The much-debated Tk 2000 minimum tax for all to be eligible for a raft of government services is eventually up to be ditched in final cobbling of new fiscal measures, sources said.
Instead, the amount would be adjusted against tax at source during return filing as citizens already pay taxes at source.
Official sources said the proposed provision would not be brought in the new income-tax law following widespread controversy provoked by the budget proposal.
The government has decided not to impose Tk 2000 as minimum tax on people not having taxable income by "honouring opinion of cross-sections of people", they added.
The finance minister proposed the new measure while placing the national budget for fiscal year 2023-24 in parliament on June 1, 2023.
The provision has been incorporated into the Income Tax Bill 2023, placed in the parliament on June 8.
The Parliamentary Standing Committee on the Ministry of Finance submitted amendments to the draft Income Tax Bill 2023 on Thursday to the parliament with recommendation for the National Board of Revenue (NBR) to scrap the provision.
While unveiling an over Tk 7.61-trillion proposed national budget for the upcoming fiscal, Finance Minister AHM Mustafa Kamal said, "I propose to make the minimum tax two thousand taka among competent people who are below taxable income but have the obligation to submit income-tax returns to take service from the government with a view to circulating this participation in government welfare work."
With the imposition of tax, people having income below the tax-free threshold would have to pay the tax mandatorily.
Currently, some 3.2 million taxpayers submit tax returns out of 8.7 million taxpayer-identification number (TIN)-holders.
However, most of the taxpayers submitting tax return to obtain different services showing proof of submission of return are paying tax at source.
Tax experts have said the amount of tax at source would be adjusted with the payable taxes of the taxpayers.
As per conditions, tax at source paid by taxpayers against the services usually goes beyond the Tk 2000 limit.
Chairman of the Taxation committee and former president of the Institute of Chartered Accountants Bangladesh (ICAB) Md Humayun Kabir says Tk 2000 as minimum tax is not a new measure or not necessarily has to be paid additionally.
People who are obtaining 38 services, for which submission of tax return is mandatory, are already paying source tax or Tax Deducted At Source (TDS), he mentions.
"That means all of the mentioned services, under 184A, are subject to TDS and if the TDS is equal or higher than Tk 2000, they will not need to pay further tax," he says in clearing the mist the measure cloaked in.
For Tk 0.5 million worth of government savings certificate, where TDS is 5.0 per cent and tax on interest rate is at least 10 per cent, his/ her TDS would be at least Tk 2500, he added about the arithmetic of taxing.
"None of the services mentioned in 184A is under TDS for less than Tk 2000. Introducing this will bring transparency and accountability both to tax payers and tax authorities, increase return submission and thereby expand tax net."
"Is it not justifiable to levy Tk 2000 when tax department has to spend time and incur expenditures to scrutinize an assesee having bank deposit over Tk 1.0 million, got a registered car or submitting a plan (meaning she has land to build a house) etc?" He questioned.
Currently, people having annual income up to Tk 0.3 million are exempt from payment of income tax. In the proposed budget, the government has increased the threshold to Tk 350,000.
A report of the Parliamentary Standing Committee on the Ministry of Finance has placed a set of recommendations, including exempting the bank depositors having up to Tk 1.0 million deposits (credit balance) from mandatory submission of tax returns.
Instead the committee has proposed making return submission mandatory for the bank depositors having term or fixed deposits in the bank of the said amount.
Official sources have said many of the banks are asking depositors to submit proof of submission of tax returns irrespective of their deposited amount despite having a ceiling for this.
"The amendments have been proposed to facilitate country's financial inclusion and encourage people on formal and recorded transaction," the vetting report says.
The committee placed its report to parliament on Thursday proposing the amendments to the Finance Bill 2023.
According to the proposed budget, salaried persons having two-thirds of the total income or Tk 450,000, whichever is less, would be considered taxable.
The committee, headed by Abul Hassan Mahmood Ali, also proposed considering one-third of the income of the salaried person or Tk 450,000, whichever is less, as taxable income.
The changes have been recommended after the parliamentary committee found people having Tk 66,000 monthly income may be excluded from the tax net.
According to the recommendation, companies, firms, association of persons and funds having up to Tk 30 million in turnover have to submit audited financial statements, which was Tk 20 million in the proposed budget.
Confusions on tax rebate for savings certificates and debenture have been cleared in the report by interpolating two words in the government securities.
Also, the committee has proposed scrapping the provisions of proposed Finance Bill on mandatory submission of wealth statement at the time of overseas travel.
It also proposed raising special tax amount for showing undisclosed income in apartment.
The parliamentary standing committee on finance also recommend scrapping a provision under 167 of the bill for submission of tax return by a person after his foreign trip for personal purposes.
Furthermore, the committee recommended raising the special tax rate against investment in 200-square-meter flats or buildings in Gulshan Banani, Baridhara, Motijheel and Dilkusha commercial area to Tk 6000 per square meter from the previous Tk 5000.
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