Income tax in national budget- 2007

Md. Khalilur Rahman

THE ensuing national budget, 2007 is going to be placed this month by dynamic caretaker government before the people of Bangladesh who are anxiously expecting proper relief and remedy in their taxation. As a long experienced Tax Consultant and tax payer for the last fifty years and loyal citizen of Bangladesh, I would like to suggest before the dynamic caretaker government of Bangladesh some amendments to, and changes in, taxation laws in Bangladesh to be incorporated in ensuing national budget in the interest of tax payers and natural justice as mentioned below:
1. Section-11 Tax Appellate Tribunal. It is purely a judicial court for adjudicating complicated taxation cases and solving various related problems of taxation and since its inception, it was constituted by a judicial and an accountant member, but the post of judicial member has been abolished in 2002 while the judicial member in tribunal is very much necessary for adjudication of legal issues involved in taxation appeals and it is suggested that the post of judicial member is tribunal should be restored.
2. Section 16 CC- Change of minimum tax @ Tk 5,000/= for limited companies has been introduced under Finance Act, 2006 irrespective of loss or 'nil' income; or turnover or manufacturing of activities of the company which is contrary to natural justice and should be abolished.
3. Section 19- Unexplained income deemed to be income. It has been noticed that the taxing officers add the alleged investment as "cash credit" with total income without giving any opportunity to the assesse to explain the source of said investment and for the sake in the above section that no such addition be made for alleged unexplained investment without giving any opportunity to the assessee to explain the same.
4. Section 19 (11)- In existing law addition of delot amount for cancellation of indebtedness is made irrespective of relationship between the assessee and debtor, this subsection should be amended excluding the indebtedness between blood relations, partners with  firms and directors with companies.
5. Section 19 AAA- Exemption of tax for investment in industries be restored for the genuine industry engaged in the development of agriculture, poultry, cattle and diary and manufacturing of essential non-luxury goods and showing reasonable profit for another five years from July 01, 2006.
6. Section 25 (1) (h)- Repairing and maintenance cost of hired buildings should be allowed at uniform rate of 30% for both commercial and residential building as the cost of above expenses has largely increased during these year.
7) Section 32 (6), 32 (8) & (9)- Exemption of tax on capital gains for re-investment of such capital gains in the purchase of flat, apartments and house or five years saving certificates, government special bonds and ICB Unit certificates restoration of above sections 32 (6), 32 (8) and 32 (9).
8) Section 44 (1) Para 31- B, part A of sixth schedule- exemption of tax on interest on savings instruments be enhanced from existing Tk 25,000/= to Tk 50,000/= for the relief to the middle class people.
9) Exemption of income upto Tk 2,00,000/= on Cottage industry manufacturing non-luxury essential goods. A new section 47 A to be incorporated for exemption of tax on income from cottage industry employing 15 workers including the assessee himself and investing capital for Tk. 2,00,000/= and earning Tk 1,50,000/= manufacturing non-luxury essential goods per annum.
10. Section 64 needs to be amended by enhancing the limit of latest assessed income from existing Tk 2,00,000/= to Tk 3,00,000/=.
11. Section 75- submission of Return:
a) A new clause as 75 (1) (c) should be introduced "that a person whose assessment has been made at "nil" for consecutive three years, "shall not be required to file any return" to avoid unnecessary harassment by the tax officials and his file to be struck off.
b) A new clause as 75 (1) (d) should be incorporated "that a female assessee aged than 65 years shall not be-required to file any return, irrespective of her income" considering her advanced age and inconvenience in visiting tax office and similar exemption has been allowed by the neighbouring country.
12. Section 83 A & 83 AA self-assessment- Proviso under this Section should be restored to avoid unnecessary harassment of the sincere assessees in the hands of tax officials. "That the Deputy Commissioner of Taxes shall not proceed to make audit or risk assessment in respect of a return where such return is filed in accordance with rules for self-assessment made by National Board of Revenue for the year and shows at best 15% higher income than income last assessed even if the return is selected for audits."
13. Section 83- Communication of assessment order and demand notice. It has been carefully observed that in spite of specific provision under Section 83 that the Deputy Commissioner of Taxes shall communicate his assessment order, demand notice and assessment form within 30 days from the date of his order, but in most cases he fails to do so and the assessee is compelled to receive the same in back date which disqualifies him in filling appeals within stipulated date and he is deprived of natural justice and it is suggested that the Section 83 should be amended "that Deputy Commissioner of Taxes must communicate his order, demand notice and assessment form within 30 days from his order in default of which his order and demand notice shall be invalid."
14. Section 85- Assessment of Firms. At present special advantage of exemption of tax is allowed on partnership firms of professional persons viz Lawyers, Doctors, Engineers, Income Tax Practitioners and Chartered Accountants, but in most cases such partnership firms do not furnish details of their firms, documents, and books of accounts as required under law and they get tax benefit on mere papers and the section should be amended requiring the above professional partnership firms to furnish the following documents for getting exemption of tax on their firms:
a) Books of accounts, cash Book & ledger allocating the respective share of income according to deed of partnership on non-judicial stamp papers of Tk 1,000/= duly registered by the registrar of firms under partnership Act.
b) Payment of tax by the partners under section 74.
c) An application for registration of firms for-exemption of tax to be filed before the end of respective financial year.
15. Section- 158- Payment of tax at 15% of the amount, representing the difference between the tax determined by the Commissioner of Taxes (Appeals) / Appellate Joint Commissioner of Taxes and tax payable under section 74 before filing appeal to the Taxes Appellate Tribunal, genuine assessees face acute hardship to pay the above tax due to harsh assessment and they do not also get any remedy in waiving the requirement of payment of above tax from the Zonal Commissioner of Taxes to get their appeals heard by the Taxes Appellate Tribunal and are deprived of natural justice in spite of genuiness of their appeals. For the sake of natural justice, the said section 158 (2) should be amended as "no appeal under this section shall lie against an order of the Appellate Additional/ Joint Commissioner of Taxes or Commissioner of Taxes (Appeals) as the case may be unless the assessee has paid the tax payable under Section 74.
16. Section 124- Penalty for non-submission of return. This Section is highly punitive and complicated and should be amended by simplifying and reducing the imposition of quantum of penalty from existing  complicated system for non-submission of income tax return by imposing penalty @Tk 100/= per day for defaulting period with the proviso that in genuine cases penalty should be reduced.
The writer is a senior income tax consultant