Landlords would have to pay half the rent in fine if they dodge taxes on the income.
The National Board of Revenue (NBR) would formulate rules in this regard after the budget proposal of the finance minister has been passed. NBR Chairman Ghulam Hussain at the post-budget press conference of the finance minister at Osmani Memorial Auditorium in Dhaka yesterday revealed the plan.
Despite scepticisms among analysts on its success, the NBR boss defended the move saying that it would make sure landlords could not evade taxes.
The proposed budget for the 2014-15 fiscal year stipulates that the landlords who charge Tk 25,000 or more as rent for a single living unit would have to receive the rent through banks.
According to the new provision, tenants would pay rents in cheques payable to a designated account of the landlord. And it was the landlords, not the tenants, who would be held responsible in case of tax evasion.
"As transactions will be made through bank accounts, we will check the accounts of the landlords and tenants. So, there is no possibility of dodging taxes," said the NBR chief.
Analysts, however, were still sceptical, saying it was likely to encourage a section of the intended taxpayers to conceal the actual rent.
"Payment through banking system is obviously a positive step. But if the government imposes the rule from the perspective of revenue generation, it is most likely to fail," Sajjad Zohir, professor of Economics at Brac University, told The Daily Star Thursday.
He believes the new law would leave wider scopes for tax collectors to indulge in unfair practices and the landlords to adopt unethical means to evade taxes.