October 30 Tax Day
The government declared October 30 as Tax Day, setting a fixed deadline for individual taxpayers to submit their income tax returns for the year. Individuals will have to file returns on or before that date.
This is a measure that the finance minister proposed yesterday as a means to end the culture of deadline extension that the tax authority has had to oblige to every year amid demands from various quarters.
Taxpayers will have to pay a penalty if they fail to submit returns on or before the expiry date.
“We hope that introduction of the Tax Day will bring a breakthrough in the tax compliance culture of Bangladesh,” he said, while placing the budget proposal for fiscal 2016-17.
Muhith said the fixed deadline will apply to all taxpayers, other than companies; if October 30 is a public holiday, Tax Day will be the next working day.
The minister also recommended keeping the tax-free income limit for individuals unchanged at Tk 250,000 for the coming fiscal year. The existing slabs for income and related rates will continue, he added.
The current September 30 deadline to submit individuals' income tax returns is extended almost every year in the face of demands from various trade bodies and professional groups, which some taxmen believe causes delays in scrutiny and audit of the submitted returns.
Since deadline extensions have become the norm, taxpayers are not compelled to file their returns within the original timeframe. Subsequently, the volume of submitted returns tends to be low until September 30, said taxmen.
Last year, the NBR extended the deadline for income tax returns by two months to November 30. In 2014, the deadline was extended twice, and the year before, thrice to December 31.
Muhith said the last date to submit returns is maintained strictly across the world.
“.. And they are lax in submitting the returns on time. It is not only deferring the tax collection and assessment process, but also gradually making the rule of law ineffective,” he said.
Taxmen said the government will get the revenue in time, which will also bring fiscal discipline.
Currently, there are nearly 20 lakh taxpayers identification number (TIN) holders, including companies and firms. The number of return submissions, although gradually increasing, continues to remain low in view of the size and growth of the economy.
The NBR recorded about 11.5 lakh returns in fiscal 2014-15, up 14 percent year-on-year and the highest growth since fiscal 2008-09.
Still, the total number of people who file taxes continues to remain less than 1 percent of the total population of 16 crore -- a figure that creates doubts over the efficacy of the tax authority's continuous awareness and motivation campaigns.
Analysts however said the tax potential remains untapped as taxmen can collect only half of it.
Bangladesh should have 40-50 lakh people who regularly file their tax returns, given the level of per capita income, Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh told The Daily Star earlier.
About half of the potential tax does not come to the state coffers due to a lack of compliance by taxpayers and poor efforts by taxmen, according to a study by the Centre for Policy Dialogue.
Some Tk 9,893.24 crore was collected as income tax in 2010, against a potential of Tk 19,700 crore, said the independent think-tank.