You can reduce your amount of paying tax considerably if you want. For this, some tricks have to be applied. A portion of your disposable income needs to be invested. The National Board of Revenue (NBR) has encouraged people to such investment. Again, even if you donate some of your income throughout the year, the amount of tax will be rebated.
It should be remembered that there was a time to invest up to Tk 1.5 crore a year in order to have tax rebate. It has been reduced to Tk 1 crore for the current financial year.
Many people do deposit pension schemes or DPS. DPS up to TK. 5,000 per month i.e. up to Tk 60,000 per annum will be considered for tax concession. This means that DPS is also being considered as a kind of investment.
There are also six other sectors where you will get tax exemption for investment. These sectors are life insurance premiums; donations to provident funds of government officials; subscription of employer and officer-employee to recognized provident fund; donations to welfare funds and group insurance funds; investment in government approved treasury bonds and donations to super annuity funds.
Do not even consider that donations anywhere can lead to tax exemption. Donating to 13 sectors in a hefty sum will provide tax concessions. These are national level institutions dedicated to the memory of the Father of the Nation; Zakat Fund; National Board of Revenue (NBR) approved charitable hospitals; institutions set up for the welfare of the disabled; Liberation War Museum; Aga Khan Development Network; Ahsania Cancer Hospital; Dhaka Ahsania Cancer Hospital; Asiatic Society; ICDDRB; CRP; National level institutions and government-approved public welfare or educational institutions engaged in memory of the Liberation War.
In these sectors, a taxpayer can invest or donate up to 25 per cent of the total income of the year to get tax concessions. If you do more than that, you will not get the extra tax concession. If the annual income of that investor or donor taxpayer is less than Tk 15 lakh, 15 per cent tax exemption of total investment and donation will be available. Tax exemption at the rate of 10 per cent will be available if it exceeds Tk 15 lakh. To avail such rebate, 24D schedule form along with return form has to be filled.
Let me give you an example, suppose somebody earned Tk 8 lakh from July 2020 to June 2021. He saved his expenses and bought savings of Tk 2 lakh. Now let's calculate, he does not have to pay tax on the first three lakh rupees of taxable income, 5,000 at the rate of 5 per cent over the next Tk1 lakh; 30,000 at the rate of 10 per cent for the next three lakh and Tk 15,000 at the rate of 15 per cent for the next one lakh. The total amount of the tax payable is Tk 50,000.
The writer is a lawyer