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Next budget set to offer special tax incentives for industries

Doulot Akter Mala | Published: June 03, 2014 00:00:00 | Updated: November 30, 2024 06:01:00


The budget for fiscal year (FY) 2014-15 is set to offer special tax incentives including extension of tax holiday facility and reduction of corporate tax for facilitating industrial growth.  
The tax holiday facility for local industries is likely to be extended until 2019 which is scheduled to expire on June 30, 2015. Term of the tax holiday facility is likely to be extended to 10 years from existing seven years. Industries are likely to be entitled to enjoy tax holiday facility for 10 years by starting commercial operation by 2019.
The government might also cut corporate tax for non-listed companies to 35 per cent from existing 37.5 per cent. However, higher tax rates for banks, non-banking financial institutions (NBFIs) and insurance companies at 42.5 per cent will remain unchanged.
However, the tax authority has backtracked from its earlier move to impose a 10 per cent tax on income of micro-credit lenders amid opposition from a cross-section of people.
Rather, it might impose tax on house rents, bank interest, religious charity and other incomes of micro-credit lenders. Any secondary income added to the income of the micro-credit lender will be taxed.
In the FY 2014-15, individual taxpayers, under higher slabs, might see a major change in their tax payment structure.
The National Board of Revenue (NBR) is likely to incorporate a new slab at 30 per cent on annual income above Tk 44,20,000. For the first time, individual taxpayers might have to pay tax at a rate of 30 per cent on their annual income. Currently, the highest rate of tax for individual taxpayers is 25 per cent.  
However, minimum tax-free threshold for individual taxpayers will remain unchanged at Tk 2,20,000.
Next slabs for individual taxpayers would be 10 per cent for income above Tk 2,20,000 to Tk 7,20,000, 15 per cent for above Tk 7,20,000 to Tk 14,20,000, 20 per cent for above Tk 14,20,000 to Tk 19,20,000 and 25 per cent for above Tk 19,00,000 to Tk 44,20,000.
Allowable limit of 'perquisite' (a payment or profit received in addition to a regular wage or salary, especially a benefit expected as one's due) is likely to be raised to Tk 3,50,000 from existing Tk 2,50,000. The government is going to increase the limit after three years following increase of tax-free threshold for individual taxpayers by Tk 40,000 in that period and increase of other expenditure limits.     
Minimum tax on gross receipts of companies, irrespective of loss and profit, might be cut to 0.30 per cent from existing 0.50 per cent.
The government would impose a 'green tax', the first of its kind, at 1.0 per cent on prices of products produced by companies polluting environment.
Tax-free limit for freedom fighters will be raised to Tk 4,00,000 while for women and disabled to Tk 2,75,000 and Tk 3,50,000 respectively.
Areas of wealth tax or surcharge might also be widened for well-off section of people. Tax on transfer of lands might be hiked on per katha.
The government might also increase provisions of penalty for not maintaining accounts properly. For late payment of tax, penalty rate might be increased by 5.0 per cent.
The NBR is likely to incorporate a provision for taxpayers under universal self-assessment system. Tax files of taxpayers under the method will not face auditing on showing 20 per cent higher income than that of the previous FY.
On VAT measures, the government is likely to scrap some of the truncated base of value or multiple rates on some products and impose VAT at flat rate of 15 per cent.  
Mobile phone sets and horlicks might be costlier in the upcoming FY. Depreciation facility on import of reconditioned cars might be relaxed in the budget. Supplementary Duty (SD) on import of some 1200 products might be waived as a part of trade globalisation. Tax on bidi might remain unchanged while both price slab and SD on cigarettes is expected to see a hike.

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