The Income Tax Bill-2023, which was placed in the parliament on June 8, has provided for legalising undisclosed income by investing in land as well as residential and commercial building structures.
The investors will have to pay taxes at specific rates to formalise their money, however, without facing any question by the taxmen on the source. The opportunity is applicable only for the undisclosed money earned through legal means.
The bill awaits the lawmakers’ consent and is expected to be passed soon, officials said, adding that the new law would come into force from July 01, 2023.
Currently, the amnesty to such income and its investment is applicable for only residential house properties at the area-based tax rates fixed by the taxmen.
Under another provision of the new law, privacy of the taxpayers’ information may not be preserved in case of any criminal investigation under the law of the Anti-Corruption Commission, Money Laundering Act, Foreign Exchange Regulation Act or court orders.
For investing undisclosed income in land, the investors will have to pay Tk 15,000 in taxes per square metre (sqm) in Gulshan model town, Banani, Baridhara, Motijheel and Dilkusha commercial area.
Tax amount has been fixed at Tk 4,000 per sqm for investing in buildings up to 200 sqm and Tk 5,000 per sqm for more than 200 sqm plinth areas.
The tax will be Tk 10,000 per sqm of land in Dhanmondi residential area, Defence Officer Housing Society Mohakhali, Lalmatia Housing Society, Uttara Model Town, Bashundhara residential area, Dhaka Cantonment, Siddeshwari, Karwan Bazar, Bijoy Nagar, Wari, Segun Bagicha and Nikunja, and in Chattogram city’s Pachlaish, Khulshi, Agrabad, and Nasirabad areas.
Other than those areas, tax for showing investment in land is fixed at Tk 5,000 in other city corporation areas while Tk 1,000 outside the city corporation areas.
In case of having more than one piece of land or building prior to the disclosure of untaxed income, the rate would be 20 per cent more than the specific amount.
However, the taxmen would levy 100 per cent tax in case of detection of any previous proceedings relating to tax evasion.
The investment of such income in the Economic Zones and Hi-Tech Parks would also be allowed from July 1, 2019 to June 30, 2024 subject to paying tax at a flat rate of 10 per cent.
The existing provision on voluntary disclosure of such income by paying 10 per cent tax in addition to normal tax rate was also kept unchanged in the new law.
A senior tax official said that the taxpayers who might have forgotten to show their land or flat would be able to show their assets in their tax files. He added that the taxpayers who forgot to show their land in a year may face difficulties with the undisclosed assets in the following year.
Under the new provision, except the tax authorities, all other law enforcing agencies would be able to ask questions on the source of the disclosed money, he said.
“The opportunity to show investment in land would help many genuine taxpayers to disclose their assets,” he said. Investment in land is usually done in a shorter period of time compared to house property that needs time to construct.
Meanwhile, as per the new law, a heavy tax is imposed on tobacco companies. Tax deducted at source (TDS) for cigarette businesses has been fixed at 10 per cent while a 3.0 per cent turnover tax would be imposed on cigarette, bidi and other tobacco products.
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