No separate bank account needed
The National Board of Revenue on Tuesday said that house owners would be able to use any bank account, including the existing ones, for depositing their income from house rent. The revenue board issued a circular in this regard, relaxing the existing provision of the Income Tax Rules-1984 which says that a house owner should maintain a dedicated bank account to deposit the monthly house rent or advance if it exceeds Tk 25,000.
House owners, however, can operate separate bank accounts for depositing the rent, if they want, the circular said.
Considering the trouble in opening and maintaining separate bank accounts by the house owners and additional maintenance cost of separate bank accounts, the revenue board took the decision.
In line with the decision, the revenue board will now amend the rules, officials said.
In the circular, the NBR gave some instructions to the house owners and tenants on their responsibilities to fulfill the requirements of the provision.
It also provided some explanations and clarifications addressing the confusions of house owners and tenants on the matter.
NBR said that tenants would be able to pay the rent either through cross-cheque or directly deposit the rent to the bank accounts of the house owners.
House owners will deposit the rent if any tenant pays in cash, it said.
House rent will be calculated including the rent for furniture, fixture and fittings in case of full-furnished apartments, the NBR clarified.
According to the circular, house owners will have to inform the deputy commissioner of tax about the bank accounts and must submit the bank statement related to house rent transactions along with income tax returns in the fiscal year 2015-2016 as the provision came into effect from July 1, 2014, it said.
Officials said that house owners who failed to deposit the rent for July to bank accounts would be able to deposit the money next month.
There will be no problem even if they fail to deposit the money as the revenue board will add an amount in calculating tax keeping consistence with the rent to be deposited for the next month, they said.
The NBR in the fiscal year 2014-15 incorporated the provision of depositing house rent exceeding Tk 25,000 in a month to separate bank accounts by the house owners.
The provision will be applicable for all kinds of houses—small, big, commercial and residential— and for all kinds of house owners including individual, firm, company or any other organisations, the circular said.
According to the law, the revenue board will impose penalty on the house owners at the rate of 50 per cent of taxes payable on income derived from house property or Tk 5,000, whichever is higher, for not transacting the house rent through banks.
Penalty will also be imposed for hiding the actual amount of the rent or showing less income or for not depositing to the bank the total income from house property.
The revenue board will also fix the amount of tax after auditing if house owners conceal the actual amount of the rent.
House owners will have to preserve the details including name, address, date of payment of the rent, amount of rent and other information of tenants in a separate register.
People having power of attorney for collecting the rent of any house property will have to maintain bank accounts for depositing house rent on behalf of the house owners, NBR said.
In case of joint-ownership of any house, the owner who gets monthly house rent exceeding the amount of Tk 25,000 will have to deposit the rent to bank account.
Any partner of a house need not deposit house rent to bank accounts if the portion of rent exceeds the limit though the total rent exceeds Tk 25,000, it said.
-With New Age input
