing a seminar titled "The economy of Bangladesh amid global context: National budget 2024-25 considering growth, inflation, food and nutrition security" held at Bangladesh Agricultural Research Council (BARC) in the capital.

State Minister for Commerce Ahsanul Islam Titu spoke it as the special guest with president of Bangladesh Agricultural Economists Association and chairman of the Parliamentary Standing Committee on Civil Aviation and Tourism Ministry Sajjadul Hassan in the chair.

Former State Minister for Planning Dr Shamsul Alam spoke as the main discussant, FAO country representative Dr Jiaoqun Shi spoke as the guest of honour while Prof Dr Mohammad Jahangir Alam made the key-note presentation.

Referring to the various socio-economic progress of Bangladesh, the finance minister said that the World Bank has also said that Bangladesh has been performing better.

Speaking on the occasion, State Minister for Commerce Ahsanul Islam Titu thanked the Finance Minister for delivering such a nice budget considering the global context.

He said that this proposed budget would be effective in that sense of creating employments, containing inflation and thus propelling the country's growth.

The state minister informed that steps are underway to distribute the commodities of the state-run Trading Corporation of Bangladesh (TCB) at subsidized prices through cards so that there is no misuse and wastages.

Titu also stressed the need for ensuring effective use of agricultural subsidies, increasing use of surface water, increasing more participants of agricultural economists in improving supply chain, giving more attention on preserving the perishable items, putting more emphasis on overall information management regarding demand and supply.

Terming this proposed budget as a courageous one and people friendly, former State Minister for Planning Dr Shamsul Alam said although the proposed ADP is not that big considering the ADP of the outgoing fiscal year, but it would play an effective role in containing inflation.

He said that it would be possible to increase the revenue generation through collecting VAT by electronic devises, mandatory provision for showing income tax returns for availing various services.

Dr Alam also opined that special attention should be given so that the bank interest rates are not increased anymore, otherwise the small entrepreneurs would be affected.

FAO Bangladesh representative Dr Jiaoqun Shi said that the development of agriculture is very much important for the development of Bangladesh.

Welcoming the increased size of agricultural subsidy in the proposed budget, he said that this move would help to reduce production cost, boosting productivity and thus help to contain inflation.

Dr Sajjadul Hassan said that this budget is definitely a courageous budget. "The Awami League government thrives for ensuring welfare of country's people. The government of Sheikh Hasina is also for ensuring welfare of people. We'll have to keep an eye on subsidy in fertilizer so that the marginal farmers are benefitted."

Bangladesh Agricultural Economists Association Secretary General Dr Mohammad Mizanul Haque Kajol gave the address of welcome.

Local and international researchers, agricultural scientists, vice chancellors of various universities, teachers and agricultural economists attended the seminar.

MSH

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."