The income tax return filing season has begun. Taxpayers can now submit their returns throughout the year, but they must file them online.
According to the National Board of Revenue (NBR), Bangladesh currently has around 12.5 million (1.25 crore) holders of Taxpayer Identification Numbers (TINs). Last year, 4.7 million (47 lakh) TIN holders submitted their returns online.
Many people believe that filing their tax returns prevents tax officials from questioning them or selecting their files for audit or investigation. However, the tax authorities may audit any taxpayer's records. Therefore, taxpayers should ensure that every piece of information in their return is accurate.
Every year, many taxpayers make the same common mistakes when filing their income tax returns.
These errors can lead to unnecessary complications, requests for explanations and even difficulties in determining tax liability. Discussions with tax officials, tax lawyers and taxation experts identified the following common mistakes.
Common mistakes taxpayers make
1. Taxpayers fail to declare flats, land and other immovable properties located within city corporations, municipalities or other areas correctly. As a result, their asset declarations do not accurately reflect their total wealth.
2. Taxpayers provide incorrect investment figures when claiming tax rebates on eligible investments. This may result in either underpayment or overpayment of tax.
3. Taxpayers report expenditure that exceeds their total income, creating inconsistencies in their financial information. This raises questions about the transparency of their income and expenditure.
4. Taxpayers declare an unusually large amount of cash in hand. They should avoid reporting excessive cash balances that are inconsistent with their income.
5. Taxpayers overstate the amount of gold jewellery they own, which may not reflect reality. For example, some declare ownership of 50 bhori of gold jewellery. It is worth remembering that 50 bhori of gold jewellery is worth more than Tk 10 million (1 crore). Taxpayers should consider whether their income justifies holding assets of such value.
6. Taxpayers fail to disclose complete information about their savings, loans given or loans taken. They should also include details of outstanding loans in their tax returns. Otherwise, the tax authorities may question the source or use of those funds.
7. Taxpayers omit information about gifts, grants or other lawful receipts. Such omissions may raise questions about the source of their assets.
8. Taxpayers fail to report Fixed Deposit Receipts (FDRs), Deposit Pension Schemes (DPSs), savings certificates and other financial savings or investments.
9. Taxpayers present incorrect information regarding their net assets from the previous tax year.
10. Taxpayers provide incorrect or incomplete information about tax deducted at source or claim tax adjustments that exceed the actual amount deducted.
Note to remember
Before submitting your income tax return, carefully verify all information and supporting documents relating to your income, expenditure, assets, liabilities and tax payments. A correct, complete and legally compliant tax return will help you avoid unnecessary complications in the future.