Tax-free income limit pushed up to Tk 1.5 lakh
Staff Correspondent
The budget for fiscal 2007-08 brings forward a 13-point proposal for changes in the income tax structure including increasing the exemption limit of income tax for an individual to Tk 1.50 lakh from Tk 1.20 lakh. The other changes proposed include offering tax holiday for solar energy plants and rebate for the non-resident Bangladeshi investors, abolishing advance tax on the government bonds, raising the rate of tax to be deducted at source to 7.5 percent from the existing 5 percent and the limit of advance income tax to Tk 3 lakh from Tk 2 lakh. The budget unveiled yesterday suggested introducing universal self-assessment procedures for encouraging the taxpayers to pay tax voluntarily. It says the Income Tax Ordinance 1984 would be amended to reduce the maximum tax on the basis of turnover irrespective of profit or loss to 0.25 percent from 0.50 percent. The provision of tax deduction at sources on credit card bill would be abolished. In the amendments, interest on loans up to Tk 20 lakh for self occupied accommodations would be admitted as allowable expense while private universities and research institutions registered under trust law would be allowed 15 percent tax rebates. On the other hand, the provision of tax for construction of building or buying house property or flats or land or car with undisclosed and untaxed money would be abolished. The corporate tax for the mobile phone companies has been proposed to be set at 45 percent. However, it would be 35 percent if the company is listed on stock exchanges. The budget also proposed tax deduction at source on all exports at the rate of 0.25 percent. The advance tax deduction at source for hospitals and diagnostic centres has been increased to 10 percent from the existing 5 percent. Finance Adviser AB Mirza Azizul Islam in his speech stressed the need for reducing dependence on import-based revenues while perking up the revenues from domestic sources. "We also have to gradually reduce import duties on industrial raw materials and capital machinery and even on the intermediate goods to keep the prices of commodities within tolerable limits," he said. He proposed curtailing the discretionary powers of the tax officials and asked the tax authorities to avoid discretionary tax collection policies. He also emphasised the importance of simplifying the tax assessment and payment procedures.
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