Budget: Increasing income tax exemption limit and more

Income tax exemption limit at the individual level may be increased in the next budget with a view to relieving the tax payers in the wake of high inflation, according to the sources at the National Board of Revenue (NBR).

Currently a person with annual income of Tk 300,000 does need to pay tax and this amount may be increased to Tk 330,000-350,000.

This matter is being discussed at the policy level of NBR.

However, FBCCI, research organisation Centre for Policy Dialogue (CPD), professional bodies and research organisations have demanded increasing the income tax exemption limit.

NBR sources said there are over 8.7 million Tax Identification Number (TIN) holders in the country. About 2.9 million submit return of income and expenditure every year.

Around 500,000-60,000 people pay minimum tax. Two years ago the minimum income tax exemption was raised.

Speaking to Prothom Alo, former NBR member (income tax) Alamgir Hossain said income tax exemption limit can be raised considering the present context as there is a pressure of inflation and the net income of people has decreased. If there is money left after meeting the living cost, only then people will be able to pay tax.

Meanwhile, the corporate tax has been reduced for the two consecutive years. This tax may not be decreased this year.

NBR sources said there is a plan not to decrease corporate tax in the next financial year in a bid to maintain the trend of collecting revenues and to concentrate on collecting additional tax.

In a recent meeting with the NBR, the International Monetary Fund (IMF) delegation has given a suggestion not to decrease corporate tax.

Sources at the NBR said they are considering the matter positively.

There is a 20 per cent tax for companies listed in the stock market and 22 per cent for non-listed companies while tax for banks, financial institutions, tobacco companies and mobile phone operators is 37 to 45 per cent. Two-thirds of income tax comes from corporate tax.

In the current fiscal year, there is a scope to bring laundered money by paying 7.50 per cent tax.

NBR sources said this scope may not be extended further. The scope to buy a flat, plot and house with black money may be cancelled.

Moreover, the duration of the tax holiday in the information technology sector is going to end on 30 June. This duration may not be extended till 2026.

Meetings will be held on the proposals once prime minister Sheikh Hasina returns home after the foreign trip. The final decision will be taken in that meeting.

NBR is being given a big target of collecting Tk 4300 billion in the next financial year. The amount is Tk 600 billion higher than the current financial year.

*This appeared, originally appeared in the Prothom Alo Bangla online edition, has been rewritten in English by Rabiul Islam.