Complexities over collection of income tax on allowances and other income of the officials of state-owned enterprises (SoEs) and autonomous bodies have created confusion among the taxmen in the current fiscal year.
Taxmen are puzzled over two contradictory rules of the government on collection of income tax from the officials of SoEs and autonomous bodies. According to the income tax rules the officials and employees of the SoEs and autonomous bodies, who have taxable income, have to pay income tax on both of their allowances and basic salaries while finance ministry's order allowed them to pay tax only on their basic salaries that full government officials are enjoying, tax officials said.
Income Tax Ordinance, 1984, has allowed the government officials, having taxable income, to pay income tax on their basic salary and enjoy exemption on other allowances.
Following the two different circulars, field-level tax officials have been facing difficulties in collecting taxes from the individual taxpayers who are serving autonomous and state-owned entities.
A senior tax commissioner said they are yet to receive any official order from the National Board of Revenue (NBR) resolving the complexity.
Tax officials faced the problem after they found some of the individual taxpayers, employed in SoEs and autonomous bodies, came with the order of the Ministry of Finance (MoF).
The NBR official said the board held a meeting recently following the queries of taxmen in the field-level offices but could not reach to a solution.
"The revenue board has issued some clarifications on the matter to field-level tax offices in case-to-case basis but it cannot issue a general order contesting the MoF order," the official said.
Tax officials are bound to follow the income tax law as it can supersede all other laws of the state, he said.
Show cause notice might be issued on a Deputy Commissioner of Taxes (DCT) for non-compliance with the income tax law, he added.
"We have verbally instructed taxmen to collect tax on both allowances and basic salaries of the officials of SoEs and autonomous bodies," he said.
The official, however, assured that the complexities would be resolved in the budget for FY 2014-15.
"The government will impose tax equally on all government, SoEs and autonomous officials' income including basic salaries, allowances and other incomes from the upcoming FY," the official said.
Earlier in May, the NBR had proposed the MoF to resolve the matter by issuing an order but the ministry ruled out the proposal.
NBR made the request to MoF so that taxmen can collect income tax on allowances from the employees of the SoEs and autonomous bodies without hindrances.
A senior MoF official said all the government employees are entitled to enjoy similar facilities as they are getting salaries as per national pay scale.
"Finance minister AMA Muhith ruled out the NBR proposal as it will be discriminatory for government officials," the official said.
Since 2010, officials of all the government offices are paying tax on their basic salary while officials of private companies are paying tax on both basic salaries and other allowances, he said.
Under the existing income tax rule, any person having annual income above Tk 2,20,000 have to pay income tax.
Until fiscal year 2009-10, the public servants used to get refund of their paid tax from the government coffer.
In the budget for 2009-10, the government withdrew the facility of tax refund for its officials as per pay commission recommendations after it hiked the salaries of government officials.
The NBR deducts the tax at source from salaries drawn by government officials.
According to available data the NBR receives more than 50,000 tax returns every year out of more than 1.0 million government officials.
The tax official said the government would earn additional Tk 4.0 billion tax by imposing tax on allowances of the officials of the state-owned bodies.
"Some of the state-owned bodies including Bangladesh Petroleum Corporation (BPC), Rajdhani Unnayan Kartipakhha (RAJUK) pay handsome allowances to its employees which is many times higher than their basic salary. But full government officials hardly enjoy such allowances," he said.
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