In a move to raise more revenue from payroll tax, the National Board of Revenue (NBR) has issued a prescribed format for the private sector employers to submit salary statements of their employees.
Such a format was inducted in the income tax rules issued on June 29, 2016.
As per the format, the private companies will have to furnish detailed account of cash reimbursement of its employees, number of employees without TIN and expenditure on salary payment to foreign employees to the taxmen.
The NBR has included the measures in the income tax rules with a view to raising the contribution of payroll tax to 7.0 per cent from existing 3.0 per cent in the total withholding tax.
Companies will have to deposit the tax deducted at source from salaries of their employees within two weeks to the taxmen which earlier could be extended up to three months.
Companies will have to submit salary statements with information on the number of foreign employees, total amount spent as their salaries and percentage of the paid amount on total income of the company, the rules said.
The employer will also have to give a list of employees of the company who do not have taxpayers identification number (TIN).
Companies will also have to furnish details of the amount of cash reimbursement per employee in the salary statement.
Talking to the FE, a senior tax official said the provision on furnishing information about cash reimbursement has been incorporated in a bid to know about the volume of cash transaction, apart from salary expenditure of the company.
It has been alleged that many companies provide higher amount in cash to their employees than that of the salary amount to evade payment of income tax.
With the information, the difference between salary amount and cash payment will be known.
However, taxmen will not create any tax liability for taxpayers on the basis of the information, the tax official said.
The payroll tax is more than 30 per cent in developed countries. In India and Pakistan, it accounts for more than 15 per cent of the total withholding tax, NBR sources said.
In the Finance Act-2016, submission of a list of employees and their TIN numbers to the taxmen has been made mandatory at the time of showing salary expenses.
In case of failure of doing so, salary payment by companies will be treated as income and will be taxable.
The NBR also made TIN mandatory for employees in management, supervisory level in private companies and all government officials who are drawing minimum Tk 16,000 monthly salary.
About 95 per cent of the employed people work in the private sector. Of the employed, 24 million are paid employees and half of them receive salaries on a monthly basis.
According to Labour Force Survey 2013 by the Bangladesh Bureau of Statistics, the number of managers, professionals, technicians and associate professionals is 3.4 million or 14.6 per cent of the total employees.
They have an average monthly income between Tk 17,746 and Tk 21,323, according to the survey.
Tax officials said there is a huge potentiality to boost payroll tax through intensified efforts and devising effective tax measures.
In fiscal year 2014-15, the NBR collected Tk 9.79 billion as withholding tax from salaried persons.
Officials said collection of withholding tax from salary income showed a 29 per cent rise that year.
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