The new Income Tax Act-2023 is likely to be placed in Parliament today, incorporating provisions allowing purchase of land, plots, flats with black money, creating multiple firms from breaking up one company, mandatory submission of wealth statements during foreign trips, and increasing power of tax officials.
If passed by Parliament, the new act will come into effect in July, finance ministry documents and sources say.
The new income tax act also includes the provision of thin capitalisation to stop tax evasion by multinational companies. Changes are also coming in the law allowing transfer pricing, sources said.
In this act, the government will incorporate the provision of buying land, plots, and flats with black money. In this case, such a move can be legalised by paying taxes in the same way as before.
However, for multiple land and flat properties, owners will have to pay 20 per cent additional tax. There is an opportunity to set up industries by investing black money in economic zones or hi-tech parks with 10 per cent tax.
Black money can be converted into white by paying an additional 10 per cent of the prescribed tax.
This income can be used for industrialisation and its expansion, industrial modernisation, renovation and expansion, purchase of buildings, apartments or land, and shares of companies listed in the stock market.
Besides, in the future, if anyone deliberately evades or tries to avoid income tax, he may face fines, jail term or both.
If the annual income of an individual is more than Tk 5 lakh, it is mandatory for him or her to submit the statement of living expenses in the return, and if the annual income is more than Tk 40 lakh or if s/he travels abroad, it is mandatory to submit the statement of assets.
Government employees are required to submit asset declarations. In the new law, the government imposed a 10 per cent tax on stock dividends in addition to cash dividends in the stock market. Penalty for late return will be increased as well.
Mutual fund income is kept exempt from tax. Some changes are being made in the tax concessions, and the upper limit of concessions is being reduced.
Medical, travel, and daily allowances will be exempt from tax, but house rent, holiday allowance, encashment of leave, fees, commission, and
overtime will be subject to tax. TIN (taxpayer identification number) can also be canceled by showing reasonable cause.
According to the new law, a person who deliberately tries to evade tax can be punished with a minimum of 6 months to a maximum of 5 years of jail term, or fine or both.
Concealing information about income, providing intentionally false information about assets, liabilities and expenses to reduce taxes, providing or attempting to provide false information in accounts or other statements, omitting intentionally or falsifying tax file information or statements, and taking any other initiative to avoid paying income tax will be punished.
Immunity of tax officials
The new law provides immunity for tax officials. They cannot be held responsible for collecting, withholding or paying tax deductions from the income of any person.
Besides, no suit can be filed in a civil court for rejection or revision of tax assessment or against any other order of the tax officer.
No criminal case or any other proceedings can be taken against any government servant for his acts done “in good faith.”
Incentives have also been provided for tax officers and employees. The act provides for an award for outstanding contribution in tax collection or detection of tax evasion.
Tax officials can break down doors
According to the new law, tax officials can enter any building, place, ship, vehicle, aircraft and search income records, money, precious metals, jewelry or other valuable articles or things.
Officials can break down doors, boxes, lockers, safes, cupboards or any other receptacle if it is locked. Income records, money, precious metal jewelry or other valuables can be seized upon search.
Penalty for finding wealth abroad
The new income tax law is also bringing bad news for Bangladeshis who have illegally accumulated wealth abroad. If a person is found to have assets held abroad that are not disclosed in his returns, he will have to pay a hefty penalty.
In this case, there is a provision of fine equal to the fair market value of the property abroad. Also, the deputy commissioner of taxes can investigate the property abroad if he wants.