AIT rates increase proposed

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Doulot Akter Mala
The government has proposed to raise advance income tax (AIT) on import items to 5.0 per cent from existing 3.0 per cent aiming to boost income tax collection and achieve 27.27 per cent growth for fiscal 2010-2011.
Apart from capital machinery and essential commodities, thousands of other items will come under new tax measure incorporated in the Finance Bill-2010. The Finance minister AMA Muhith placed the finance bill before parliament Thursday.
AIT contributes 50 per cent to the total income tax collection while the rest is paid by individual and corporate taxpayers.
The government has also proposed to slap new taxes on exporters. It wants to raise AIT on export bill to 1.0 per cent from 0.25 per cent.
Advance tax will also be increased in the case of contractors' bill above Tk 30 million. Contractors will have to pay 7.0 per cent instead of 1.0 per cent tax on their bills if it exceeded the said amount.
Tax-free ceiling of contractors' bill has been raised to Tk 0.2 million while AIT will be levied at 1.0 per cent for above Tk 0.2 million to Tk 0.5 million, 2.5 per cent for above Tk 0.5 million to Tk 1.5 million, 3.5 per cent for above Tk 1.5 million to Tk 2.5 million and 5 per cent for above Tk 2.5 to Tk 30 million.
"Deduction at source is the most popular and modern method of collecting income taxes. This is very convenient to the taxpayers for tax planning purposes and is also a hassle-free system. The scope and rate of collection of income tax at source in some cases need to be rationalized in due course," the finance minister said in his budget speech Thursday.
The proposed finance bill also kept a provision to allow approval of 1.0 per cent depreciation allowance on assessment of income in case of investment in physical infrastructure like bridges, flyovers, roads under public private partnership (PPP).
The provision of approval of accelerated depreciation allowance for plant and machinery of new industry has been extended to June 30, 2012.
The finance bill also proposed to raise AIT on brick field. It has revised existing tax rates to TK 30, 000 for one section, Tk 45,000 for two sections and Tk 60, 000 for three sections.
Indenting, foreign buyers and insurance commissions have been raised to 7.5 per cent from 3.5 per cent, 4 per cent and 3.0 per cent respectively.
Advance taxes on clearing and forwarding service, courier service fees, freight forwarding service, general insurance company surveyor fees have been raised to 15 per cent from 7.5 per cent.
Compensation against properties acquired by government remained same at 2.0 per cent for city corporation pouroshova and cantonment while the same at 1.0 per cent has been proposed for other areas.