ICMAB for 10pc incentive for timely tax returns

Mohammad Ali | Published: April 19, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

The Institute of Cost and Management Accountants of Bangladesh (ICMAB) has proposed providing 10 per cent tax incentive to individual taxpayers for submission of their income tax returns on time (by September 30).
"This incentive will expedite submission of return on time and simultaneously de-motivate those who try to create pressure to extend the last date of submission of returns," ICMAB president Abu Sayed Md. Shaykhul Islam, FCMA, told the FE Saturday.
The ICMAB made the suggestion in a set of tax proposals, recently placed to the National Board of Revenue (NBR) for inclusion in the national budget 2015-2016.
"The individuals have developed a practice to wait up to the latest extended time declared by the NBR for submission of their returns," Mr Islam continued.
Sometimes, the NBR extends time up to end- December, he said.
"The individuals, who will submit returns on time, should be rewarded with some sort of incentive," the ICMAB president said.
"Tax incentive at the rate of 10 per cent on income-tax including surcharge, if any, may be allowed if a person submits return of income on time (September 30)," as per the 48-point tax proposals.
The ICMAB, however, proposed keeping the company and individual assessees, paying tax up to the level of minimum tax out of this tax incentive.
It also suggested to increase tax exemption limit for individual taxpayers from Tk 220,000 to Tk 250,000.
"Tax exemption limit remains unchanged for the last two years. By this time, the cost of living index has increased. To cope with the increased cost, it is necessary to increase the exemption limit," the Institute said.
The ICMAB also proposed to set a uniform rate of minimum tax for individuals at Tk 5,000 across the country instead of separate rates such as Tk 3,000 in city corporations, Tk 2,000 in district headquarters and Tk 1,000 in other areas.
It further suggested withdrawing the existing provision of giving 10 per cent tax rebate to the listed companies paying cash dividend of 20 per cent or more.
The listed companies are liable to pay tax of 35 per cent instead of 25 per cent if cash dividend of less than 10 per cent is paid, it said.
"The condition of payment of cash dividend in determining the tax rate of the listed companies may be withdrawn," said theÂ proposal.
"There should not be any condition of dividend payment in determining the tax rate of the listed companies. It is inequitable to ask the low ability taxpayer to pay tax at higher rate," it said.
The provision also contradicts the Companies Act, the ICMAB said, adding that "application of so many differential tax rates on companies complicates the tax computations."
To encourage the foreign banks to be listed with the stock exchanges and make the local banks more competitive, the ICMAB also proposed to impose 10 per cent higher tax (52.5 per cent) on the former than the latter.
Currently, all local and foreign banks pay 42.5 per cent income tax, it said.
Among others, another proposal is for applying rates of income tax on prospective basis such as tax rates of the Finance Act 2014 which will be applicable for the assessment year 2015-16 but collection of advance tax in 2015-16 may be based on the Finance Act 2015.
Under the present situation, it is very difficult to pay 75 per cent advance tax during the income year due to absence of actual rate of tax, which would be known at the end the income year- after approval of the Finance Act on 30 June, the Institute said.
"This proposal, if accepted, would allow assessees, especially large taxpayers, to plan and pay advance income tax, as required by law, on time," the ICMAB said.
Â Â Â md.ali.du@gmail.com