All income of employees of SoCBs’ to be taxable

The government is holding consultations with five state-owned commercial banks (SoCBs) to impose tax on all forms of income of the banks' employees based on SRO-370 under the Pay Scale 2015 to boost revenue earnings, sources said

They said the finance division of the Ministry of Finance has already requested the financial institutions division (FID) to take necessary steps in this regard, sources said.

The employees now pay taxes on basic salary of more than Tk 16,000, incentive and festival bonus (Eid). However, after implementation of the SRO, the employees would also have to pay tax on house rent, recreation allowance and New Year allowance.

The government employees enjoy income tax exemption on all benefits and allowances, excluding festival allowances, basic salary and bonuses.

Presently, there are around 40,000 employees of Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, and Bangladesh Development Bank.

Senior bankers said they would have to count an additional cost burden annually if such heads of accounts come under taxable income.

Senior officials like senior principal officer and assistant/deputy manager to deputy managing director would then provide an income tax ranging between Tk 25,000 and Tk 260,000 annually.

They claimed that it is not possible to bear additional tax liability amid the overheated essentials market, and that they are not prepared for absorbing such burden at this stage.

The SRO-371 was accommodated in the National Pay Scale - 2015 with necessary approvals by board of directors of the SoCBs but the NBR could not follow it in determining the taxable income of the bank employees.

At the same time, the SRO-370 was included in the National Pay Scale -2015 for the officers-employees of the state-owned institutions.

As per Article 2(11) of Chapter of Public Service Act-2018, if the government has more than 50 per cent stake in an institution, it will be considered state-owned.

The finance division sources said that the SoCBs (public bodies and state-owned institutions] may follow the (Pay and Allowances) Order, 2015. There is no need to include the names of the banks into the Employment (Banks, Insurance and Financial Institutions) (Pay and Allowances) Order, 2015.

The issue of determination of income tax of the officers-employees of the banks had been asked to be settled in consultation with the Internal Resources Division, and for providing opinion in this connection. But the division did not provide such opinions, an official said.

The SoCBs have already decided to follow SRO-370 of the National Pay Scale - 2015 in their respective boards of directors, a source said.

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