NBR to open five offices to monitor source tax

The National Board of Revenue is set to open five separate zones to intensify its monitoring of the deduction of source or withholding tax and to curb evasion.

Dubbed the Tax Deduction at Source Monitoring Zone, the specialised offices will monitor 250,000 organisations, agencies and firms that are responsible for withholding tax at source of income and depositing them to the state coffers.

The revenue board has already approved the plan and has formed a committee to prepare a detailed proposal to submit to the public administration ministry, a senior official of the NBR said yesterday.

“We will be able to prevent revenue losses and ensure proper supervision of withholding tax deduction.”

Of the proposed five offices, four will be in Dhaka and one in Chittagong.

A withholding tax, for example, is the tax that banks withhold from the depositors' interest earnings and later pay to the government.

Withholding tax, which is collected from 58 areas, accounts for 57 percent of the total direct tax collection. It was less than 20 percent a decade ago, according to the NBR.

At present, officials in the existing tax zones oversee the deduction of withholding taxes by the public and private agencies.

But in recent times, it has become tough to ensure compliance with the rules to deduct and deposit source tax by agencies.

It has also become difficult to conduct audit to see whether the 250,000 agencies are properly discharging their responsibility to deduct tax during payment, according to taxmen.

If they do not deposit correctly, the state loses a huge amount of revenue, they said.

“Scaling up monitoring by opening the specialised zones will not only allow us to curb revenue dodging but also enable the other zones to carry out their duties better,” the official added.

In his budget proposal, Finance Minister AMA Muhith unveiled the plan to set up separate zones to streamline the collection of withholding or source tax.