The excise duty on depositors' money has been discouraging people from parking their money in the banking system, bankers said yesterday in a dialogue.
They said if a person has above Tk 1 lakh in his/her savings account, the revenue authority takes Tk 150 as excise duty while the amount hits Tk 25,000 if the balance touches Tk 5 crore.
When the depositor puts the money as term-deposit, he has to pay excise duty again. In case of borrowing from banks, a person also has to bear the burden of excise duty on loan account.
“This makes depositors frustrated and they feel discouraged to go for savings. I think it will be good if excise duty is not charged on the same money kept in two accounts,” said Mahtab Jabin, managing director of Probashi Kallyan Bank.
She spoke at a dialogue on revenue at Bangladesh Shilpakala Academy organised by the Tax Zone-1 under the National Board of Revenue (NBR).
At the event, the audience, comprising bankers and executives of various firms, including those of the apparel industry, welcomed Jabin's recommendation with claps.
A person at present has to count excise duty on his/her deposit account and loan account although rules are there stipulating that the tax should be deducted from the deposit once a year, said Mohammed Shahid Ullah, senior executive vice president of Dutch-Bangla Bank.
Bankers at the event also urged the tax authority not to slap any tax on the provision kept against loans, mainly default ones.
They also want the NBR to carry out awareness campaigns among people on the benefits of paying taxes and take steps to eliminate the negative perceptions about tax offices and taxmen in society.
Md Mosharraf Hossain Bhuiyan, chairman of the NBR, did not comment on the proposal related to excise duty. But he said they would consider the plea regarding taxes on the provision kept against bad debts. “Impose and collect tax based on the lifestyle of taxpayers instead of merely on the person's income,” said Masudul Hoque Sardar, head of finance at Eastern Bank.
“If it is not done, it will affect social equity. It is likely to have a positive impact if tax is collected based on lifestyle, not based on income.”
He said the NBR is doing a lot of good jobs. “Yet, perception of taxpayers about the NBR is still not positive.” Sardar also urged the NBR not to bring a change to tax rates every year. If possible, keep the rate similar at least for two years, he said.
Tax collection will increase if the tax offices become friendlier and awareness is raised on tax payment, said Kazi Sanaul Hoq, managing director of the state-run Investment Corporation of Bangladesh.
“My driver says that he has no problem with tax payment but he is unwilling to visit tax office.”
Aslam Sani, former vice president of the Bangladesh Knitwear Manufacturers and Exporters Association, suggested that taxmen increase interactions with the taxpayers so that they get an idea about the lifestyle of the taxpayers.
The NBR chairman said the proposal of taxing people based on lifestyle was inspiring.
“It is a matter of disgrace that there are only 20 lakh people who submit returns in a country of 18 crore of people,” he said. Currently, the tax administrator is taking numerous steps to bring in people who are still out of the tax net despite having taxable incomes.
He said the taxpayers would not agree to pay tax if questions are raised on the sources of their incomes.
Bhuiyan said his office was finding ways on how to impose taxes on properties and transport sector. He said they would hand out exemplary punishment to officials involved in wrongdoings.
Kalipada Halder, NBR member for tax administration; Md Obayed Ullah Al Masud, CEO of Sonali Bank, and Nahar Ferdousi Begum, commissioner of Tax Zone 1, also spoke.