Tax on private sector PF, other funds cut to 15pc

DOULOT AKTER MALA | November 05, 2023 00:00:00

The government has decided to cut the tax rate on private sector provident fund (PF), Gratuity Fund, Superannuation Fund and Pension Fund to 15 per cent from existing 27.5 per cent.

The decision comes following wide-spread demands and recommendations from a cross-section of people, officials said.

In the new income tax law, enforced from June 23, 2023, the tax on PF, GF and other funds have been raised from 10 per cent to 27.5 per cent like corporate tax rates with a provision of tax return submission by the funds.

However, the government employees have remained exempted from payment of taxes from their profits on PF and other funds.

Recently, the National Board of Revenue (NBR) has sent a summary to Finance Minister AHM Mustafa Kamal to issue a Statutory Regulatory Order (SRO) in this regard.

In the summary, NBR Chairman Abu Hena Md Rahmatul Muneem wrote the Finance Minister that approval is required to bring changes considering after-retirement benefits of private sector employees.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on October 3, 2023 and Federation of Bangladesh Human Resource Organisation (FBHRO) on October 10, 2023 requested the NBR to reconsider the taxes on PF and other funds.

They raised concern over the provision that may discourage savings tendency and formation of such funds in private sector employers due to high taxes.

It would aggravate the discriminations on job benefits between the government and private sector employees, they viewed.

The tax of PF is payable on the interest amount of its deposits in banks or other government securities.

Until June 30, PF was exempted from submission of tax returns.

Industry insiders said maintenance cost of PF would be increased following the provision as it would require audited financial statements from chartered accountants.

Last date of tax return submission for PF is November 30, 2023, like individual taxpayers while other rules, including tax rates, have been imposed like corporate taxpayers.

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