Unquestioned amnesty for black money likely to continue

The government is likely to keep the opportunity to whiten black money without asking any question on the source of fund in the next fiscal year owing to the lobby from various quarters, said officials of the finance ministry.

However, the holders of undisclosed wealth may need to pay 25 per cent tax along with a 10 per cent penalty, instead of the scope to legalise income on payment of a 10 per cent tax, which will expire on June 30.

As a result of the measure, the effective tax rate on the declared amount in the income tax return will be 27.5 per cent.

The effective tax rate will be the highest as the maximum personal income tax rate is 25 per cent, said an official.

In his post-budget media briefing, Finance Minister AHM Mustafa Kamal skipped the issue of whether the government had any plan to give unquestioned amnesty to legalise black money in the next fiscal year beginning from July.

The current opportunity—under which 10,404 taxpayers whitened nearly Tk 14,460 crore this fiscal year—drew criticism from economists and civil society organisations as it acts as a disincentive to honest taxpayers and encourages corruption and bribery.

However, the government has kept the scope of using undisclosed income for the purchase of homes, land, buildings, or flats on the payment of a certain amount of tax, depending on the area and location of the property.

Under the provision, government agencies can ask questions about the source of funds.

A number of officials said the holders of black money might be given the opportunity to legalise the untaxed income through the purchase of flats by paying a specific amount of tax per square metre.

In this case, a 10 per cent penalty would be payable on the computed tax, an official said.

And except for land, a person—having cash, bank deposits, savings instruments and other financial schemes and instruments—is likely to get the leeway to whiten undeclared money.

In a bid to fuel tax collection during the pandemic, the government gave the wholesale opportunity to legalise income by introducing the provision that no authorities could question the source of assets once legalised.

Of the total legalised assets, Tk 11,664 crore was whitened by paying taxes for undeclared fixed deposit receipts, savings certificates, cash and others.

Taxpayers legalised Tk 2,513 crore by investing in properties, and Tk 282 crore was whitened through investments in the share market.

In the 15 years to 2019-20, undeclared income worth Tk 14,595 crore was legalised.