Income Tax Act seeks details of mobile recharge, pleasure trip costs
Under the new Income Tax Act, the people with a certain income are required to submit statements detailing their regular expenses, including mobile recharge, utility bills, and other living expenditures.
The act, recently passed in parliament, appears to have been designed to gain a clearer understanding of citizens' income and cost patterns.
Hence, it requires the people to record their expenses meticulously, ranging from regular mobile recharges and utility bills to monthly house rent, and submit it along with their income tax returns. There was no such provision in the previous law.
According to the act, the submission of a living cost statement is mandatory for individuals with a minimum annual income of Tk 500,000 and assets worth Tk 4 million. And those falling below the threshold are at the liberty to submit their living cost statements.
Mohammad Sohel Rana, a tax lawyer and managing partner of JNJ Associates, expressed concerns about the newly enacted act, saying that it is challenging for taxpayers to keep record of mobile recharge expenses, as people usually recharge small amounts of money at a time. This, he added, will only exacerbate the complications faced by taxpayers.
The National Board of Revenue (NBR) aims to gain insights into taxpayers' financial situations, including their income, expenses, and social status, through the living expense statement.
Besides, the tax officials seek to verify whether a taxpayer's lifestyle aligns with their reported income.
Nine types of cost statement
There are nine types of costs that eligible taxpayers need to report under the new act. These are -- personal and family maintenance costs, housing expenses, vehicle costs, utility bills, education costs, self-funded travel and vacation trip costs, festival expenses, details of tax at source, including savings certificates, and details of interest payments for both formal and informal loans.
The eligible individuals who embark on pleasure trips, whether domestic or international, are required to include their travel expenses in their tax filings. All types of travel expenses, including short stays in resorts in the suburbs of the capital, must be reported to the revenue board.
The revenue board is also interested in understanding the quality of education provided to a taxpayer's children and whether the expenses are consistent with their income.
They aim to obtain a concise picture of taxpayers' incomes and expenses and assess whether there is any inconsistency.
The same is applicable for the costs during different festivals, including Eid, New Year, and others. The individuals will keep a record of the costs and the NBR will seek to know the statement after a year.
There are some businesses who report losses to pay a minimal tax. But the same people easily afford their children's' education in the expensive English medium schools. Thanks to the new act, these types of people are expected to come under the NBR lens and find it difficult to evade tax obligations.