Commerce Adviser Sk Bashir Uddin on Saturday affirmed that trade between Bangladesh and India will continue in the greater interest of consumers and business communities of both nations.

Talking to reporters at the Secretariat, the Adviser said, “We have not officially been informed of India’s actions yet. Once we receive official information, we will take necessary steps. If any problem arises, both sides will try to resolve that through discussions." 

"We hope the trade will continue for the benefit of both countries' consumers and business communities," he added.

Adviser Sk Bashir said, “From social media and news reports, we have come to know that India has taken certain decisions regarding specific land ports, including Akhaura and Dawki and some border areas.”

Asked whether such decisions would negatively affect Bangladesh’s exports, Sk Bashir said, “Not everything is exported from our country. A significant amount goes from the garment industry. You know that achieving competitiveness is our main goal. It is beneficial for both parties. We certainly believe that India is also a prosperous country in the textile industry. Even then, when these products are exported from our country, it is based on our capabilities.”

It is, however, believed that this will continue for the interest of consumers and production of both countries, he said.

When asked about India’s ban on transshipment and exports, the adviser said, “Transshipment has had no real impact on us. We have addressed the issue using our own capabilities.”

Responding to another question, whether Indian businesses would also suffer from these restrictions, he said, “Certainly. This is a matter of competitiveness. Our competitiveness and transport costs are factors here. At times, we impose bans on agricultural imports and so does India. This is part of the ongoing trade management process. If issues arise, we will try to resolve them through discussions.”

When asked if the government plans to engage in discussions with India, Bashir said, “We will do whatever is necessary. However, we have not yet been officially notified on this matter.”

Asked whether these recent decisions were influenced by the current state of bilateral relations, the adviser said, “My work is related to trade, and I want to stay focused on that. As I’ve always said, I believe in open trade. Trade is crucial to me. I see no alternative to trade liberalisation and inclusion for enhancing the capacity of our businesses and consumers.”

Responding to another question about how Bangladesh plans to reduce the growing trade deficit with India in light of such decisions, the adviser said, “It’s a long-term process. Trade deficits can’t be addressed overnight. What we source from India, we do as a neighboring country and India does the same. This is largely influenced by natural factors. We aim to expand trade through diversification and competitiveness.”

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."