Govt to revise land value every year
Doulot Akter Mala | Saturday, 7 June 2008
The government has taken a move to fix area-wise value of land at the beginning of every year.
This aims to streamline collection of revenue and check evasion of taxes through concealment of actual value, land ministry sources said.
Land prices will be fixed by a high-powered committee for specific areas at the beginning of every year.
The sources said the existing market prices of land are much higher than those recorded at the time of registration in accordance with the government-fixed, location-wise notional prices.
This is one of the major reasons for building up of undisclosed but not necessarily corruption-tainted income, a competent source said.
The government will also rationalise the rate of land registration fees and charges. It has planned to reduce some of the taxes levied on land registration, the land ministry official said.
Existing 5.0 per cent stamp-duty for land registration in rural areas will be reduced to 2.0 per cent, while the similar duty rate for urban lands will remain unchanged. The decision might come into effect from July 1 next.
The government collected Tk 8.96 billion from non-judicial stamp-duty in fiscal 2004-05 followed by Tk 8.27 billion in 2005-06 and Tk 9.08 in 2006-07. The revenue was worth Tk 12 billion in the first ten months of 2007-08, the land ministry sources said. The registration fee and local government tax, which are 2.0 per cent for both rural and urban areas, will be reduced to 1.0 per cent respectively.
The land registration fees will be lowered to 2.0 per cent for both rural and urban area from the existing rate 2.5 per cent.
An inter-ministerial meeting last Wednesday discussed matters relating to re-adjustment of stamp-duties, registration fees, local government taxes and waiver of 5.0 per cent tax at source.
Senior officials of the ministries of law, land and finance, and Local Government Engineering Department (LGED) attended the meeting.
S.M.AR AlBeruni, a land expert who attended the meeting, said: "We have agreed in principle to reduce stamp duty, local government tax and tax at source from land registration."
In order to check any adverse effect of the tax reduction on revenue generation, it will be monitored that the value of land reflects the actual one at the time of registration in conformity with the existing market price, he said.
"Significant reforms in land registration procedures will streamline the tax collection method from this sector despite the reduction of taxes," he added.
The government might waive the provision of deduction of 5.0 per cent tax at source, which during the last one year, remained unimplemented at the insistence of the revenue board.
In July 2007, an inter-ministerial meeting, chaired by the finance adviser, decided to waive the tax, but it has not been implemented because of a fear of revenue losses.
The finance adviser had asked the board to issue a circular in this connection by August 30 that year, but it was never carried out.
This is because of a difference in opinion on waiver of tax at source between the land ministry and the revenue board.
Asked about the issue, a senior NBR official said: "We have no specific information on tax waiver."
The NBR had proposed reduction of the tax rate at 3.0 per cent from present 5.0 per cent, instead of a waiver, he added.
The board earned revenue worth Tk 3.70 billion from the tax relating to land registration in fiscal 2006-07.
In the outgoing fiscal, the government earned Tk 4.0 as tax at source from land registration, the land ministry source said.
Meanwhile, a reform proposal on simplification of land registration procedures is now under scrutiny at the Regulatory Reforms Commission (RRC).
A high-powered task force, headed by former NBR chairman Muid Chowdhury, is reviewing a proposal made by a committee on simplification of land registration procedures.
Talking to the FE, Chowdhury said: "We have been reviewing the proposal made by the committee. It is yet to be finalised."
There are some shortcomings in the report relating to land registration reform, he added.
International Finance Corporation (IFC), a private sector arm of the World Bank, has also suggested simplification of land registration procedures through monthly monitoring as a measure to improve the country's ranking in the next 'doing better business' indicator.
Asked about the IFC suggestion, Chowdhury said: "We are studying the IFC suggestion for inclusion in the reform proposals."
Meanwhile, the government has taken some effective measures to reduce the time concerning transfer of ownership and land registration procedure.
The government has been taking those measures, as the land registration cost of the country is much higher than that of the neighbouring countries due to imposition of different taxes and fees, a senior finance ministry official said.
In a review, it has been found that the total land registration cost in urban and rural areas stands at 14.5 per cent and 18.5 per cent respectively of the total land price.
The government has decided to bring down the registration cost to 5.0 per cent and 8.0 per cent respectively.
Sources said a big difference exists between the government-fixed notional value and the actual market prices of the city land.
The related costs of registration and duties for transfer of immovable property in Bangladesh are at the highest level among the countries in South Asia. People often feel discouraged to show actual market value of land to cut land registration cost.
A World Bank report said Bangladesh ranked below 166 countries in matters of simplified land registration, while Nepal is placed in 25th position.
Higher tax incidence and fees pushed up the land registration cost, resulting in concealment of purchasing or selling value to reduce the cost.
Such procedural complexities have also raised the volume of lawfully earned undisclosed income.
This aims to streamline collection of revenue and check evasion of taxes through concealment of actual value, land ministry sources said.
Land prices will be fixed by a high-powered committee for specific areas at the beginning of every year.
The sources said the existing market prices of land are much higher than those recorded at the time of registration in accordance with the government-fixed, location-wise notional prices.
This is one of the major reasons for building up of undisclosed but not necessarily corruption-tainted income, a competent source said.
The government will also rationalise the rate of land registration fees and charges. It has planned to reduce some of the taxes levied on land registration, the land ministry official said.
Existing 5.0 per cent stamp-duty for land registration in rural areas will be reduced to 2.0 per cent, while the similar duty rate for urban lands will remain unchanged. The decision might come into effect from July 1 next.
The government collected Tk 8.96 billion from non-judicial stamp-duty in fiscal 2004-05 followed by Tk 8.27 billion in 2005-06 and Tk 9.08 in 2006-07. The revenue was worth Tk 12 billion in the first ten months of 2007-08, the land ministry sources said. The registration fee and local government tax, which are 2.0 per cent for both rural and urban areas, will be reduced to 1.0 per cent respectively.
The land registration fees will be lowered to 2.0 per cent for both rural and urban area from the existing rate 2.5 per cent.
An inter-ministerial meeting last Wednesday discussed matters relating to re-adjustment of stamp-duties, registration fees, local government taxes and waiver of 5.0 per cent tax at source.
Senior officials of the ministries of law, land and finance, and Local Government Engineering Department (LGED) attended the meeting.
S.M.AR AlBeruni, a land expert who attended the meeting, said: "We have agreed in principle to reduce stamp duty, local government tax and tax at source from land registration."
In order to check any adverse effect of the tax reduction on revenue generation, it will be monitored that the value of land reflects the actual one at the time of registration in conformity with the existing market price, he said.
"Significant reforms in land registration procedures will streamline the tax collection method from this sector despite the reduction of taxes," he added.
The government might waive the provision of deduction of 5.0 per cent tax at source, which during the last one year, remained unimplemented at the insistence of the revenue board.
In July 2007, an inter-ministerial meeting, chaired by the finance adviser, decided to waive the tax, but it has not been implemented because of a fear of revenue losses.
The finance adviser had asked the board to issue a circular in this connection by August 30 that year, but it was never carried out.
This is because of a difference in opinion on waiver of tax at source between the land ministry and the revenue board.
Asked about the issue, a senior NBR official said: "We have no specific information on tax waiver."
The NBR had proposed reduction of the tax rate at 3.0 per cent from present 5.0 per cent, instead of a waiver, he added.
The board earned revenue worth Tk 3.70 billion from the tax relating to land registration in fiscal 2006-07.
In the outgoing fiscal, the government earned Tk 4.0 as tax at source from land registration, the land ministry source said.
Meanwhile, a reform proposal on simplification of land registration procedures is now under scrutiny at the Regulatory Reforms Commission (RRC).
A high-powered task force, headed by former NBR chairman Muid Chowdhury, is reviewing a proposal made by a committee on simplification of land registration procedures.
Talking to the FE, Chowdhury said: "We have been reviewing the proposal made by the committee. It is yet to be finalised."
There are some shortcomings in the report relating to land registration reform, he added.
International Finance Corporation (IFC), a private sector arm of the World Bank, has also suggested simplification of land registration procedures through monthly monitoring as a measure to improve the country's ranking in the next 'doing better business' indicator.
Asked about the IFC suggestion, Chowdhury said: "We are studying the IFC suggestion for inclusion in the reform proposals."
Meanwhile, the government has taken some effective measures to reduce the time concerning transfer of ownership and land registration procedure.
The government has been taking those measures, as the land registration cost of the country is much higher than that of the neighbouring countries due to imposition of different taxes and fees, a senior finance ministry official said.
In a review, it has been found that the total land registration cost in urban and rural areas stands at 14.5 per cent and 18.5 per cent respectively of the total land price.
The government has decided to bring down the registration cost to 5.0 per cent and 8.0 per cent respectively.
Sources said a big difference exists between the government-fixed notional value and the actual market prices of the city land.
The related costs of registration and duties for transfer of immovable property in Bangladesh are at the highest level among the countries in South Asia. People often feel discouraged to show actual market value of land to cut land registration cost.
A World Bank report said Bangladesh ranked below 166 countries in matters of simplified land registration, while Nepal is placed in 25th position.
Higher tax incidence and fees pushed up the land registration cost, resulting in concealment of purchasing or selling value to reduce the cost.
Such procedural complexities have also raised the volume of lawfully earned undisclosed income.