New taxpayers
I refer to your staff correspondent's report in the August 28 issue. In the drive to widen the tax-net and raise government resources for the income tax, this is definitely a welcome step. If the drive is further extended to all the districts and upazila towns, big hats and bazars in the rural areas, the number would increase significantly. Without such widening of the tax net, it would be impossible to increase the tax revenues in a big way. Apart from this, the following steps would be effective:
i) NBR should adopt a strategy which would not frighten the possible tax-payers but encourage them. It appears from newspaper reports that many depositors are now withdrawing their money from banks and investing the same on land, jewellery, etc or buying dollars. This would be disastrous for our economy in the long run.
ii) Rather than imposing any penalty on undeclared money, the owners of such money should be inspired to disclose the same in their next income-tax return, without any penalty or payment of arrear tax. It is said that there is two lakh crore taka in the market, which is not income tax paid. If even 25% of this money can be brought under taxation, the revenue earning would increase several times. Corruption cases may be looked into by the ACC, not by the NBR.
iii) All the money deposited in the banks are in a way tax--paid, at 10% on interest. Across the board, the effective tax rate on earning from bank deposits may be much higher as even a small investor who otherwise would not have paid income tax is paying 10% on his interest earning. In our country, the great multitude of investors are small depositors.
Investors on Sanchaya Patras are getting exemptions up to Taka 25,000 interest earning, whereas a person earning even a very small amount from bank interest is paying income tax at source. This policy is definitely anomalous and self-contradictory, the NBR may please look into this.
iv) We hope the new return form, introduced by the NBR, would make return submission easier. Income tax officials, with their old mindset, may be persuaded to accept declarations made by the honourable tax payers, without any harassment to them. The NBR chairman on many occasions reiterated that the tax offices would not perform any audit function on the returns submitted. Trusting people is more rewarding than distrusting them and putting them in trouble in various ways.
Many taxpayers do not remember or keep records of small details, many of which can easily be ignored. That would be a positive step by the NBR.
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