Realtors yesterday urged the government not to question the source of an individual's undisclosed income to invest in real estate.
In a meeting with the National Board of Revenue, the Real Estate and Housing Association of Bangladesh or REHAB sought to restore a provision in the tax law that allowed people to invest undeclared incomes in real estate without any question on its source.
REHAB wants the provision to be effective from fiscal 2015-16.
“A large sum of money will fly abroad if the provision is not revived,” REHAB said in its budget proposal, placed by its President Alamgir Shamsul Alamin at the NBR headquarters.
Currently, people can use undisclosed money to construct or purchase residential buildings or flats by paying a certain amount of tax, but revenue officials may question the source of the funds.
REHAB that has around 1,200 members argued that money is flowing abroad to enjoy the scope of a 'second home' programme offered by various countries.
“Investors will come under the tax net once their undeclared incomes are allowed in investment in apartments. It will boost state revenue," REHAB said.
It is going to be another year that realtors put forward this plea, at a time when the sector is passing tough times as apartment sales have declined significantly in the last several years.
The sector's sales fell as much as 60 percent in 2013 and the situation is not any better now, according to REHAB.
REHAB Vice President Liakat Ali Bhuiyan said taxmen and Anti Corruption Commission asks for the sources of income under current laws.
"As a result, people are not interested in investing in apartments. That is why we have placed the demand," he said.
REHAB wanted a 5-10 year bar on questioning the source of income in the housing sector, to revamp the sector. However, the scope of legalisation of undisclosed income without question faces criticism from various quarters.
It also proposed to reduce the taxes on flats and plot registrations and duty-benefits to import firefighting equipment for apartments and commercial buildings.
Apart from the REHAB, trade bodies representing steel and re-rolling mills, cement and steel building makers also placed their recommendations ahead of the budget.
Drug makers, plastic, light engineering, tyre tubes and melamine manufactures and exporters also placed their demands with most of them seeking measures that promote domestic manufacturing capacities.
Jasim Uddin, president of Bangladesh Plastic Goods Manufacturers and Exporters Association, sought a reduction of import duties on some raw materials used to make plastic goods. Those items are not produced locally and it will facilitate the sector that fetches Tk 3,000 crore a year through exports.
He appealed to the revenue authority to cut duties to encourage establishment of industries to make moulds. It will save a lot of foreign currency in reduced imports, he said.
Abdul Malek Chowdhury of Bangladesh Association of Pharmaceuticals Industries (BAPI) demanded slashing duties on the import of specialised racks, which are needed to comply with the rules of regulatory and international bodies.
"These racks are imported and are used to store pharma ingredients and drugs," said BAPI in its proposal recommending a mere 5 percent duty on the item.
BAPI also wanted duty benefits in the imports of pharmaceutical laboratory furniture.
NC Saha, representing Bangladesh Tyre Tube Manufacturers and Exporters Association, demanded continuation of the 5 percent duty on the import of raw rubber, in favour of VAT registered makers.
"We have already started making automobile tyres, while our export of tyres of bicycles and bikes is rising. Investment will be affected for a spike in duty.”
NBR Chairman Md Nojibur Rahman called upon all the trade bodies to pay income taxes, VAT and import duties in line with the law.