Home ›› 30 May 2023 ›› Front
The government is set to present some important proposals regarding income tax in the budget for FY2023-24 to be placed in the national parliament on June 1 this year in a bid to boost tax revenue and widen tax net as well as reduce income disparity.
Tax-free income ceiling for individuals
Finance Minister AHM Mustafa Kamal is likely to propose raising tax-free income limit to Tk 3.5 lakh from existing Tk 3 lakh for general people, Tk 4 lakh for females and senior citizens from existing Tk 3.5 lakh and Tk 4.75 lakh for physically challenged people from existing Tk 4.5 lakh as real income declined amidst soaring inflation, said finance ministry sources involved with budget preparation.
Tax-free income limit for wounded freedom fighters is likely to be set at Tk 5 lakh from existing Tk 4.75 lakh and for the members of the third gender at Tk 4.75 lakh from existing Tk 3.5 lakh.
In case of parents or legal guardians having physically challenged child or dependent person, tax-free income limit will be raised by Tk 50,000 more for each physically challenged child or dependent person.
Minimum income tax will remain the same at Tk 5,000 for the taxpayers of Dhaka South and Dhaka North City Corporation areas.
Tax-free income ceiling for individual taxpayers will remain at Tk 4,000 in other city corporation areas and Tk 3,000 in other areas.
Min tax of Tk2,000 for getting govt services
The finance minister is likely to propose fixing a minimum income tax of Tk 2,000 for those taxpayers who are required to submit the return filing proof for getting government services.
People will require filing the proof of submission of their income tax returns in order to get 38 types of services, including loans and trade licence, for becoming a director or a sponsor shareholder of a company, and obtaining or continuing an import or export registration certificate.
In the budget, no more service will be included for FY24.
Corporate tax may remain unchanged
The government had reduced corporate tax every fiscal year since FY2020-21 but in the upcoming budget, corporate tax will remain unchanged as part of increasing the tax-to-GDP ratio.
Currently, the corporate tax rate is 20 per cent for listed companies, 27.5 per cent for non-listed companies, and 22.5 per cent for one-person companies. The rates were set in the budget to help achieve the private investment to gross domestic product (GDP) ratio target.
Tax return preparer to be introduced
The National Board of Revenue (NBR) is going to appoint tax agents in the fiscal year 2023-24 in a bid to boost revenue and widen tax net in the country.
Currently, there are around 88 lakh e-TIN holders and return submission increased by 25 per cent to around 32 lakh in FY23 due to the provision of submitting return filing proof to get 38 services introduced in this FY23 budget. However, the submission of return is still not as expected.
This is why the government is planning to propose tax agent provision in the upcoming budget, sources say.
Source tax on land registration increased
The ownership of land property under Rajdhani Unnayan Kartipakkha (RAJUK), Chattogram Development Authority (CDA) and areas outside such jurisdiction may become costlier in the next fiscal year as the government is likely to rationalise source tax during land registration. Finance ministry sources say that the rationalisation of source tax may be increased by 1 per cent.
Source tax on manganese imports to be rationalised
To reduce tax refund, the government is set to propose rationalisation of source tax on manganese imports which is being used as raw material for manufacturing steel. Besides, source tax may be rationalised in the case of supplying local manufactured 33-500 KV cable.
In both cases, source tax may be relaxed in the upcoming financial year, sources say.
Travel tax to be raised
The Finance Minister is set to propose hiking travel tax to curtail unnecessary overseas trips amidst economic headwinds as part of austerity measures and creating new tax sources to raise revenue collection.
Travel tax, now ranging from Tk 500 to Tk 4,000, was hiked eight years ago for the last time. In the next FY, it may increase ranging from Tk 750 to Tk 6,000, sources say.
Environment surcharge to be imposed on multiple cars
As part of the idea of imposing taxes on such things which affect people’s health in the developed world, the government plans to propose imposing environment surcharge on multiple cars in a bid to curb environmental pollution. Tax will be imposed based on CC and KW and which will be ranging from Tk 25,000 to Tk 3.5 lakh, finance ministry sources say.
Tax expenditure to be at Tk1,78,241cr in FY24
Direct tax expenditure, including rebate, tax holiday, and exemption and reduce tax imposed will be estimated at Tk 1,78,241 crore in FY24 based on the GDP size.If the government includes tax expenditure in the government’s estimated subsidy, it will be raised to Tk 2,89,228 crore in FY24. In the upcoming expenditure budget, the government may include tax expenditure in the total government’s subsidy allocation, sources say.
Secondary stock investment rebate may remain unchanged
The government is planning to scrap the decision on withdrawal of rebate on investments in the secondary market in the budget for the fiscal year 2023-24. Tax benefits will remain unchanged in the upcoming financial year as that is not included in the budget document due to some controversy and stabilise the capital market and investment, sources say.
Currently, taxpayers are eligible for a 15 per cent rebate on their investments up to a maximum of 20 per cent of their taxable income in the stock market, deposit pension schemes (DPS), life insurance etc.
Govt unlikely to hike gain tax on land, flat reg
The government plans not to raise the rates of gain tax on land and flat registration, and penalties for the delay in submitting income tax returns in the fiscal year 2023-24.
Gain tax on land and flat registration will remain unchanged at current 4 per cent in Rajdhani Unnayan Kartripakkha (Rajuk) and Chattogram Development Authority (CDA) areas as the provision is not included in the budget document, according to finance ministry officials.
In other areas, the rate is fixed at 3 per cent as per the existing rate, they added.
For land registration, owners now pay 14-16 per cent taxes and fees, including 3-4 per cent gain tax, 3 per cent stamp duty, 2 per cent registration fee, 2 per cent local government tax, and 3 per cent VAT.
