An official audit objection has been raised regarding payment of income taxes of employees at state-owned commercial and specialised banks and entities from their offices' funds, officials said.
Under the existing rules, officials and employees of banks are required to pay their respective income taxes on their own.
The commercial audit department recently sent the objection to the Banking and Financial Institution Division of the Ministry of Finance (MoF) for the next course of action.
The objection has been found in the audit reports of fiscal years (FYs) 2009-10 and 2010-11.
The audit objection detected a loss of Tk 83 million for the state-owned banks due to payment of their employees' tax from the fund of the institutions without consent of the MoF.
To address the issue, the MoF held a meeting Monday with all the relevant departments, Bangladesh Bank (BB) officials, Managing Directors (MDs) and Chief Executive Officers (CEOs) of the state-owned and specialised banks.
A senior MoF official, who attended the meeting, said the MoF has asked the banks to settle the issue at their respective board meetings.
"We have urged the banks to let us know about the decisions of their board meetings for taking further steps," he said.
The MoF will scrutinise the documents submitted by the bank officials in support of their employees' tax payment to take further decisions.
According to Section 23 of National Pay Scale, 2009, employees of state-owned banks and entities will have to pay income tax from their own income from salaries and allowances.
Officials said it is mandatory to obtain approval of the MoF prior to paying the employees' tax from their banks' funds. But the banks and financial entities did not abide by the rules.
The banking division of MoF has reviewed the banks' clarification on the audit objections.
Sonali Bank, in its clarification, said salaries of the bank employees are not self-drawing.
"They do not get salaries from government treasury. Banks bear the entire expenditure of salaries and allowances. A bank bears the expenditure of income tax payment from its own funds," the paper containing the banks' clarification said.
Citing the reference of the Large Taxpayers Unit (LTU) under income tax wing, June 9, 2005, the Sonali Bank said the rules of National Pay Scale will be applicable to only full government officials. State-owned banks, insurance or other entities are not required to follow the rules.
"The LTU's decision has not been withdrawn after introducing the National Pay Scale-2009. The bank is following the previous rules on deducting tax at source on employees' income," the paper said.
Employment Bank also gave its clarification on the audit objection. It also referred to a decision of the National Board of Revenue on August 29, 2012.
"As per the directives of the income tax authorities, the Employment Bank will decide on whether it will pay the employees' income tax from its own funds. Income tax law has no objection to payment of employees' tax from the funds of banks," the clarification said.
On the clarification, the commercial audit department urged the banks to furnish documents, if any, in support of validity on NBR's order on National Pay Scale -2009.
A total of 18 audit objections have been raised against Sonali, Agrani, Janata, Rupali Banks, Bangladesh Krishi Bank, Rajshahi Agriculture Development Bank and Jiban Bima Corporation.
According to income tax law, only full government officials, who draw entire salaries from government funds, will pay income tax only on their salaries. Officials of state-owned and autonomous bodies and entities will have to pay income tax on both of their salaries and allowances.
A senior income tax official said both the officials of government and state-owned enterprises have to pay tax from their own salaries from fiscal year (FY) 2012.
Earlier, the government employees got refund of their paid-up tax from the public exchequer, but now the rule has been scrapped to encourage tax compliance in both public and private sectors.
© 2024 - All Rights with The Financial Express
