Income tax ceiling may rise

The government is likely to raise the tax-free income limit for individual taxpayers after two consecutive fiscal years of maintaining the same threshold.
Sources concerned said the ceiling could be revised upward to Tk 275,000 from the existing one of Tk 250,000 in the upcoming budget for FY2017-18.
The decision on increasing the tax-free limit has been taken following demand from cross-sections of people, including business chambers, civil society, tax lawyers and common taxpayers, for raising the ceiling much higher in view of rising cost of living.
Officials see increasing tax-free ceiling as a sensitive issue and may be changed with instructions from the high-ups.
A number of marginal taxpayers will be dropped out from the list of tax-return filers after a raise in the threshold.
Currently, some 1.6 million individuals submit tax returns to the income-tax department, although the number of registered taxpayers or electronic taxpayer-identification number (TIN)-holders is above 2.8 million.
In the Finance Bill 2015, the government fixed higher the tax-free limit at Tk 250,000 from Tk 220,000. The ceiling was increased to Tk 220,000 in the budget for 2013.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) in its budget proposal for FY 2017-18 proposed that the government fix the limit upward to Tk 325,000.
'Average rate of inflation was above 5.6 per cent in FY 2015-16 and 2016-17. Tax ceiling for individual taxpayers needs to be revised higher considering inflation, increasing cost of living, decrease in purchasing power of the common people,' the apex chamber said in the budget proposal that was placed before the Finance Minister in the 38th meeting of consultative committee of the National Board of Revenue (NBR).    
The FBCCI said the tendency in tax-evasion would be reduced if the minimum amount that is required as living expenditure remained tax-free.
Under the existing income tax ordinance 1984, an individual taxpayer has to pay income tax at a rate of 10 per cent on his annual income above Tk 250,000 to next level of Tk 400,000.
Neighbouring India in its budget for the current fiscal introduced a new rate 5.0 per cent for net marginal taxpayers and increased the number of tax returns.
Tax officials said there are three minimum tax-payment limits-Tk 3,000, Tk 4,000 and Tk 5,000--on the basis of regional locations.
Taxpayers have to pay a minimum amount if their income surpasses the tax-free ceiling.
In neighbouring countries, the tax-free threshold for individual taxpayers is Rs 400,000 in Pakistan and Rs 500,000 in Sri Lanka.
Tax ceiling for sub-groups like women, elderly citizens, people with disabilities, and freedom fighters will also be raised proportionately from the existing amounts.
Currently, the limit is Tk 300,000 for women and senior citizens, Tk 375,000 for people with disability, Tk 400,000 for parents of children with disability and Tk 425,000 for freedom fighters.
    doulot_akter@yahoo.com