The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) has proposed a raise in the minimum tax-free threshold for individual income taxpayers to Tk 265,000.
The chamber felt the necessity of raising the limit considering the escalating prices of products and overall living cost fuelled by the inflation.
It also proposed a cut in corporate tax rates for banks, insurance and non-banking financial institutions to 40 per cent.
Currently, the tax-free income ceiling for individual taxpayers is Tk 220,000 and corporate tax rates for banks, insurance and non-banking financial institutions is 42.5 per cent.
The MCCI placed the proposals for incorporation in the budget for the fiscal year (FY) 2015-16 to the National Board of Revenue (NBR) recently.
The chamber leaders would sit with Finance Minister AMA Muhith on March 15 to discuss the budget proposals.
The MCCI leaders sought revision of the existing surcharges on net assets of the well-off section of people.
Neighbouring India in their proposed budget fixed the tax-free income ceiling at Rs 200,000 (around Tk 250,000) for individual taxpayers aged below 60.
The Indian finance minister Arun Jaitley in the budget for the FY 2015-16 placed on February 28 last proposed to reduce the corporate tax rate from 30 per cent to 25 per cent in the next four years considering the scope of boosting employment and spending.
However, in the budget proposal the MCCI proposed to cut the highest tax rates for individual taxpayers to 25 per cent from the existing 30 per cent.
The chamber leaders said the high rate of taxes usually discourages taxpayers and causes tax evasion or concealment of actual income.
For individual taxpayers, the MCCI proposed fixation of the tax-free income ceiling at Tk 330,000 for women and senior citizens aged above 65 years.
It suggested setting the tax-free income limit at Tk 385,000 for physically and mentally challenged persons and Tk 450,000 for war-wounded freedom fighters.
The Chamber also proposed Tk 2,000 as the minimum tax for an individual taxpayer. Currently the rate is fixed on the basis of areas.
In the budget proposal the chamber leaders said life insurance companies in India pay 15 per cent tax and general insurance companies 37.5 per cent with 2.5 per cent surcharges each.
The MCCI also proposed a cut in the advance income tax (AIT) to 3.0 per cent on import of products from the existing 5.0 per cent.
"In some cases, it has been found that the volume of AIT usually remains higher than that of the actual payable taxes. Taxmen adjust the taxes exercising their discretionary power," the chamber said.
The MCCI also proposed withdrawal of excess profit tax, 3.0 per cent tax on distributors and relaxed tax for off-shore banks to encourage investments.
Off-shore banking units (OBU) in Asia-pacific countries usually enjoy a reduced 0-20 per cent tax, it said.
It proposed a ceiling on withdrawals for overseas tour and allow 2.0 per cent of turnover of a company to be spent on overseas tour.
The chamber proposed withdrawal of tax on medical expenditure by employers. It requested not to consider it as income.
The MCCI proposed imposition of AIT at a uniform rate of 10 per cent on an interest amount from bank deposits, both in fixed and savings accounts. Currently, it is charged at 10 and 15 per cent.
It proposed withdrawal of tax on local Letter of Credit and waiver or reduction of minimum tax for companies to 0.1 per cent.
"New manufacturing companies should enjoy at least two years of tax-exemption after its establishment," the MCCI said.
It proposed raising the tax-free ceiling for wealth tax or surcharge to Tk 30 million from the existing Tk 20 million.
The Indian government in its budget for 2015 imposed a surcharge at the rate of 10 per cent of the income tax, if taxable income is more than Rs 10 million.
The MCCI proposed imposing minimum tax on well-off people having their net asset above Tk 30 million but no taxable income.
The Indian finance minister in his budget proposal also decided to abolish the earlier-imposed wealth tax and replace it by 2.0 per cent surcharge.
Wealth tax used to be 1.0 per cent on net wealth exceeding Rs 3.0 million and non-resident Indians were exempted from the tax for seven years in India.
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