Government officials' salary incomes are likely to come under full-scale taxation from the upcoming financial year, as the tax net is being cast wide to enhance revenue.
An initiative has been taken to bring their salary incomes--both basic and allowances--under the purview of income tax, officials said.
The step comes close on the heels of ensuing hike in their pay from July 1st, 2015 on the national pay commission's recommendation.
Currently, the government employees pay income tax on their basic pay and enjoy tax exemption on their allowances.
However, employees of semi-government, autonomous and private organisations have been paying income tax on both basic and allowances.
In a bid to bring parity in income-tax treatment to both public and private employees, the government would strike a balance in tax liability of all the service-holders from the FY2015-16.
"From next FY all employees are likely to be brought under a similar tax structure to remove the existing discrepancies," said a senior government official.
The changes may be disclosed by the finance minister in his budget speech set to be delivered on June 4 next.
However, tax officials said all of the tax-related budget proposals would be placed today (May 20) before Prime Minister Sheikh Hasina for her perusal.
Final decision on the sensitive matter would be taken following her suggestion, they said.
Recently, the pay commission proposed a substantial salary hike for government officials and employees. They may have their monthly salary doubled under the new pay scale. In the 16-grade pay scale, the highest basic pay is Tk 80,000 and the lowest Tk 8,200.
In the budget speech for the current fiscal, the finance minister also had vowed to remove the tax disparity on salary incomes of the employees after increase in salaries in line with the pay commission report.
"The issue of existing discrepancies in tax liability on salary income is expected to be addressed during implementing the national pay commission report," he said in the FY 2014-15 budget speech.
Officials under the National Pay Scale (NPS) are entitled to enjoy similar kind of facilities, including tax payment.
Earlier in May 2013, the NBR had proposed to the MoF to resolve the matter by issuing an order on tax liability of the officials of the state-owned enterprises (SOEs) and government servants. But the ministry ruled out the proposal as discriminatory for the officials.
Since 2010, officials of all the government offices have been paying tax on their basic pay.
Until FY2009-10, the public servants used to get refund of their tax paid from the government coffers.
In the budget for 2009-10, the government withdrew the facility of tax refund for its officials after a hike in their pays and perks.
As per existing income-tax law, a person having annual income above Tk 220,000 have to pay income tax.
Official data show the revenue board receives more than 50,000 tax returns annually out of around 1.3 million government officials.
Humayun Kabir, convener of the income-tax subcommittee of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said in the budget proposal for FY2015-16 the apex chamber body also had proposed that the disparity in tax liability of government and private employees should be removed.
"There should not be discrimination in the law for imposition of tax," he added.
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