The Financial Express

Relief on the way for Covid-hit taxpayers

Doulot Akter Mala | Published: May 20, 2020 09:19:38 | Updated: May 21, 2020 18:40:25

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The government is likely to offer a set of tax incentives for both individual and corporate taxpayers, including black money whitening opportunity, in the budget for upcoming fiscal year (FY), 2020-21.

In an effort to bring informal economy under tax net, the National Board of Revenue (NBR) may again offer an opportunity to legalise undisclosed money by paying a flat rate of tax without penalty.

The flat rate might be set at 10 per cent or lower than that. Taxmen will not ask any question on the source of undisclosed money under the offer, sources concerned said.

In the budget, rate of corporate taxes might be slashed, while tax-free threshold for individual taxpayers is likely to see an upward adjustment.

There might be tax measures in the upcoming FY to make the country's bond market vibrant, they added.

Finance Minister A H M Mustafa Kamal is expected to announce a tax incentive package while presenting the national budget before the parliament on June 11.

Official sources said the government will not opt for any harsh tax measure in the upcoming budget, considering the ongoing Covid-19 pandemic.

For the first time in the country's history, target for income tax collection is likely to be set lower by Tk 12.04 billion in FY 21 than that in the revised budget for the current FY.

Following the pandemic, salvaging economy through fiscal measures will get priority in the upcoming budget, rather than mobilising higher revenue, said a senior tax official.

Some measures will be devised for bringing the grey economy under the tax net, he said without elaborating.

Under the existing tax law, people can legalise their undisclosed money by paying a penal tax in addition to normal tax.

Sources said a flat rate of tax might be introduced in FY 2020-21 for investment of undisclosed money in some capital-intensive sectors.

They also said the tax-free ceiling for individual taxpayers might be increased to Tk 300,000.

The government increased the tax-free threshold for individual taxpayers last time in FY 2015-16.

Despite requests from the apex chamber body and other business associations, the tax-free limit had been kept unchanged at Tk 250,000 in a bid to check dropout of existing taxpayers.

Besides, corporate tax rates might be cut for non-listed companies by 2.5 per cent in the coming budget.

Talking to the FE, former NBR chairman Dr Abdul Mazid said the NBR should reduce the rate for corporate taxpayers to help them accumulate fund for further investment and generating employment to offset the economic blow, caused by the Covid-19 pandemic.

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