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Savings tools information under taxmen's watch

DOULOT AKTER MALA | Thursday, 12 August 2021


All investors in government savings certificates are coming under scrutiny by taxmen to check any information holdback on their actual wealth.

The tax authority has already got down to doing the recheck through an integrated system between the Department of National Savings and the National Board of Revenue (NBR).

Diving through the system, concealment of savings-certificate information put in the tax returns can be detected easily by prying only into Taxpayer Identification Number (TIN).

Already five tax zones, out of 31 across the country, have begun on a pilot basis such search by crosschecking information in the tax returns with the DNS data, officials said.

They said all of the tax zones would introduce the integrated system with DNS in phases after getting password and identification numbers from the directorate.

DNS has automated database of investors which are accessible to the taxmen.

According to the Income Tax Ordinance 1984, investors in savings certificates can enjoy tax rebate on their investment in the tools but it is mandatory to show the investment in tax returns.

However, savings-certificate investors have to pay tax at source at a rate of 5.0 per cent on the yields (better known as interest) coming from of the instruments.

Many of the investors consider buying savings certificates as secure investment with higher rates of yield than on investments in banks or capital market.

A senior official of the relevant wing of the NBR said already Application Programming Interface (API) with two government organizations have been completed to exchange data.

"DNS and Bangladesh Road Transport Authority (BRTA) are among them. Now, tax authority can crosscheck information of the car owners and savers in government tools."

Mohammad Jahid Hassan, commissioner at tax zone-6, said he received user ID and password from DNS Wednesday and would start working as per NBR guidance.

"We have started the work to crosscheck the data smelling huge gap between actual investment in savings certificates and disclosed data in the tax returns," he added.

It is not possible to check the huge mass of data manually, he said.

Tax officials said some of the investors take tax rebate showing certificates but sell off before their maturity.

In the income-tax law there is a provision of imprisonment of up to five years in case of concealment of actual wealth in the tax returns.

Mr Hassan, however, said there is no reason to get panicked with the scrutiny as taxmen usually avoid prosecution for tax evasion.

If detected, the taxpayers will have to pay penal taxes with the actual payable taxes

Another tax commissioner, preferring anonymity, said his zone has also received ID and password and started working Wednesday.

Meanwhile, a senior official of NSD said they had issued user ID and password to 29 tax zones out of 31 recently.

"We will issue ID and password to the remaining two zones shortly. All tax offices will be able to check investment in saving certificates under this system," he added.

The government has set borrowing target at Tk 320 billion through savings instruments in the current fiscal year, 2021-22.

Higher yields on the government savings certificates encourage investors, especially housewives, senior citizens, retirees and the like, to put their money in the instruments for secure earning to live on.

The rate of return or RoR on savings tools is more than 11 per cent while commercial banks are offering 3.0 to 4.0 per cent as interest rate on deposits.

Banks deduct 5.0 percent tax at source on interest amount of savings tools which is considered finally paid tax on income from the investment.

Executive Director of the Policy Research Institute (PRI) Dr Ahsan H Mansur says tax implications on investors in savings tools are nominal so they should disclose the information in tax returns without concealment.

"Unless the investors have fear of increase in tax liability having wealth in other sector," he added, "they usually do not hide the information of savings tools."

In the current fiscal budget, the NBR relaxed the tax measure on savings-certificate investments through increasing the ceiling of mandatory TIN by 0.1 million for savers.

Noor Ferdous, a retired private company official, however, says the government should consider some sections of people such as senior citizens and housewives, who do not have other sources of income, as eligible to buy saving certificates sans TIN.

"I run my family expenses with the gains from savings instruments as there is no pension scheme for private-sector employees," he said.

Savings certificate is the only effective tool of government social- safety net to help people survive, he observed.

Shahda Begum, a housewife who lives in city's Eskaton, said the government made submission of tax returns mandatory for all TIN-holders, with few exceptions. "I have to obtain TIN for buying savings tools but I don't have other incomes than that of the interest amount on my family savings certificate."

The banks deduct tax at source from the savings certificates so there are no payable taxes on this investment, she added.

"I am unable to take hassle of return submission visiting tax offices and consider it unnecessary harassment of taxpayers who do not have other incomes," she added.

Talking to the FE, a field-level tax official also admitted that they also have to take huge workload amid scarcity of manpower to handle tax returns of those having no other incomes.

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