Adviser to the interim government on the Ministries of Finance and Commerce Dr Salehuddin Ahmed on Tuesday asked the National Board of Revenue (NBR) not to collect taxes forcefully from the taxpayers.

“There should not be any force on the existing taxpayer. All are not equal, every person cannot pay taxes, that do not mean you will collect tax forcibly,” he said while speaking at 'meet the press' at the NBR Bhaban in the capital's Agargaon area on the occasion of introducing online income tax return submission this afternoon.

He also put emphasis on bring all eligible persons under the tax net as many people have the capacity to pay tax. “All eligible have to be put under the tax net. If you bring those people under the tax net it would be better,” he said.

The adviser said that it is a tough job to provide government services when people don't pay taxes.

He also said that taxpayers feel easy while not seeing the face of any tax officials. “…and you know the various meanings of seeing the face of tax officials.”

He put emphasis on deposit the taxes in the national exchequer without any leakage. “From now on we will avoid any leakage in tax payment and for that purpose we have introduced the online tax payment system,” he said.

The Finance Adviser said that the government can not run the country through borrowing from savings certificates and taking loans from abroad.

Narrating the benefits of online submission, Dr Salehuddin hoped that this year some 15 lakhs individual taxpayers would submit their income tax return through the online system. “We will be able to get rid of them from the dependency on others,” he said

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."