DCCI recommends raising tax-free income limit to Tk5 lakh

The Dhaka Chamber of Commerce and Industry (DCCI) has recommended raising the tax-free income limit to Tk5 lakh from Tk3 lakh in the next fiscal year to protect low-income people from the pressure of inflation.

At the same time, the trade body has demanded the VAT-free business turnover limit be increased to Tk4 crore from Tk3 crore.

DCCI President Sameer Sattar placed the proposals at a pre-budget discussion organised by the National Board of Revenue (NBR) at its auditorium on Sunday.

Dhaka chamber leaders as well as members of the NBR spoke in the discussion chaired by NBR Chairman Abu Hena Md Rahmatul Muneem.

The DCCI president also proposed to halve the existing tax rate of 20% on companies' income from bank interest. He demanded a further 2.5% reduction in corporate tax for non-listed companies in the next fiscal.

He said that the cottage, micro and small industries are being discouraged from depositing due to a higher tax on bank interest. But the savings from the small entrepreneurs are important to tackle the ongoing liquidity crisis.

Placing a demand to increase vat free turnover limit he said that, the net profit has reduced drastically in recent time due to increased cost of production and supply of goods and services.

Raising the vat free threshold of turnover will help ensure financial protection for the marginalised business, he said.

He also proposed to add another slab of income to set the highest at 30% which is now 25%.

Sattar said the tax waiver would protect the quality of life of low-income people as the cost of living increased due to inflation. At the same time, if the tax rate of the rich is higher, the government's revenue will ultimately increase.

The president said that many start-ups have failed to achieve any growth in their business due to the adverse impacts of Covid-19. He proposed to extend the growth period to 10 years from existing five years and increase various benefits including tax exemption.

The Dhaka chamber also recommended expanding the scope of income tax at the individual level to avoid possible losses in meeting various demands including increasing the tax-free income limit, reducing the VAT rate.

He said only 3 million TIN holders file tax returns and the tax-GDP ratio is very low. He suggested identifying seven to eight lakh new taxpayers every year on an average for the next 10 years.

He also proposed automation in vat and tax systems to reduce hassle and increase revenue generation.

The Dhaka chamber demanded reforms in various parts of the tax policy, including reducing the penalty for tax evasion from Tk50 lakh, reducing the period of freezing bank accounts from 180 days to 60 days. DCCI also proposed rapid implementation of the National Single Window to ease the business.

NBR Chairman Abu Hena agreed to accept the reasonable proposals of the businessmen in the event and asked support from business leaders to ensure further reforms.

He said that various steps are being taken to simplify the process of conducting business in the country, but NBR will always have a strict stance on compliance issues.

He expressed the opinion that the activities of 'National Single Window' will be completed by the end of 2025.