Land-related taxes see sharp rise
FE Report | Friday, 6 June 2014
The budget for the upcoming fiscal year 2014-15 has proposed a sharp hike in taxes on transfer of land in a bid to increase domestic revenue from the less-tapped sector.
"Undervaluation at the time of registration of land transfer is causing significant revenue pilferage every year. It is therefore essential to introduce per katha-based advance tax system irrespective of registration value," Finance Minister AMA Muhith said in his budget speech.
He proposed to impose the katha-based advance tax replacing the existing 3.0 per cent tax at source on registration value of the sale of land in the posh residential and commercially important areas of Dhaka and Chittagong.
Finance Bill-2014 said the tax rates would be doubled to Tk 10,80,000 per katha (1.65 decimal), Taka ninety per square feet for any structure, building, flat, apartment or floor space on the land, if any, or 4.0 per cent of the deed value, whichever is higher.
The finance minister also proposed to impose Specific Tax in the same manner based on per-square-feet in case of transfer of important residential/commercial and other structures in Dhaka, Chittagong, and Narayanganj city corporations.
However, the finance minister has kept the black money whitening scheme through investment in the real estate sector unchanged for fiscal year (FY) 2014-15.
It also kept the existing law on voluntary disclosure of income, through payment of penal tax, unchanged.
To bring transparency in the process of house-rent collection in order to widen tax net and deter tax evasion, the finance minister has proposed to ensure payment of monthly house rent, amounting more than Tk 25,000, through banks.
Considering the issue of capital gain, he also proposed to increase the rate of tax at source from 3.0 per cent to 4.0 per cent on the deed value of land in areas other than the important commercial and posh areas within the jurisdiction of RAJUK and CDA.
The minister also proposed to impose tax at source at 3.0 per cent on registration value in other City Corporations and municipalities at district headquarters, and 2.0 per cent in other municipalities and 1.0 per cent in all other areas outside the municipalities.