Govt set to raise investment limit for individual taxpayers for rebate

Investment limit for getting income tax rebate by individual taxpayers is set to be increased to 25 per cent from the proposed 20 per cent in the budget for next fiscal year, officials said.
The government took the decision following massive criticism from various stakeholders including taxpayers, business bodies, and research organistions for lowering the investment limit for tax rebate in the proposed budget.
Finance minister Abul Maal Abdul Muhith in his budget statement tabled on June 2 proposed to reduce the limit to 20 per cent from the existing 30 per cent for individual taxpayers.
Different trade bodies and research organistions said that the tax liability of taxpayers from lower income groups would increase substantially due to the proposed reduction of investment ceiling worth for tax rebate and demanded for withdrawal of the proposal.
According to the Income Tax Ordinance-1984, individual tax payers get income tax rebate at the rate of 15 per cent on investment up to 30 per cent of his or her total income or Tk 1.50 crore, which is lower, in certain sectors.
Under the proposed budget, the rate of tax rebate was also revised ranging from 10 per cent to 15 per cent based on investment amount.
Under the proposal, an individual taxpayer will get 15 per cent rebate on his/her payable income tax for eligible investment if his or her annual income does not exceed Tk 10 lakh.
For annual income from Tk 10 lakh to 30 lakh, the rate of rebate will be 15 per cent on investment of first Tk 2 lakh and 12 per cent for the remaining investment amount.
For annual income above Tk 30 lakh, the rate of tax rebate will be 15 per cent for first Tk 2 lakh, 12 per cent for next Tk 4 lakh and 10 per cent for rest of the investment amount.
Officials of the National Board of Revenue said that finance minister had already approved a summery related to upward revision of investment ceiling worth for tax rebate.
They said that the change would be brought to provide the individual taxpayers with some relief from additional tax-burden created due to sudden reduction of the facility.
Many taxpayers have already calculated their tax liability considering tax rebate at 30 per cent.
Tax-burden will increase if rebate facility is reduced to 20 per cent.
Many companies already deducted advance tax from the salary amount of individual taxpayers as per proposed measures.
Such changes should be applicable on prospective basis so that taxpayers do not face such sudden tax-burden, Institute of Chartered Accountants Bangladesh said in its budget analysis.

News Courtesy: www.newagebd.net