AIT pays dividends but individuals still shy of coming under tax net

The number of actual personal income tax-payers has been stagnant, if not on the decline, during the last two years.
A substantial part of the individual income tax receipts comes in the form of as advance income tax (AIT). The AIT is deducted at different stages including import activities or from returns on bank deposits, irrespective of whether the concerned individuals are TIN holders or not.  
An analysis of available data of FY 2012 and FY 2013 from the National Board of Revenue (NBR) shows that while the number of individual taxpayers, belonging to high and marginal income groups, increased while those who can be categorised as middle-income groups are still shy of submitting income tax returns.
The number of taxpayers, enjoying annual income above Tk 1.0 million almost doubled in a year while individual taxpayers belonging to income group above Tk 0.3 million up to Tk 1.0 million a year declined, said a analysis of NBR annual report data.
Former tax officials and field-level taxmen admitted the number of individual taxpayers is not increasing, in line with the rise in collection of overall income tax receipts.
According to the latest annual report of the NBR, the number of individual taxpayers increased from 1.2 million to 1.3 million earlier in a year but income tax officials themselves expressed doubts over this data.
A senior tax official of NBR said some 1.1 million individual taxpayers submitted their returns in fiscal year (FY) 2011-12 and this declined to 9,50,000 million in FY 2012-13.
In fiscal 2014, some 50,000 new taxpayers were added to the number of income tax returns, he said.
"Taxmen have found the data of fiscal year 2012 as confusing. Some evidence of double counting of tax-returns that year have been detected," he said.
Expansion of tax offices also needed reallocation of some tax files from one zone to another and it might have caused some mistake in counting the number of individual tax returns, he said.
Some people also filed tax returns in the tax-fair that tax offices counted twice, he added.
Former Income tax member Syed Aminul Karim said although the income level of people increased, the number of individual taxpayers does not reflect this.
The marginal group of taxpayers has risen in number because of inflation that included them the under tax-net, he added.
"The raise of AIT resulted in an increase in the number of taxpayers among the high-income group. Contractors as a group are the largest taxpayers among the individual taxpayers," he said.
The ex-member of the NBR appreciated an effective tax policy through national budget for a marked increase of income tax collection.
Another tax official also expressed his wonder over the current stagnant trend about number of individual taxpayers, despite several efforts by the NBR to help widen the tax net.
"I wonder why the number of taxpayers is not increasing. Some 3,00,000 of new taxpayers obtained e-tax identification numbers (TINs), known as online TINs last year who are supposed to submit tax returns this year,"  he said.
The analysis of NBR data showed that the number of individual taxpayers, having annual income above Tk 3,75,000, increased slightly. Some 1,829 taxpayers were added to the tax threshold in FY 2012-13, compared to the corresponding figure of the previous fiscal.
However, there is yet no exact study on how many taxpayers are paying the minimum taxes, how many submit nil returns or how many paid taxes at the highest rate of 25 per cent until fiscal 2013-14.
Tax offices are still maintaining data in a format that was prepared in 2000 on the basis of tax-exempted threshold income for individual taxpayers.
Every year, the research wing of NBR has been collecting data from tax offices across the country in the decade-old format.
According to an unofficial data, taxmen found some 8000 of existing taxpayers have annual incomes above Tk 44,20,000 who would come under the highest tax slab. Also, the income tax slab for the non-resident Bangladeshis (NRBs) has been raised new to 30 per cent from earlier 25 per cent.
The tax offices found that some 5000 taxpayers enjoyed annual incomes above Tk 20 million who paid surcharge last fiscal.
Transparency International Bangladesh (TIB) Executive Director Iftekharuzzaman said the country's various high income groups of people are yet to be fully tax-compliant.
He blamed the nexus of taxmen and taxpayers for losing a large amount of taxes from individual taxpayers.
"Although things are improving but the ratio of tax receipts to the country's gross domestic product (GDP) is still low in Bangladesh, from both regional and the global perspectives," he added.
Common people, he noted, are shouldering the burden of indirect taxes while direct tax collection is not increasing to that extent.
Mr Iftekharuzzaman focused on state support to the citizens who deserve it most, and transparency about public expenditure for motivating the people about the imperatives for paying income taxes.

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