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Ministry of Labour and Employment has sought withdrawal of the existing 10 per cent tax on the benefits of workers under the Labor Welfare Fund (LWF).
In a letter, the ministry has urged the Ministry of Finance to take necessary steps to this effect, said official sources.
The letter said the Laboure Labour Welfare Foundation has been formed as per the section 45 and 46 under the Labour act for the sake of greater interest of the country's labourers.
So, any benefits or yield to be gained by the workers from the Foundation should be free from income tax.
"The Labour and Employment Ministry expects necessary steps for withdrawal of the tax imposed in the fiscal 2025-26," Secretary of the Ministry A H M Shafiquzzaman said in the letter.
Although such tax was also imposed previously, but it was not deducted from the beneficiaries, Labour secretary said.
According to the section 234 of the Bangladesh Labor Act- 2006, a 5.0 per cent of a company's net profit should be allocated in 80:10:10 ratio to the participation fund, welfare fund, and the Workers' Welfare Foundation Fund, respectively, the letter mentioned.
Also Section 245 of the Act, states that "the income of the funds, including the capital gains thereof, shall be exempted from income tax.
Besides, the Section 246 also states that the money given to the workers from the funds shall not be subject to any income tax".
Mr. Zaman said lobourers are provided with social security through maximum grants to improve their living standards.
Bangladesh labours Welfare Foundation provides grants to injured and deceased labours/workers' families, and also provides assistance for the treatment of cancer or complex diseases.
He mentioned that if the 10 per cent tax is deducted from the donations received from the labours Welfare Fund are taxed for treatment purpose, the workers will be affected.
Besides, deduction of such tax is not supposed to be applicable under Sections 245 and 246 of the Bangladesh Labor Act, 2006.
No money is given to workers from the government's revenue and there is no specific social security program for informal labourers, he also said in the letter.
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