• Tuesday, September 16, 2014

NBR tightens rules for rent payment

Businesspeople and professionals will have to pay rents through banks

Sohel Parvez

The National Board of Revenue has tightened rules for businesspersons and professionals who rent properties for commercial or residential purposes.

These people will now have to pay rents of properties through crossed cheques or bank transfers, a move that taxmen say will help plug tax loopholes.

"Otherwise, the rents will not be admissible as expenses," the NBR said in a notice on Monday.

It means businesspeople and professionals will have to pay more tax if they do not pay such rents through banks. The expenses, claimed by taxpayers as rental payments for properties, will then be treated as income and entail tax, taxmen say.

NBR officials said people who will fall under the professional category include physicians, lawyers and engineers. The measures will be effective from July 1 this year.

"We have introduced the rule to ensure disclosure of real expenses. It will boost tax receipts," a senior official of NBR said, asking not to be named.

The tax administrator took the step as it found that claims of payments for property rents were not verifiable as the money could be paid to owners in cash.

Taxmen said there was scope of collusion between renters and owners on disclosure of expenses paid as rents. The collusion would lead to concealment of the real amount of rents.

The NBR said rental of any property -- building, apartment, office space, shop and factory -- will fall under the rule.

Taxmen said people with incomes from business and professions will have to show the expenses on rental payments through banks in their tax returns from next year.

The NBR also tightened rules for constructing houses through borrowing. The tax authority says it will only allow expenses for interest payments on bank loans taken for building homes. Interest payment expenses on money borrowed from other sources will not be granted as allowable expenses. It means taxpayers will have to pay tax on their claims of interest expenses if the loans are taken from sources other than banks or financial institutions.

The NBR aims to collect a record Tk 57,500 crore via direct taxes in fiscal 2014-15, up 34 percent from Tk 42,915 crore collected a year ago.

 

Published: 12:00 am Wednesday, August 27, 2014

Last modified: 1:34 am Wednesday, August 27, 2014

TAGS: National Board of Revenue businesspersons commercial residential purposes

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