NBR clarifies tax rates on transfer of lands

The National Board of Revenue (NBR) issued a clarification Wednesday on tax rates on transfer of personal and other lands and specifying those for some areas after these led to widespread confusion over the measure.
The newly-introduced tax rules on transfer of land and flats from July 1, 2014 made the land authorities puzzled as they found that some of the rules needed a review and have to be clarified further for field-level land offices.
Apparently, registration of land in some areas was almost halted since July 1, 2014, sources in the land registration offices said.
District registrars of the land offices across the country in a recent meeting with the National Board of Revenue (NBR) shared the complexities over collection of taxes under the new tax law.
To resolve the problems, the revenue board formed a five-member committee comprising land registration authorities and senior income tax officials.
The committee identified ambiguities over the land tax rule and made clarification for facilitating the field offices to collect taxes smoothly.
In the budget for the current fiscal, the NBR set tax on transfer of per katha (1.65 decimal) land at maximum Tk 1.08 million and for flats, structures or buildings at Tk 600 per square metre.
In the tax rules, the tax authorities defined different areas including posh, commercial, city corporation and land developed by local authorities and fixed land transfer taxes accordingly.
According to the clarification, signed by Abdur Rahman FCMA, First Secretary of Income Tax Policy wing, the NBR fixed land transfer tax at 3.0 per cent or 4.0 per cent on deed value for personal or privately-owned land situated in Dhaka, Gazipur, Narayanganj and Agrabad (residential and commercial area), Khulshi, Nasirabad, Halishahar, Pachlaish, CDA Avenue and Mehedibag in Chittagong.
However, tax would be imposed on transfer of per katha of land or deed value, whichever is higher, for the lands, located in those areas if those are earlier allocated, sold or developed by the National Housing Authority (NHA) or Rajdhani Unnayan Kartipkkhaa (RAJUK) under the Ministry of Housing and Public Works.
In the clarification, the NBR said tax would be imposed on the basis of per katha land on transfer of land in Basundhara (block A to G) and Niketon residential area of Dhaka. The areas were not specified in the rules, issued by NBR on July 1 last.
For transfer of land situated in Gazipur, Narayanganj, Munshiganj, Manikganj, Narsingdi, Dhaka and Chittagong, irrespective of city corporation areas but not under the jurisdiction of RAJUK or CDA, owners will have to pay 3.0 per cent tax on deed value of land registration.
However, tax rates would be higher, 4.0 per cent of the deed value, if those lands are located under RAJUK and CDA areas.
For transfer of flats and building, owners will have to pay tax on both land and flat registration as per specified rates of the NBR.
Abdul Quayum, Dhaka District Registrar of Land, said the new land tax rule is quite complex and unclear to the land officers to collect tax on registration.
"The committee has resolved the complexities to enforce the law," he said.
Land registration process in some areas is being hampered due to confusion over the tax law, he added.
Tax rates on land transfer have been fixed on the basis of area while land offices define land on the basis of Mouza.
Mr Quayum said the NBR had fixed tax at higher rate for some of the commercial areas that also include some residential areas.
In that case, it was not clear what rate should be charged by the land officer for the residential ones, he said.
It would be easier for land registrars if the tax rates could be fixed on the basis of different 'blocks' which are familiar to the land offices, he added.  
 "The tax authorities have also fixed tax rates on the basis of size of roads beside the land. But, how could the land authority know what the size of the road is without visiting the place physically?" he asked.
Officials said land offices have acute shortage of logistics and manpower to conduct the job smoothly. They have to collect some six to seven types of taxes for the public exchequer at the time of transfer of land or house property.
In the budget for current fiscal year, the tax authority has made submission of Taxpayers Identification Number (TIN) mandatory on transfer of land or buildings, valued above Tk 0.1 million, in city corporation and municipalities of district towns. However, it is not applicable for non-resident Bangladeshis.
In the clarification, the NBR said in case of child-owner of a land, his legal guardian will have to submit the TIN. For registration in joint name, TIN would be mandatory for the partner having deed value above Tk 0.1 million.