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THE service holders of Bangladesh had been deprived of reasonable income since independence. The present government realized the situation and increased compensation of public servants from July 2015. But the present individual income tax slabs will take away a significant portion of the increased income of public service holders, if the income tax slabs are not revised. At present tax-free limit is Tk 2,50,000. Income tax is levied @10 per cent on next Tk 3,00,000, 15 per cent for next Tk 4,00,000. Indeed, under present proposal, 20 per cent income tax will be levied on next Tk 5,00,000 and 25 percent on the next Tk 30,00,000 and 30 per cent on next full amount. The proposed rate of income tax will encourage tax evasion. In the upcoming budget the individual income tax slabs should be reviewed.
Hundreds of businessmen do not pay income tax at all although they earn taxable income. But the service holders in urban as well as in rural areas cannot evade tax as their employers show the salaries in exact figure to show high expenditure in their business. The real income of the service holders in Bangladesh have fallen significantly in last couple of years because of high inflation. The business communities shift the burden of price increase to the buyers by increasing prices of their products and services. In fact, inflation brings more money to business people. But the service holders are helpless. They have to bear the whole burden of inflation, as their salaries do not increase instantly with the increase in commodity prices.
The tax free income limit should be raised to Tk 500,000 and income tax may be imposed at the rate of 5.0 per cent on next Tk 500,000, 10 per cent for next Tk 500,000, 15 per cent on next Tk 500,000 and 20 per cent for the rest Tk 500,000 and 25 per cent on higher income in 2016-17 budget. Reduced income tax will help people with increased real income. The measure will also reduce tax evasion. The government should open income tax offices at upazilla level and bring medium business communities working in rural Bangladesh under the income tax net.
The government should review income tax slabs and reduce the tax burden on limited income people.
Md. Ashraf Hossain
8/A, Ramna, Dhaka-1000
[email protected]