Legalising undisclosed money: Provision not applicable to real estate owners

The people having undisclosed land or building or apartments will not have to make separate declaration to the taxmen.

What they will need to do is pay tax in accordance with the prescribed rates.

The opportunity to legalise money by paying 10 per cent flat rate of tax will not be applicable in the case of undisclosed apartments or buildings or land.

The income tax wing under the National Board of Revenue (NBR) clarified the issues in a circular issued on Tuesday.

The 187-page circular also clarified the procedure of investment of undisclosed money in equities and other designated areas.

As per the circular, investors will not be entitled for the opportunity to invest their undisclosed funds in share market just by keeping the money in the BO accounts. They have to invest in securities to avail the opportunity and legalise their money.

In the budget for the current fiscal year (FY), the government has offered an extended facility to invest the undisclosed money.

People will be able to show cash, share, debenture, moveable and immovable properties under the opportunity without facing any question by the taxmen or any other government authorities.

In the circular, the NBR has clarified that cash could be shown in three processes -cash in hand, cash at bank and cash as working capital.

As per the circular, no declaration will be required for the undisclosed apartment, land and building owners.

However, individuals have to mention about the assets and give an explanation with required documents, on case to case basis, in the income tax returns.

Tax will be applicable at specific rates ranging from Tk 20,000 per square metre to Tk 500 per square metre for land and Tk 6,000 per square metre to Tk 200 per square metre for apartment based on the location of such property.

The taxmen will not allow any undisclosed money holders to legalise land and house property by paying tax at 10 per cent on deed value of land, apartment or building.

For availing of the opportunity in capital market, the undisclosed money holders need to make a declaration containing ledger and portfolio statement to the deputy commissioner of taxes.

They have to pay tax within 30 days of investment in the capital market, the circular said.

The undisclosed money holders will have to comply with some conditions including disclosing movable or immovable assets between July 1, 2020 and June 30, 2021, payment of tax before submission of income tax returns or revised returns etc.

Taxmen will not be able to take any legal steps even on previous income or any type of receipts from such undisclosed assets, it said.

As per the circular, taxpayers will not be able to avail the scope if there are any ongoing proceedings related to tax evasion and other financial issues taken by NBR or other agencies.

In the circular, known as 'Income Tax Paripatra-2020-21', the NBR clarified a number of issues including gratuity and pension fund issues.

The provision on imposition of income tax on private sector employees' gratuity receipts and pension from unapproved funds will come into effect from the next FY 2021-2022 instead of the current FY.

In the budget, the government imposed income tax on employees' gratuity receipts after retirement or completion of service if employers failed to get NBR's approval on the fund.

Following recommendations of the Chartered Accountants and other cross section of people, the NBR relaxed the provision for facilitating private sector employees.

With this relaxed provision, the employers will get the current FY to obtain approval of the NBR on gratuity fund to avoid income tax on the fund.

The NBR usually allows tax exemption on gratuity receipts up to Tk 25 million for the private employees that they receive from their employers as retirement or termination benefit.

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