Md. Zillur Rahaman: The country’s economy is getting bigger day by day, as a result, the size of the budget is increasing and more money is needed to implement the budget. But as money from overseas sources have become much smaller, now the internal sources are playing a vital role in the implementation of the budget. VAT and income tax are among these. According to the latest data, about 69 per cent of the government’s revenue comes from the National Board of Revenue (NBR) and the remaining 31 per cent from non-NBR sector. The highest revenue collection in the NBR sector is 37.52 per cent from Value Added Tax or VAT. Income tax is at the second position with 32.85 per cent. In the third position is the supplementary duty and in the fourth position is the import duty– the contribution of these two sectors is 29.63 per cent. Earlier, the highest revenue was collected from import duty. In most countries of the world, most revenue is collected from income tax. In Bangladesh also initiatives have been taken to increase revenue collection from income tax.
Income tax is an important part of our economy and it is a major source of government revenue. The government spends this money on the development of the state, which is the income from the taxes paid by the citizens. But sadly, many people in our country who are supposed to pay income tax do not do so. The number of TINs in Bangladesh is 5.2 million (only 2.2.2 million submit returns) is very disappointing. In the interest of development of the country, the number of income tax payers must increase. In order to continue the progress of economic development of the country, it is necessary to increase the rate of payment and collection of income tax. Those who are in the habit of paying taxes should pay their taxes on time. Tax evasion or reluctance to pay taxes is not good sign for the country. Basically, those who have a tendency to evade taxes are not evading the state, they are evading themselves actually. Income tax evasion means that the government collects revenue by increasing the scope of indirect tax and it is imposed on the rich and the poor equally.
The three main sources of revenue of the government are two types of indirect taxes such as import duty and value added tax and two types of direct taxes such as income tax and wealth tax. Besides, excise duty is levied on domestic production of certain products. In addition, supplementary duties are levied at the import stage and at the local production level for the purpose of collecting the required revenue. NBR, an affiliate of the government’s internal resources department, is responsible for formulating and implementing tax policy in Bangladesh.
The stronger the economy of a country, the higher the rate of revenue collection. In our country, the tax to Gross Domestic Product (GDP) ratio increased from 8.47 per cent in 1999-2000 to 11.3 per cent in 2007-08. But in the 2018-19 FY, the tax-to-GDP ratio was 10.10 per cent, which is a disappointing figure.
| ব্যাংক, ব্যাংকার, ব্যাংকিং, অর্থনীতি ও ফাইন্যান্স বিষয়ক গুরুত্বপূর্ণ খবর, প্রতিবেদন, বিশেষ কলাম, বিনিয়োগ/ লোন, ডেবিট কার্ড, ক্রেডিট কার্ড, ফিনটেক, ব্যাংকের নিয়োগ বিজ্ঞপ্তি ও বাংলাদেশ ব্যাংকের সার্কুলারগুলোর আপডেট পেতে আমাদের অফিসিয়াল ফেসবুক পেজ 'ব্যাংকিং নিউজ', ফেসবুক গ্রুপ 'ব্যাংকিং ইনফরমেশন', 'লিংকডইন', 'টেলিগ্রাম চ্যানেল', 'ইন্সটাগ্রাম', 'টুইটার', 'ইউটিউব', 'হোয়াটসঅ্যাপ চ্যানেল' এবং 'গুগল নিউজ'-এ যুক্ত হয়ে সাথে থাকুন। |
Income tax isa tax payable on the income or dividends of an individual or entity. Tax under the Income Tax Ordinance 1984 means income tax payable under the ordinance, additional tax, surplus tax, penalty, interest or recoverable amount. In other words, the tax is a compulsory amount paid to the government to meet the expenses of the state for the welfare of all the people of the state. Income tax which varies according to the amount of income or dividend and progressive tax is applied in our country. Progressive tax is the tax system that increases the tax rate as the taxpayer’s income increases. Income tax is levied on the taxpayer’s ability to pay taxes, that is why income tax is called progressive tax. According to the Income Tax Ordinance 1984, the sources of income are salaries, interest on security deposit, real estate income, agricultural income, business or occupation income, capital gains, income from other sources, part of farm income, income of husband/ wife or minor child. However, the income streams have to be included when submitting the return.
In the last 10 years of the current government, the revenue collection from the income tax sector has increased. However, the growth rate is rather slow. The NBR is now looking at new sources to increase the growth rate as well. The current government came to power in January 2009 and total income tax collected in FY 2008-09 was Tk. 14,274.21 crore. The end of the first term of the government and the beginning of the second term was the financial year 2013-14 and then the tax collection was Tk. 43,848.52 crore. In the 2016-17 financial year, the tax collection was Tk 65,695.19 crore. According to the latest data from the NBR, in the last FY 2020-21, the NBR collected a total of about Tk. 2,59,900 crore in taxes, value added tax or VAT and Income tax, which is about Tk. 41,000 crore less than the target. In the budget of Tk 5 lakh 68 thousand crore for the FY 2020-21, the revenue income was estimated at Tk 3 lakh 78 thousand crore. In the outgoing FY, the target of tax collection was Tk. 3 lakh 30 thousand crore which was later revised as Tk. 3 lakh 1 thousand crore and in the last FY, it has increased by about 19 per cent.
In South Asia, Bhutanese citizens pay the highest taxes in proportion to their population. Out of the population of Bhutan of 7.54 lakh, about 88 thousand taxpayers have returned in the last FY, i.e. more than 11 per cent of the population is subject to direct taxes. Nepal, which is in the second place, has 3 million (about 11 per cent) taxpayers out of 28 million. Pakistan has a population of about 200 million and more than 2.5 million of them are taxpayers. However, in a country of 1.3 billion people of India, 14.6 million (1.5 per cent) people pay taxes.
In the past, people were afraid to pay taxes. But now people’s attitudes have changed a lot. People are becoming interested in paying taxes of their own free will. Because a taxpayer can stand with his or her head held high in the society. The government is rewarding the highest taxpayers and giving various benefits, that is why many are being encouraged to pay taxes. However, value addition in agriculture, industry and services has doubled in recent years. The average per capita income has more than doubled. But the NBR could not increase the number of taxpayers in tandem. The NBR conducts various programs every year in search of new taxpayers. Only TIN is given in this programme, this increases the number of TIN holders.
Since the first Income Tax Day was observed in the country in 2008, many taxpayers have become aware and are motivated about paying taxes. As a rule, every year a taxpayer has to submit his return on time. To this end, the National Board of Revenue (NBR) has been organizing Income tax fairs across the country in November for the last few years. Last year, NBR stopped this event due to Covid-19 pandemic but has made arrangements to submit the return online.
The government has an obligation to submit the return by November 30 of each year. This time too it was no exception. However, there is still a huge gap between TIN holders and return depositors. If TIN holders do not file a return, the NBR does not have their information. The biggest issue is that many are losing interest in paying taxes due to the complexity of filing returns. In this case, the NBR has to make arrangements for easy creation and easy distribution of taxpayer-friendly forms in the interest of the state. This will increase the return submitters and consequently increase the revenue of the government.
The large number of people participating in the Income Tax fair every year shows how much people are interested in paying income tax. It is worth noting that the crowd at the income tax fair is increasing every year. But this year also the income tax fair is not being held due to the Covid-19 pandemic. However, a major complaint of those interested in paying income tax is that the process of paying income tax is quite complicated. In this case, it is necessary to make arrangements for submitting the return online and take necessary steps to overcome this complication.
Md. Zillur Rahaman is a banker and freelance writer.
