Income tax measures should apply with prospective effect, not retrospective: ICAB [ Tritiyo Matra News ]

Income tax measures should apply with prospective effect, not retrospective: ICAB

Local June 16, 2016

Professional chartered accountants on Wednesday strongly criticised the government for reduction of investment tax rebate facility for individual taxpayers saying that the measure would increase income tax liability for them in the next fiscal year.
At a seminar on tax measures for the next FY 2016-2017 organised by the Institute of Chartered Accountants of Bangladesh, they said that the government should apply income tax measures with prospective effect instead of retrospective effect.
At the seminar held at ICAB auditorium in Dhaka, the ICAB also recommended for upward revision of investment tax credit scheme considering the tax planning of individual taxpayers.
The ICAB also recommended the government for reduction of the rate of tax at source on export to 0.80 per cent from the proposed 1.5 per cent, withdrawal of tax on investment income of several funds including gratuity fund, provident fund and workers participatory fund and reduction of minimum tax for companies from the proposed 0.60 per cent to 0.40 per cent.
ICAB member Snehasish Barua presented a key note paper titled ‘An analytical study of significant amendments to the Finance Bill 2016 and amendments enacted through SROs on Income Tax and VAT Regulations’ at the seminar.
The government through the proposed Finance Bill 2016 brought an amendment to the Income Tax Ordinance reducing the rate of investment ceiling eligible for tax rebate to 20 per cent of income from earlier 30 per cent.
Snehasish said that an individual taxpayer should know about the tax rate, investment rebate and other issues affecting his or her income when income is generated so that he or she can prepare tax planning properly.
But in Bangladesh, income tax measures are applied for previous income year which should not happen, he said.
The income tax measures which will be approved by the parliament for the next fiscal year will be applicable on income of outgoing fiscal year, he explained.
‘The proposed reduction of investment ceiling eligible for tax rebate will affect many taxpayers as their tax liability will increase,’ he said.
Many people have already made their investment for the purpose, he added.
ICAB executive committee member AF Nesar Uddin urged the government for upward revision of investment rebate measures.
Speakers at the seminar also said that salaried persons would be heavily affected due to the reduction of tax rebate benefit.
Employers have already deducted tax at source for 11 months at lower rate on salary income taking 30 per cent investment facility into account but sudden reduction of investment benefit would increase tax liability for the last month of the fiscal year.
State minister for Finance MA Mannan said that the parliament would consider the recommendations given by different stakeholders including ICAB before approving the budget.
He asked the officials of the National Board of Revenue for taking steps to make the tax payment procedures least painful for taxpayers so that they feel satisfied while paying tax.
NBR member (income tax policy) Parvez Iqbal said that the revenue board would try to adopt the rational recommendations of the institute.
NBR first secretary (income tax policy) Shabbir Ahmed said that the NBR tried to give an idea about the new income tax law which the NBR was going to frame through the proposed income tax measures for the next year.
He said that the tax authority emphasised on issues related to compliance, increase the number of taxpayers and revenue collection through the proposed tax measures.
ICAB president Kamrul Abedin, vice-president Mahmudul Hasan Khusru, council members Mohammed Humayun Kabir, Haider Ahmed Khan, Shahadat Hossain, among others, spoke at the seminar.