Incongruity still persists in tax collection by field offices

The number of income-tax returns filed by individual taxpayers registered a sharp growth to 1.55 million in the last fiscal, mainly due to mandatory submission of tax returns by government officials having monthly salary above Tk 16,000.     

Officials attributed the leap to government's budgetary measures and consequent drives for augmenting the revenues from this segment of taxpayers by breaking a cycle of around a million in their number.

Individuals' tax returns had been almost steady at 1.0 to 1.1 million during the last three years despite several efforts and enforcement by the field-level tax officials.

In FY 2015-16, the number of individual tax returns was 1092,000, according to compiled data from the tax offices across the country.

An additional 0.5 million individual taxpayers contributed Tk 46 billion in revenue last year that was Tk 25 billion in FY 2015-16.

A senior official of the National Board of Revenue (NBR) said the number of tax returns by individuals is expected to increase to 2.0 million in FY 2017-18 due to new tax measures in the budget.

"A significant number of government officials having above Tk 16,000 as monthly salary submitted their tax returns during the last fiscal due to mandatory provision in the income-tax law," he said.

From this year, private-sector executives and officials in the managerial positions will have to submit tax returns mandatorily, he added.

Employers will be held responsible if the taxmen found non-compliance on part of the private-sector officials, he said.

The number of tax returns will also go up with a significant increase in electronic Taxpayer Identification Number (e-TIN) to nearly 3.0 million, he expressed the hope.

Talking to the FE Sunday, former income-tax-policy member Aminur Rahman said salaried taxpayers contributed to the impressive growth in individual tax returns last year due to fiscal measures in the budget.

"Many people pay tax indirectly through bank accounts but avoid submission of tax returns for fear of harassment by the taxmen," he said.

The number of tax returns would go up if marginal taxpayers having annual income above the tax-free threshold Tk 250,000 to Tk 300,000 feel comfortable to get onto tax net.

"Currently, all of the tax returns go through scrutiny assessment. Marginal taxpayers should get relief from the scrutiny for at least three years of their tax-return submission," he said.

Compliance cost of marginal taxpayers is high as they have to pay some Tk 12,000 instead of Tk 5,000 as minimum tax, he added.

Tax rates for a marginal taxpayer are also high due to minimum tax, he said.

For example, an individual taxpayer having annual income of Tk 260,000 needs to pay tax Tk 1,000 at a rate of 10 per cent on a Tk 10,000 taxable income, but he has to pay Tk 5,000 as tax due to minimum tax slab.

"Rate of tax slab goes up to 40 per cent for the marginal taxpayers," he said about such an incongruity in tax payment.

India has introduced a relief for marginal taxpayers in its budget for the current FY, like one-stop package, he pointed out.

The tax policy framed by the NBR is often misused by the field-level officials, he said.

An insignificant part of revenue comes from audit of individuals' tax files, except Large Taxpayers Unit (LTU), he added.

Individual taxpayers contribute 40 per cent of the total income-tax collection as a significant number of taxpayers pay advance income tax (AIT).

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