The progress of a nation, the establishment of justice and the effective operation of state administration rely heavily on government revenue, to which income tax is a major contributor. However, Bangladesh’s income tax system has evolved into a complex structure influenced by legal complications, bureaucratic practices, human behaviour and political realities. This complexity often burdens taxpayers and limits the country’s ability to develop a strong and transparent tax culture. Understanding tax laws, adopting ethical behaviour and practising responsible tax compliance are crucial for moving towards a sustainable system.

Income tax is a government-imposed levy on the income or profit earned by individuals and entities. Bangladesh follows a progressive tax rate, meaning the higher one’s income is, the higher the applicable tax rate will be. Corporate tax, by contrast, is usually imposed at a flat rate. Taxes are broadly classified into direct and indirect categories. Income tax falls under direct tax, which cannot be passed on to someone else; the taxpayer must pay according to their respective tax slab. This fundamental principle underscores the need for transparent economic activity and honest financial declarations.

Just as a household relies on income to function, a country depends on revenue for its development. Taxes fund essential services such as schools, hospitals, transport systems, infrastructure and social welfare. When taxpayers comply honestly, national revenue increases, governance becomes more transparent and confidence in the economy grows, encouraging both local and foreign investment. Income tax directly contributes to education, healthcare, poverty reduction, social safety nets, and national development projects. Paying taxes strengthens state institutions, supports the justice system, and deepens public trust in the government.

Despite progress, Bangladesh’s tax-GDP ratio still remains below 8%, among the lowest in South Asia. About 1.20 crore people have obtained TINs. But only around 39.86 lakh returns were filed in the 2024–2025 assessment year, barely one-third of registered taxpayers. Nearly 65% did not submit returns at all. In contrast, by the end of November of the 2025–2026 assessment year, more than 20 lakh returns have already been filed through the e-Return platform, showing remarkable improvement. With the deadline extended to 31 December, the number is expected to surpass the previous year significantly. This demonstrates that digital services can play a transformative role in increasing compliance.

The online e-Return system, which was launched NBR in late 2024, allows taxpayers to file returns from anywhere, at any time, without visiting tax offices. It reduces human errors through automated calculations and validations. The system instantly provides an acknowledgement slip, an e-certificate and a complete copy of the submitted return. This initiative by NBR represents a major step towards ensuring convenience, accuracy, and administrative transparency.

Nonetheless, practical challenges remain. Some legally required fields are still missing from the system. The hotline support team requires better-trained personnel capable of understanding taxpayer issues, communicating effectively with technical teams, and resolving problems promptly. Strengthening professionalism, service quality, and responsive communication is essential to maintain taxpayer confidence.

A widely held misconception is that having no taxable income automatically requires filing a zero (nil) return. Due to this misunderstanding, many taxpayers are submitting zero returns unnecessarily, which creates long-term risks. While no taxable income means no tax payable, taxpayers with total assets exceeding Tk 50 lakh must submit IT-10B under Section 167 of the Income Tax Act. IT-10B requires full disclosure of income, expenditure, assets, liabilities, receivables, payables, bank balances, investments, property and valuables. Failure to submit IT-10B or concealing assets may lead to complications in tax assessment, audits, property purchases, visa processing and legal matters.

There are recurring behavioural tendencies (among people who do not want to pay tax despite their eligibility) which include avoiding compliance, ignoring legal obligations, prioritising shortcuts, relying on unofficial practices and lacking structured planning. Files that are non-compliant often attract audits resulting in substantial back taxes, interest and penalties, severely damaging businesses. Such situations can undermine long-term business growth and national economic stability. Therefore, the guiding principle should be: “Let us all come forward in paying taxes, let us build a self-reliant Bangladesh.” Many taxpayers also fear audits, worry about increased scrutiny, or lack trust in the system. Changing this mind-set requires transparent administration, professional tax services, fair audits and widespread public awareness.

A major barrier to progress is weak public trust in government institutions. Tax disparity, favouritism and unrealistic tax rates hinder fairness. The government must ensure an equitable tax structure, simplify return procedures, adopt AI-based systems, and maintain spending transparency. Frequent amendments, impractical exemptions, interpretational ambiguities and administrative gaps must be avoided. Citizens must be clearly informed about how tax revenue is utilised.

Professionals can play a critical role in guiding taxpayers, promoting awareness, ensuring compliance and bridging communication with authorities. Their knowledge and assistance can help create a transparent and business-friendly tax ecosystem.

It should be kept in mind that tax is not simply a deduction but the foundation of our national development. The quality of life of future generations depends on our tax ethics today. So, taxpayers must adopt lawful practices, professionals must enhance their expertise and uphold ethical standards, and the administration must ensure transparency and fairness in order to ensure a responsible tax culture within our society.

_____________________________________

The writer is an income tax lawyer and certified VAT consultant