The entities deducting tax at source will have to deposit the sum to the government exchequer through automated challan, instead of doing the task manually. The move aims to bring transparency in source tax management.
The provision will benefit institutions that collect tax at source from individuals and organisations – such as banks, because the new system allows greater flexibility.
The National Board of Revenue (NBR) recently issued a notification in this regard, adding, “Not only source tax, but also advance tax and if tax is payable by the organisation at the time of filing the return, should also be paid through A-challan or e-payment.
Due to this provision, an organisation will not be able to submit tax at source through pay order or any other means.
Tax is deducted at source against purchase of various services or goods. The organisation, from which the goods or services are purchased, deposits the tax at source in the government treasury.
Till now, it had to be submitted through pay order, paper challan or other means as prescribed by the government. From now on, the organisations deducting tax at source will be able to utlise the IVAS system under the finance ministry and deposit the money.
As a result, information on how much money an organisation has collected, and from whom, will be available quickly, NBR sources say, and adding that it will also help the board in monitoring the TDS system and boost revenue collection.”
According to the NBR, around three lakh public and private entities are currently paying tax at source to the national exchequer. Among them, 1.2 lakh are government entities, and 1.8 lakh are private ones.
Fifty-three types of income, including Sanchay Patra and bank deposit interest, source tax on export proceeds of exporters, fall under this particular criteria.
They have to deposit the money to the state coffer through banking channels and file returns with field level tax offices, officials say. In FY23, the NBR set a target of collecting Tk 1,22,000 crore from the income tax sector.