Taxmen\\\'s sweeping powers irk taxpayers

Doulot Akter Mala | Published: April 05, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Auditing of tax files, submitted under the universal self-assessment method, is creating dissatisfaction among the taxpayers.
Allegations have it that some taxmen are exercising their discretionary powers taking advantage of the absence of specific criteria for auditing tax files, sources concerned said.Â Â
Taxpayers have complained that some taxmen at field offices are selecting tax files upon smelling irregularities and are sending those to the board for approval as there are no guidelines for them as to which files they should select for audit. It is also difficult for the board to review all the selected tax files coming from 630 circles due to manpower shortage.
Such practice is making way for corruption among some tax officials, tax evasion by taxpayers and is increasing harassment of the genuine taxpayers, sources concerned said.
There is no safety clause for taxpayers through which they can point out harassment during audit of tax files, they added.
A senior tax official, acknowledging the issue, said there had been a set of specific criteria to determine which tax files, submitted under universal self-assessment method, could be audited and which files were not, until fiscal year (FY) 2011-12.
"The guidelines have been scrapped following some companies' intention to evade tax through bypassing the rules," he said.
Under the previous rules, if a taxpayer showed 20 per cent higher income compared to that of the previous year, taxmen would not audit his or her tax files.
The tax official said some companies have earned double in a year, but showed only 20 per cent higher income by concealing other information.
"Such a practice forced the taxmen to scrap specific guidelines for audit in a bid to keep ways open to audit any of the tax files without bar," he said.
Humayun Kabir FCA, convener of income tax related sub-committee of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said the objective of introduction of the 'universal self-assessment' in 2008-09 had been to reduce harassment of taxpayers. But that objective is now being undermined, he said.
"Taxpayers are facing harassment as taxmen have 'open licence' to select the tax files for audit. A specific methodology must be incorporated in auditing of tax files," he said.
The FBCCI last year proposed inclusion of the criteria for auditing universal self-assessment tax files, withdrawal of a provision which tags 'satisfaction of Deputy Commissioner of Taxes (DCT)' on the assessment of tax files, he said.
There must be a predetermined base to conduct audit of tax files through random sampling and computerised system, he added.
Taxpayers, especially the large corporate ones, are facing double auditing, first by the NBR and then by the auditor general's office in the name revenue auditing. Such a double scrutiny is unjust, he said.
Taxmen get a long period of six years to audit tax files after assessment, as per the existing tax law, Mr Kabir said.
Shahadat Hossain FCA, former vice-president of the Institute of Chartered Accountants of Bangladesh (ICAB), said the complex audit system concerning universal self-assessment tax files was discouraging taxpayers and prompting them to switch over to the general method.
"Criteria should be framed to stop harassment of taxpayers during auditing. Taxpayers should be able to know in which way they should submit tax return to avoid auditing," he said.
Taxmen are selecting tax files putting under doubt the available information of the taxpayers as the NBR is yet to build the capacity to understand the techniques of tax evasion by some large companies, he added.
"Tax officials must follow guidelines during auditing of both individual and corporate taxpayers' files, submitted under universal self-assessment method," he added.
An income tax official, however, declined to accept the allegation without mention of specific cases or complaints.
He assured of taking stern action and keeping the source secret if any taxpayer made specific allegations about harassment.
Sources said taxpayers usually do not lodge complaints against taxmen to avoid further hassle. Also some taxpayers evade tax, by bribing taxmen.
The official said the tax authorities were auditing only 2.0 per cent of the universal self-assessment tax files in line with the approval of NBR, while around 98 per cent of the tax files remained out of scrutiny of taxmen.
"The rate of auditing of tax files should be increased gradually to increase tax collection by unearthing evasion," he added.
The NBR has selected some 20,000 universal self-assessment tax files for auditing in FY 2012-13. The number was 16,000 in FY 2011-12, and 10,000 in FY 2010-11.
The ratio is 2.04 per cent, 2.45 per cent and 2.35 per cent respectively of the actual tax returns submitted under the method.
For FY 2013-14, the NBR has already instructed its field offices to send the list of taxpayers, selected for auditing on the basis of tax return, by April 30 next.