INCOME TAX DEDUCTION AT SOURCE : NBR to set up 5 spl zones to intensify monitoring [ Tritiyo Matra News ]

INCOME TAX DEDUCTION AT SOURCE : NBR to set up 5 spl zones to intensify monitoring

Local November 02, 2015

The National Board of Revenue is planning to set up five specialised income tax zones with a view to intensifying monitoring of tax deduction at source or TDS across the country and expediting the revenue collection from the sector.
Of the TDS monitoring zones, which will cover the whole country, four will be set up in Dhaka while the rest one will be established in Chittagong.
The government made the decision as it found difficulty in enforcing the TDS system due to an absence of proper monitoring mechanism and establishment, officials have told New Age recently.
Finance minister AMA Muhith also made a proposal on formation of TDS zones at his budget speech for the current financial year 2015-2016 at the national parliament, they said.
According to NBR statistics, around 57 per cent of income tax in the country comes from the sector which is very low compared to the developed countries like the United States and the European states where the share of TDS, also known as withholding tax, is more than 90 per cent.
Hundreds of withholding authorities under 58 sectors including employers, suppliers, government’s development projects implementing agencies, companies and banks deduct income tax at source where the income is generated at different rates and deposit the amount to the government exchequer.
The income tax at source is deducted from salaries, interest on securities, savings instruments and bank deposits, supply of goods and execution of contracts, fees for services, commissions in different sectors, payment on local LCs, dividends, etc.
‘Currently there is no dedicated tax office in the country to oversee the tax collection process though more than half of the income tax comes from the sector,’ a high official told New Age last week.
The withholding authorities often misuse the system causing huge amount of revenue loss for the government, he said.
The withholding tax comes without any effort of tax officials but it demands strong monitoring for enforcing the TDS system properly, the official said.
Earlier, the revenue board identified four major problems in collecting and depositing TDS by the government and private organisations, the officials said.
The problems include deducting tax at lower rates by the withholding authorities, dodging the tax through not depositing it to the government treasury on time, non-deduction of tax at source and non-deposition of the deducted taxes to the government exchequer.
Under the existing 31 income tax zones across the country, both the effort-based revenue collection and the TDS monitoring are managed by the same tax officials.
‘Taxmen usually emphasise on effort-based revenue collection assessing the tax files of taxpayers and TDS monitoring does not get proper attention from them as there is nothing to do with it except monitoring,’ an income tax official said.
Lack of manpower and logistics also hamper the monitoring ac tivities which require regular visit to the withholding authorities’ offices, he said.
He said in the future, the importance of withholding tax, also known as source tax, would increase enormously in the country.
Considering all the issues, the revenue board has prepared a proposal for the government’s approval, the officials said.
The proposal will be placed to finance minister AMA Muhith after getting approval at the NBR board meeting to be held soon, they said.