Govt moves fast to revamp taxation system

News Desk
12 July 2020, Sun
Published: 05:39

Govt moves fast to revamp taxation system

The government has decided to build a modern and ICT-backed taxation system alongside revamping the income tax department soon, aiming to materialize the Vision 2021 and Sustainable Development Goals (SDGs) by 2030.

To make that happen, officials said, the government has put emphasis on taking measures to ensure the most efficient use of information technology in all the activities related to taxation such as filing of income tax returns, processing of returns, assessment of total income, computation of taxes and payment of taxes.

According to a budget document, all the activities related to tax deducted at source (TDS) are in the spotlight to be brought under an automated system.

"Steps are also needed to be taken to facilitate capacity-building of the Income Tax Department on issues of auditing and international taxes," the document says.

It says income tax, which is also known as direct tax, is one of the major sources of internal revenue collection. Currently, income tax contributes nearly 35 percent of the total revenue collected by the National Board of Revenue (NBR). The average growth in income tax collection has been above 15 percent in recent years.

According to a senior NBR official, analyses and review of data from different countries reveal a growing tendency towards income inequality among citizens, which is a by-product of economic growth.

He said tapping adequate revenue to finance the overall development of the country, ensuring macroeconomic stability, maintaining discipline in the financial sector, and establishing a welfare state having redistribution of wealth, social justice, equity and reduction of income inequality are some of the key objectives behind collecting income tax.

"The strides made by the government in developing various socioeconomic indicators of the country over the last 12 years earned global appreciation as a role model," he said.

According to the budget document, economic growth and rise in per capita income in the past 12 years have made a large section of the population capable of paying income tax, which in turn opened up huge potential and opportunities to significantly increase revenue collection.

It mentioned that it is needed to make the county's income tax system more robust and dynamic so that the benefits of progress and development do not remain confined only to the fortunate few.

"This also can be shared by every citizen in the country… income inequality as a corollary to economic growth does not rise, and, above all, social justice, one of the key drivers behind the War of Independence, is ensured, and a society based on equity and welfare is built."

The NBR official said that activities related to tax are heavily information-intensive. "The unprecedented advancement taking place in the field of information technology in recent times has brought immense opportunities for us for augmenting tax collection."

He mentioned that globalisation and extraordinary development and evolution in information technology are contributing to the fast-changing nature and context of investment, business models and economic transactions.

"Economic activities these days are increasingly going cross-border with the widespread adoption of virtual economy due to digital access to information."

Against this backdrop, the NBR official said issues relating to international taxes are increasingly becoming relevant and important.

"Now, we don’t have any alternative but to tap required internal resources to successfully implement Vision 2021 and elevate into a upper middle income country. Successful implementation of Sustainable Development Goals by 2030 also calls for gearing up collection of income tax."

The government from this fiscal announced to provide tax rebate of Tk 2,000 to all the taxpayers who will file their income tax returns online for the first time.

"I hope this will highly encourage the taxpayers to submit their income tax returns online, which will in turn expedite the process of digital transformation of the Income Tax Department," Finance Minister AHM Mustafa Kamal said in his budget speech.

The total revenue collection for the proposed budget for 2020-21 fiscal estimated to be Tk 378,000 crore where the NBR will contribute Tk 3,30,000 crore. The revenue from non-NBR sources was estimated at Tk 15,000 crore, while non-tax revenue at Tk. 33,000 crore.

Of the grand amount for the NBR, Tk 103,945 crore will come from income, profit and capital tax, while Tk 125,162 crore will be contributed by VAT, supplementary tax will provide Tk 57,815 crore, Tk 37,807 crore will come from import duty, Tk 55 crore from export duty, Tk 3,686 crore from the excise duty and Tk 1,530 crore as other taxes. Source: UNB