The National Board of Revenue in a circular on Thursday announced that taxpayers will be required to fulfil their income tax obligations for the current 2023-24 tax year according to the new Income Tax Act 2023 and Finance Act 2023.
Furthermore, the board specified that all activities related to income tax, including the issuance of notices, scheduling of hearings, and the determination of tax rates, will be conducted in accordance with the provisions of the new law.
The Jatiya Sangsad, in June, passed the Income Tax Act 2023, thereby replacing the previously established Income Tax Ordinance of 1984.
After enactment of the new law, certain ambiguities persisted concerning the calculation and payment of income tax. There was a notable confusion amongst many regarding the basis on which they were expected to fulfill their tax obligations – adhering to the new law or the former ordinance.
In response to these concerns, the revenue board has issued this circular to provide clarity. The circular states that, for the tax year 2023-24, tax calculations will be executed in accordance with the new Income Tax Act.
Furthermore, the circular elucidates that provisions disallowing certain deductions for income assessment, present in the Income Tax Act but absent in the Ordinance, will become applicable starting from the tax year 2024-25.
Additionally, it specifies that during the tax year 2023-24, dividends will be classified as income stemming from financial assets. Nevertheless, audit cases conducted by the Board of Revenue prior to the enactment of the new law will be concluded in line with the stipulations outlined in the Income Tax Ordinance of 1984.
