Individual Taxpayer
NBR plans to reduce tax rebate on investment
The National Board of Revenue is likely to reduce the rate of tax rebate on investment by individual taxpayers in different sectors including in stock markets in the coming budget for fiscal year 2014-15, officials of the revenue board said. They said that the rate of rebate might be set at 10 per cent of any investment and donation by an individual taxpayer from the existing 15 per cent.
Currently, an individual taxpayer enjoys 15 per cent rebate on investment and donation amounting up to 30 per cent of total income, or Tk 1.5 crore or actual investment which comes less.
The revenue board in FY 2013-14 increased the rate of rebate by 5 percentage points from 10 per cent along with the investment ceiling.
According to Income Tax Ordinance-1984, taxpayers will be able to enjoy the rebate in case of investment in stock markets and government treasury bonds, contribution as life insurance premium, contribution to provident fund, recognised provident fund, superannuation fund, benevolent fund and group insurance premium, annual contribution up to Tk 60,000 to deposit pension scheme of any scheduled bank or financial institution and in purchase of one computer or laptop.
Taxpayers will also get tax rebate for donation to Zakat Fund, to any charitable hospital approved by the NBR, to philanthropic or educational institutions approved by the government, to institutions established for welfare of disabled people, to Aga Khan Development Network in Bangladesh, to Ahsania Cancer Hospital and to national level institutions set up in memory of liberation war and father of the nation.
Officials said that the NBR’s revenue collection fell by around Tk 1,000 crore from income tax in 10 months of the current fiscal year because of the hike in rate of rebate and investment ceiling.
The revenue board, however, has no compiled data on the amount of total investment and donations made under the provision, they said.
The higher rate of tax rebate on investment and donation has created inconsistency in taxation system in the country, they said.
‘The minimum individual income tax rate in the country is 10 per cent while the NBR allows 15 per cent tax rebate which is not rational,’ a high official told New Age on Sunday.
The rate of tax rebate should be equal or less than the lowest income tax rate, he said.
Considering the impact on revenue collection and inconsistency in taxation, the revenue board has decided to reduce the rate of rebate, he said.
He, however, said that the decision on incorporating the NBR proposal on rate cut would ultimately be taken by the prime minister Sheikh Hasina.
If the proposal is passed in the budget set to be announced on June 5 in National Parliament, the reduced rate will be effective from next fiscal year, he added.
Officials of the revenue board, however, said that the reduction of tax rebate would not put any negative impact on investment.
-With New Age input
