All types of funds, including provident ones, will be required return submission with audited financial statements by November 30 on their incomes for the fiscal year 2022-23.
The new Income Tax Act has made tax-return submission mandatory for private companies' employee funds, including recognized provident fund, approved gratuity fund and superannuation fund.
Approved by the government for private sector, the funds were exempt from submission of tax returns until June 30, 2022. Tax paid on income from securities ranging from 5.0 to 10 per cent was the finally paid tax on funds.
However, the funds for public employees, including for the Bangladesh Bank or local government, stay exempted from tax payment.
Tax officials said 'Tax Day (November 30, 2023)' would be the deadline for the funds as those have been categorized as 'individual taxpayers' in the new tax law.
And the tax rate for funds would be 27.5 per cent to 30 per cent as of corporate taxpayers.
"In case of delay in submission of tax returns or missing the deadlines, funds would have to count 4.0-percent monthly interest on payable taxes," the income-tax act states.
The funds would have to pay taxes on incomes from government savings certificates, as per tax law.
The incomes from savings tools would be added to the actual taxable income after adjusting the taxes deducted at source.
An analysis by Chartered Accountant Snehasish Barua, a fellow faculty of Institute of Chartered Accountant of Bangladesh (ICAB), has explained the new provision of tax law following widespread confusions of the taxpayers on this issue.
"In most cases funds receive contribution from the company and other receipts through banking channel and make payment for investment or to the employees through banking channel. As such, the corporate tax rates will most likely to be 27.5 per cent on its income from securities or other sources. Fund may enjoy 15-percent tax rates on capital gain," he says.
In case of exceeding turnover of the funds above Tk 30 million, a fund must file financial statements, certified by Chartered Accountants, with the tax returns.
Income year of fund would be from June to July of a financial year, Mr Barua explained.
In some cases, funds follow January to December income year aligned with their company's income year since a subsidiary of a Multinational Companies, bank, insurances, non-banking financial institutions can follow other July to June income year.
Mr Barua's analysis in the linkdin says many funds may face troubles for filing the tax returns this year as they are submitting it for the first time. Some have already closed the financials for the period from January to December 2022.
He suggests two options for the companies managing the funds either prepare a FS from January to June 2023 or to prepare it for July 2022 to June 2023 period.
Funds need to pay Advance Income Tax by the 15th of September, December, March and December if their income exceeds Tk 0.6 million. The balance of the payable income tax on its entire income would be payable by November 30, 2023.
Mr Barua pointed out some confusion on how taxmen would consider income year in case of half-yearly FS.
Also, preparation of FS by CA would be needed to identify opening balance as of July 2022.
"Companies who have completed audit for 2022 calendar year and concerned auditor already obtained Document Verification Code (DVC) for the period may require clarification whether they need to re-audit the half-yearly statements and obtain DVC for that period," he wrote.
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