Which assets require payment of surcharge

Taxpayers who possess substantial assets such as houses, cars, flats and land are required to pay a surcharge. This initiative has primarily been undertaken to reduce inequality between the wealthy and the poor and to promote social equity.

For this purpose, the National Board of Revenue (NBR) determines the applicable surcharge rates. At the same time, the NBR has also specified the types and levels of assets that will attract a surcharge.

Let us now examine which assets are subject to surcharge and the applicable rates.

Broadly, surcharge is imposed based on three criteria:

1. If the total value of a taxpayer’s assets, including houses, cars, flats, plots, agricultural and non-agricultural land, as well as movable and immovable property, exceeds Tk 40 million (4 crore), a surcharge is applicable.

2. If a taxpayer owns more than one motor vehicle in their own name, a surcharge will also be imposed. At present, many individuals own multiple vehicles; however, some do not register them in their own names, instead registering them under the names of their business entities or their spouse and children.

3. A surcharge will also be applicable if a taxpayer owns residential property with a total floor area exceeding 8,000 square feet.

It should be noted that if a taxpayer meets any one of the above three conditions, they will be required to pay a surcharge.

The surcharge is calculated as a minimum of 10 per cent of the income tax payable by the taxpayer. As the level of assets increases, the applicable surcharge rate on the payable tax also increases.

However, even if a taxpayer is not liable to pay income tax for any reason, a minimum surcharge may still be applicable.

If a taxpayer’s net asset value is less than Tk 40 million (4 crore), no surcharge is payable. If the net asset value exceeds Tk 40 million (4 crore) but is less than Tk 100 million (10 crore), a surcharge at the rate of 10 per cent will be imposed.

If the net asset value exceeds Tk 100 million (10 crore) but is less than Tk 200 million (20crore), a surcharge at the rate of 20 per cent will be imposed.

If the net asset value exceeds Tk 200 million (20 crore) but is less than Tk 500 million (50 crore), a surcharge at the rate of 30 per cent will be imposed.

If the net asset value exceeds Tk 500 million (50 crore), a surcharge at the rate of 35 per cent of the payable tax will be applicable.

In income tax returns, taxpayers are required to declare the acquisition or purchase value of various assets, including houses, cars, flats, plots, land and gold ornaments. The surcharge is not calculated on the basis of current market value.

As a result, even if an asset or plot was purchased two or three decades ago at a price of Tk 100,000, that same value continues to be declared in the tax return.

Consequently, many affluent taxpayers remain outside the scope of the surcharge.