Relief for individuals

Individual taxpayers, from lower income group to the super rich, are likely to get some relief in the next fiscal year as the proposed budget has eased up their tax burden.

After keeping it unchanged for two consecutive fiscal years, the government has planned to raise the minimum tax-free income to Tk 2,50,000 -- up by 14 percent from the existing Tk 2,20,000. 

Finance Minister AMA Muhith in parliament yesterday proposed the new tax exemption ceiling, attributing to inflation and living cost.

In the last two years, nearly seven percent average inflation hit the country, stretching the wallets of the low- and fixed-income people.

The proposed budget also increased the tax exemption limit from Tk 2.75 lakh to Tk 3 lakh for women and elderly citizens aged over 65.

For physically challenged people, it will be hiked from Tk 3.50 lakh to Tk 3.75 lakh and for gazetted wounded freedom fighters from Tk 4 lakh to Tk 4.25.

Also in the budget proposals for the FY 2015-16, the income slabs have been reorganised, keeping the corresponding tax rates unchanged. Each of the slabs has been raised by Tk 1 lakh.

The proposed measure is going to reduce tax burden on middle-income people as well as the super rich, said Syed Md Aminul Karim, former member of income tax at National Board of Revenue.

UNIVERSAL INCOME YEAR

Companies and firms, except for banks, insurance and financial institutions, will have to adopt July-June as the income year. It has to be effective from July 1, 2016, said Muhith.

Under the current tax legislation, a taxpayer is allowed to adopt his own income or accounting period as per their own choice, he said.

Some taxpayers, namely banks, insurance and financial institutions, follow the calendar year (January-December); others keep with different accounting periods as their income years, he added.

According to the proposed budget, government is also going to impose 50 percent additional tax or Tk 5 lakh on persons for employing unauthorised foreigners.

Despite the existence of large unemployment among local eligible workforce, huge numbers of foreign nationals are being employed in the country and most them are not in tax net, Muhith said in his budget speech. 

“We have already started registering foreign nationals working in our country and they will be brought under tax net soon,” he said. 

“I propose to impose 50 percent additional tax or Tk 5 lakh [whichever is higher] for the persons employing unauthorised foreign nationals.”

He also suggested prosecution and punishment, and cancellation of tax holiday and other tax exemption facilities for what he said was “unscrupulous entities engaged in such unlawful acts”.