Capital gain from transfer of farmland under tax net

The government has brought capital gain from transfer of agricultural land under the tax net for the first time with imposition of 1.0 per cent tax on it from the upcoming fiscal year (FY).
Currently, the gain from transfer of agricultural land is free of any tax.
The Finance Bill-2014 has incorporated a provision stipulating measures for widening the tax net on transfer of land, including farmland, for the fiscal year (FY) 2014-15.
The overall rates of tax at source on transfer of land have been hiked by 1.0 to 4.0 per cent of deed value.
The proposed budget for the FY 2014-15 has more than doubled the maximum land tax to Tk 10,80,000 per katha (1.65 decimals).
The other tax rates will vary depending on locations. Tax officials said the rates would be set by framing necessary rules for implementation of the land tax measures.  
For any structure, building, flat, apartment or floor space the tax rate has been raised to Tk 90 per square feet or 4.0 per cent of the deed value, whichever is higher.
"Provided that the rate of tax does not exceed Taka ten lakh and eighty thousand per katha (1.65 decimals) for land," the Finance Bill-2014 stipulates the tax rate at "Taka ninety per square feet for any structure, building, flat, apartment or floor space on the land, if any, or four per cent of the deed value, whichever is higher."
The National Board of Revenue (NBR) estimates collection of over Tk 20 billion, the highest amount of revenue from the tax measure on transfer of land.
Land registration is allegedly seen as a major source of accumulation of black money.
Finance Minister AMA Muhith in a post-budget press conference Friday himself categorically pinpointed the issue.
Talking to the FE Sunday, a senior tax official said land tax would be the major source of income tax collection in the next FY.
Taxmen identified untapped potentiality of revenue generation from the sector, he added.
About tax on gain from transfer of agricultural land, the official said currently main buyers of agriculture land were industrialists or expatriates who could pay tax at nominal rates.
"Although a seller is supposed to pay the tax, in reality, all land transfer-related costs are usually borne by buyers," he added.
In the proposed budget, the government has raised the tax-free ceiling for income from agriculture four times, from Tk 50,000 to Tk 0.2 million, to boost the sector.
On land tax, the NBR official said rules would be prepared to fix separate rates of tax at source for commercial and posh residential areas on transfer of land.
Area-wise rates will be fixed on the basis of location and importance of house property. Tax rates might be imposed on transfer of land katha-wise, instead of the existing sale price, at the time of registration.