Reimburse income tax for officials

The Pay and Service Commission has recommended giving public servants, who pay income tax, an additional half-month's basic salary at the year's end.

The recommendation is part of the report the commission, led by former Bangladesh Bank Governor Mohammad Farashuddin, submitted to Finance Minister AMA Muhith on Sunday.

Since fiscal 2010-11, sixth grade government employees and above have been paying a half-month's basic salary as income tax every year. The recommendation means the employees would indirectly be reimbursed the amount they shell out as income tax.

Before fiscal 2010-11, they would pay the tax first and get it back later from the government. In other words, the public servants' salaries and allowances then were tax-free, which the pay commission led by Farashuddin said was not consistent with the income tax law.

Getting back the amount they paid as income tax is convenient for the government staff but it was discriminatory, the report said. The exercise was not consistent with the idea that all are equal in the eye of the law. Furthermore, the system was complex and time-consuming.

Curiously, the commission recommended a similar move, one which indirectly entailed returning the amount the public servants paid as income tax.

Before independence, the government staff had to pay income tax just like private individuals.

The first national pay commission, formed in 1972, did not give any opinion on whether the government staff would pay income tax or not in its report.

Later in 1974, through a government order, the public servants were exempted from paying income tax. The order said that their income tax will be considered as paid by the government.

In 2004, based on the recommendation of the pay commission, a provision was made that the public servants will first pay their income tax and later through a separate bill they will get back the amount.

Then in 2008, the seventh Pay Commission proposed that the government employees will pay tax from their taxable income but they will not get back the money, a practice which is going on at present.