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Taxpayers to pay penalty for hiding tax-exempted incomes

Have to pay income tax at regular high rate of 30pc in revised return incorporating such left-out incomes

Doulot Akter Mala | September 12, 2017 00:00:00

Taxpayers have expressed their resentment over a penal measure that deprives them of tax-exemption benefit of certain incomes.

According to the current income-tax provision, tax-exempted income or income entitled to reduced tax rate cannot enjoy the facility if mentioned later in a revised tax return, tax officials said.

The provision of revised, updated income-tax return has been introduced in the current fiscal year (FY) through modification of the fiscal measure stipulated in the Income Tax Ordinance1984.

Income taxpayers who are enjoying tax exemption or pared-down tax rates will not be allowed to enjoy tax-exemption or tax cutbacks on the incomes somehow left out from the original return but mentioned in the revised one.

The rules will apply to both corporate and individual income taxpayers from the current FY (2017-18).

Time for submission of income-tax returns for individual taxpayers started on July 1 and will end on November 30, 2017.

"Exempted income or income tax at a reduced rate shown in a higher amount in revised or amended return under section 78, 82BB or 93 than the amount shown in original return is to be treated as 'income from other sources'," the income-tax provision says.

And if the income is treated as coming from other sources, it will be taxed at the regular rate of 30 per cent.

Talking to the FE, a senior income-tax official said revised return is a taxpayer-friendly measure but the left-out income in the return will not be entitled to enjoy the tax benefit it is originally entitled to.

"For example, a taxpayer showed Tk 100 million as income in the original tax return and paid tax at a rate of 30 per cent. In the revised tax return, he showed another amount of Tk 10 million from fish farming that enjoys reduced tax rate. The taxpayer will have to pay 30 per cent tax on fish-farming income, too, instead of the cut-down rate of 15 per cent," the official said.

The taxpayer will have to pay 30 per cent tax on the entire income of Tk 110 million. However, paid tax as per original tax returns will be adjusted with the payable taxes, he said.

From the current fiscal, taxpayers can submit revised tax returns within six months of return submission if they find any fault in the original returns. They can also pay tax within that period in case of less payment with the tax returns but 2.0 per cent monthly penal tax would be imposed on the amount.

Talking to the FE, some taxpayers raised question on the tax measures as a number of sensitive sectors are under cut-down rate of tax or enjoying outright tax waiver.

"If a senior citizen forgot to show his pension income in the original tax return, the total amount would be taxed at regular rate in the revised return," said Rashidul Ahsan, a retired government officer.

There must be some relief for selective sectors as the government has offered tax exemption for their benefit, he added.

Otherwise, he thinks, people will not be willing to show additional income in the revised tax returns out of fear for high tax incidence on them.

According to the new tax measures for FY18, taxmen are empowered to ask the taxpayers for submitting revised returns if they find any difference between paid taxes and assessed ones in the original tax return before issuing notice.

The Deputy Commissioner of Taxes (DCTs) concerned will have to give opportunity to the taxpayer to explain his position in writing within the time specified in the notice where the process of return results in additional liability or in reduction in refund, the provision says.

A notice of demand would be served within six months of the serving of cautionary notice in case of not responding to the taxmen's query.

However, DCT would not be allowed to accept revised tax returns after expiry of one hundred and eighty days from the date of filing the original return or if the original return was already selected for audit.

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