Penal rates to be specific
Doulot Akter Mala | Sunday, 1 June 2008
The government has decided to bring a major change in the existing income tax law to facilitate declaration of any lawfully earned undisclosed income detected by taxmen during assessment.
However, the taxpayers concerned will have to pay a specific rates of penal tax instead of the existing variable rates.
According to the income tax law, there is a provision to bring lawfully earned undisclosed income under tax net, provided such incomes are detected by taxmen during assessment.
Penal tax rates set for general tax payers range between 10 per cent and 250 per cent while the maximum penal rate is 500 per cent in case of self-assessment taxpayers.
The National Board of Revenue (NBR) is set to fix the penal rate at 10 per cent by amending the existing law that stipulates variable rates.
However, the tax rate will increase on year-to-year basis. Under the proposed rule, a taxpayer would be able to declare undisclosed income of maximum five years in arrear.
The rate of penal tax will be 10 per cent for declaring one year old undisclosed income while it will be 20 per cent for undisclosed income for two years in arrear, 30 per cent for three years, 40 per cent for four years and 50 per cent for five years.
"We are planning to bring a change in this law to minimise the scope for bargaining and slash the discretionary power of taxmen," said NBR chairman Muhammad Abdul Mazid.
The income tax officials could impose higher or lower penalty rates using their discretionary power following negotiations with the tax payers, he added.
"There will be no scope for reducing or increasing the rates through bargaining," he said.
"Taxmen tend to charge penal rate at higher levels while taxpayers want to pay tax at lower levels. We are exploring ways to minimise the gap," NBR chairman said.
In the law, undisclosed incomes detected only by the taxmen are allowed to be declared, not voluntarily disclosures, the NBR chief said.
"We are also contemplating to offer a special opportunity for declaration of undisclosed income for a limited period in the next fiscal," he added.
He said tax rates should be higher than what regular taxpayers pay.
"The undisclosed money holders should pay penal tax, which will ensure justice to the regular taxpayers," he added.
The government is taking the move to make undisclosed income taxable, but illegally earned money will not get the same opportunity, he said.
"We will not be able to protect the illegal money holders from other laws, but they will not be punished under income tax law if they pay due taxes," the NBR chair said.
However, the taxpayers concerned will have to pay a specific rates of penal tax instead of the existing variable rates.
According to the income tax law, there is a provision to bring lawfully earned undisclosed income under tax net, provided such incomes are detected by taxmen during assessment.
Penal tax rates set for general tax payers range between 10 per cent and 250 per cent while the maximum penal rate is 500 per cent in case of self-assessment taxpayers.
The National Board of Revenue (NBR) is set to fix the penal rate at 10 per cent by amending the existing law that stipulates variable rates.
However, the tax rate will increase on year-to-year basis. Under the proposed rule, a taxpayer would be able to declare undisclosed income of maximum five years in arrear.
The rate of penal tax will be 10 per cent for declaring one year old undisclosed income while it will be 20 per cent for undisclosed income for two years in arrear, 30 per cent for three years, 40 per cent for four years and 50 per cent for five years.
"We are planning to bring a change in this law to minimise the scope for bargaining and slash the discretionary power of taxmen," said NBR chairman Muhammad Abdul Mazid.
The income tax officials could impose higher or lower penalty rates using their discretionary power following negotiations with the tax payers, he added.
"There will be no scope for reducing or increasing the rates through bargaining," he said.
"Taxmen tend to charge penal rate at higher levels while taxpayers want to pay tax at lower levels. We are exploring ways to minimise the gap," NBR chairman said.
In the law, undisclosed incomes detected only by the taxmen are allowed to be declared, not voluntarily disclosures, the NBR chief said.
"We are also contemplating to offer a special opportunity for declaration of undisclosed income for a limited period in the next fiscal," he added.
He said tax rates should be higher than what regular taxpayers pay.
"The undisclosed money holders should pay penal tax, which will ensure justice to the regular taxpayers," he added.
The government is taking the move to make undisclosed income taxable, but illegally earned money will not get the same opportunity, he said.
"We will not be able to protect the illegal money holders from other laws, but they will not be punished under income tax law if they pay due taxes," the NBR chair said.