The information available with the country's commercial banks about their depositors has remained unexplored by the National Board of Revenue (NBR) which is tasked to increase the number of productive tax returns without any pause, circles concerned have said. Â
Although the tax authority has been collecting tax levied at source on the interest income of bank depositors since 2012 they are yet to take sufficient steps to motivate the depositors for submitting their annual tax returns without fail.
There exists a very large gap between the number of tax returns submitted annually and the number of deposit accounts.Â
The NBR receives around 1.0 million tax returns from the individual taxpayers while number of bank deposit accounts is around over 75 million. Many individuals have multiple deposit accounts with banks.
The central bank has necessary particulars of all of the bank depositors which can be used by the taxmen for the purpose of raising the number tax returns, sources said.
The taxmen are authorised under the Tax Ordinance of 1984 to seek any information from any bank. There are also penal provisions if any bank refuses to make available the same to them.
Tax deducted at source from the interest amount of the bank deposits is the second largest source of the advance tax collection of the income tax wing of the NBR.Â
In the Finance Bill-2012, the government had included a provision to collect tax at source from interest amounts of the bank deposits. Â
Banks deduct 10 per cent tax at source on the interest amount of the bank depositors having taxpayers' identification number (TIN). In case of not having TIN, bank depositors are required to pay additional 5.0 per cent tax at source on their interest income.
Tax-free threshold for individual taxpayer is Tk 250,000. Bank depositors having annual income below that level are also paying tax at source on their bank interest income.
Number of deposit accounts, including those belonging to companies and individuals, having deposits worth Tk 300,001 and above is 3.18 million as of December 31 last, according to the BB data.Â
The taxmen can find out potential taxpayers from the owners of the bank deposits of sizeable amount but not submitting tax returns.Â
In the section 74 of the Income tax Ordinance, submission of tax return has been made mandatory for people who are subscribers of telephones or have trade licences or own club membership. The submission of tax returns is also mandatory for those who have taken part in city corporation, pouroshova or parliamentary polls   Â
Talking to the FE, a senior income tax official said taxmen collect tax at source from all deposit accounts with banks.
Bank depositors will be able to adjust the tax or claim refund of the paid tax at source if they submit the tax returns, he said.
He said the government has taken some new steps in the budget for fiscal year 2016-17 to increase number of taxpayers.
"Database of the bank depositors can be scrutinised for the purpose of submission of tax returns. It can be considered in future," he said. Â Â Â
Another tax official, however, said tax authority cannot make TIN or tax return submission by bank depositors mandatory on the basis of their bank deposits as income tax is assessed on the basis of income.
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said the small savers should not come under scrutiny by the tax authority.
"Taxmen should find out the large individual bank depositors, their number of accounts, volume of transactions to track them," he said.
Assets and transactions made by bank accountholders do indicate their income levels, Dr. Mansur added.
The NBR can develop a database with the help of the TIN of the bank depositors with a view to tracking the level of their tax payments, he added.
The tax authority can use the data base of the central bank to pursue the bank depositors, he added.
Former income tax member Aminur Rahman, however, opposed any such move saying, "The government has yet to develop any effective mechanism to check capital flight. The move can discourage people from making deposits with the banks," he said.
The NBR collects a considerable amount of at source tax from the bank deposits that grew up three times in the last five years.
Officials said the tax collection may face slight shortfall against its target in the fiscal year (FY) 2016-17 due to cut in bank interest rates on all types of deposits.
Until May, the tax authority collected Tk 51.85 billion from tax on interest income against bank deposits. The target for first 11 months of the outgoing fiscal was Tk 53.35 billion.Â
Bangladesh has more than 75.58 million deposit accounts with banks having a total deposit worth over Tk 6493 billion, including 3.18 million accounts having deposits worth Tk 0.3 million and above, according to the central bank latest statistics.
The size of deposit accounts covering both business entities and individuals are up to Tk 5000 and above, according to the Bangladesh Bank (BB) officials.
"Normally, a business entity or individual is maintaining accounts with more than one bank to meet its necessity. So the number of accounts does not indicate actual number of accountholders," a BB senior official told the FE.Â
He also said the NBR may collect the list of the top account holders to detect whether the deposits match their owners' tax portfolio.Â
"The number of taxpayers in the country would increase substantially if the NBR scrutinises the commercial banks' deposit statistics properly," the central banker noted.
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