Sunday, 19 September, 2021

Source tax collection to undergo massive reforms

  • Staff Correspondent
  • 16 August, 2021 12:00 AM
  • Print news
Source tax collection to undergo massive reforms

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National Board of Revenue has undertaken massive reforms in tax at source management to ease its payment and remove loopholes.

Although the revenue board collects 60 percent of the income tax from source tax, the different businesses alleged that they have to face harassment for paying the source tax.

Officials said the NBR would be going to implement the reform programmes to curb irregularities and ease the payment system of source tax.

 Currently, tax is levied at the applicable rate from 58 sectors including contractors, term deposits, profits earned on savings certificates, property registration, and travel agent.

A large part of the direct or income tax sector is collected from “source tax”.

According to statistics, 80 percent of the total income tax currently comes from source tax.

Currently, tax is levied in a specific rate (minimum 0.5 percent to maximum 20 percent) from 58 sectors including contractors, term deposits, profits earned on savings certificates, property registration, travel agent and others.

Due to the complexity of tax collection process at source tax and possibility of irregularities, huge amount of tax evasion occurs every year.

An official involved with the NBR and modernization projects said the tax would be collected at source either electronically or automatically to make the collection process easier and hassle free.

“Once this process is completed, you do not have to go to banks to deposit tax money. Taxpayers can deposit tax money at source using mobile, laptop or computer while sitting at home or office,” he said.

NBR said under the process, a pilot automated system has been introduced in the tax zone-1, tax zone-2, tax zone-6 and tax zone-8 in Dhaka.

The official said the tax at source would be collected in phases by introducing automatic system in all tax offices of the country within the next two months.

There are currently more than 600 tax offices across the country under the NBR.

Each tax office will be brought under automatic system and source tax will be collected.

The NBR official expected that if all tax offices were brought under this system, the collection of withholding tax would be at least 20 percent higher than at present.

In the last financial year, the total income tax collected through NBR was Tk853.91 billion where the contribution of tax at source is 60 percent.

The source tax has been collected as an advance stage of possible income. Advance tax is adjusted with the real income tax return at the end of the year.

However, if you pay more tax in advance, you will get a refund.

And if you give less, you have to pay the part due with return deposit. Not only in Bangladesh, but in many countries, the source tax system is remained.

Neighboring India contributes 40 percent of the total income tax from the source tax while the source tax in Bangladesh dominates 60 percent of revenue in income tax sector.