FY24 budget: Travel costs to rise, agents to find taxpayers

The National Board of Revenue (NBR) will appoint private agents to find new taxpayers from the next fiscal year and incorporate a relevant provision into the income tax ordinance.

The announcement will be made in the next budget. Once it comes into effect, the private agents will help track down new taxpayers and assist them in submitting tax returns.

Additionally, overseas trips are likely to become costlier in the forthcoming fiscal year as the revenue board has initiated a plan to increase travel tax. The wealthy individuals are expected to face intensified tax pressure as the authorities are planning to raise the highest tax rate.

Thus, the next budget will contain a number of measures meant to directly impact daily life. Some individuals will get relief while others will pay extra taxes. It will also bring new people under the tax net.

According to NBR sources, currently only 8.7 million people hold tax identification numbers (TIN), while only 3 million, which is only 2 per cent of the total population, submit income tax returns.

Now, the rural areas also have people with taxable income as economic activities have expanded to upazila and village levels. Also, not all city dwellers with taxable income could be brought under the tax net due to various adversities.

The number of new taxpayers is not rising mainly due to the manpower shortage in the revenue board.

The next budget will contain a proposal to add a new provision to the income tax ordinance. This provision would authorise the appointment of private agents to help identify new taxpayers, provide them with TINs, and assist in submitting tax returns, in exchange for a certain rate of commission.

Whenever a budget appears, the people show interest in the ups and downs of expenses as it impacts their daily life in various ways. The next budget is no exception. The cost of buying a house and a car may go up due to the decisions taken in the budget.

On the flip side, there might be some relief on income tax amid the ongoing time of high inflation. The budget will contain both good news and bad news, according to the NBR sources.

Finance minister AHM Mustafa Kamal will announce the budget for the fiscal year 2023-24 on 1 June at the national parliament.

The travel tax, which currently ranges from Tk 500 to Tk 4,000, was last hiked eight years ago. The authorities are likely to raise the tax this year, and it may range from Tk 750 to Tk 6,000. However, a final decision will be taken considering the issues of migrant workers.

The authorities are planning to arrange some relief for small taxpayers by fixing the tax-free income limit at Tk 350,000, but there is nothing planned for the rich.

The highest tax rate, which is currently 25 per cent, may rise by 5 to 10 per cent in the next budget. On the other hand, the rate and limit of surcharge may be revised, forcing the wealthy to pay more taxes.

Bangladesh has registered a persistent inflation rate of above 8 per cent throughout the last nine months, which has pushed up living costs. The lower-middle and middle-income groups may struggle to pay taxes as they mostly do not have any remarkable savings. The next budget is likely to bring some relief for them, according to sources.

The tax-free income ceiling, which is currently Tk 300,000, may rise to Tk 320,000 or Tk 350,000 this year.

Currently, it is not mandatory to show proof of income tax return for investments in savings certificates worth up to Tk 500,000. The ceiling may rise to Tk 1 million in the next budget.

Homes, cars to be pricier

Homes and cars are expected to become pricier in the upcoming budget. The government is proposing a duty hike for flats, plots, and cars, which may result in increased prices.

When registering flats or plots, customers are required to pay various taxes, such as gain tax, VAT, stamp duty, registration duty, and local government tax. Currently, these taxes amount to 10 to 12 per cent. The government may raise the tax to 15 per cent in the next budget.

High-end cars are going to be more expensive as the supplementary duty on their imports is set to rise in the next fiscal year. According to NBR sources, the supplementary duty on cars with an engine capacity of 2001cc to 3000cc may rise from 200 per cent to 250 per cent, and for cars with an engine capacity of 3001cc to 4000cc, it may rise from 350 per cent to 500 per cent. Jeeps and SUVs typically fall within these engine capacity ranges.

If you already own a car and are planning to purchase a second one, the budget may not be favorable for you as the government is proposing an increase in the advance tax for a second car.