The proposed limit for individual taxpayers' investment rebate is set to be revised upward in the new finance act following widespread criticism of a squeeze.
Official sources said the ceiling for investment rebate may be raised to 25 per cent from the proposed 20 per cent.
On June 02, the government in the Finance Bill-2016 proposed to cut the ceiling for investment rebate to 20 per cent from the existing 30 per cent for the individual taxpayers.
Research think tanks, professional bodies, chambers and general taxpayers criticised the lowering of the investment ceiling in the proposed budget as tax-burden for the individual taxpayers would increase substantially if the cut is enforced. Â Â
They said a sharp climb-down from 30 per cent to 20 per cent would substantially increase the pressure of income-tax payment on the individual taxpayers.Â
Under the proposed measure, individual taxpayers would be able to invest up to 20 per cent of their income and get 15 per cent rebate on their payable tax for income up to Tk 1.0 million.
If the total annual income exceeds Tk 1.0 million but does not exceed Tk 3.0 million, tax rebate on investment has been proposed at the rate of 15 per cent for first Tk 200,000 and 12 per cent for the rest.
If the total income exceeds Tk 3.0 million, investment rebate will be 15 per cent for the first slab of Tk 200,000, 12 per cent for next Tk 400,000 and 10 per cent for the rest of the amount.
An individual taxpayer can invest maximum Tk 15 million of his annual income for enjoying tax rebate.
Income taxpayers have to comply with the amended income tax rules at the time of submission of tax returns in the upcoming tax year on the income for FY 2015-16.
However, the other rates and ceiling are likely to be unchanged.
Meanwhile, many of the companies have already deducted advance tax from the salary amount of June of the taxpayers as per proposed measures.Â
Officials said changes in the provision will create complexities in getting refund of the excess paid tax by the taxpayers. Â Â
On the proposed reduction in investment-rebate facility, research think-tank Centre for Policy Dialogue (CPD), Institute of Chartered Accountants Bangladesh (ICAB) and Transparency International Bangladesh (TIB) said it would impose additional tax burden on the existing taxpayers.
Foreign Investors Chamber of Commerce and Industry (FICCI), in an analysis, said change in investment allowance will leave adverse impact on individual taxpayers. Income tax will increase by 514 per cent for the taxpayers having monthly income of Tk 40,000. Tax will increase by 11 per cent for taxpayers with monthly income at Tk 1,000,000. Â
Meanwhile, the government is likely to withdraw Value Added tax (VAT) on meditation, bread and slipper in revision of the fiscal measures before passage of the budget and the Finance Bill 2016. Â Â
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