NBR to verify savings certificate data

The National Board of Revenue (NBR) has taken steps to verify taxpayers' sanchayapatra (savings instruments) investment information in order to prevent the misuse of tax rebate facilities. 

It says the measures will also widen the tax net.

As part of its measures, it has integrated its system with that of the Department of National Savings. 

The national savings department has already provided commissioners of every tax zone with login IDs and passwords.

Policy Research Institute Executive Director Ahsan H Mansur has welcomed the move. 

But he is not sure whether this will increase tax realisation because sanchayapatra investors pay source tax on their income from savings instruments.  

"But if they are outside the tax net, the NBR can use their information to bring them under the tax net. This will widen the tax net and will also create scopes for realising more revenues from their other income sources," he told The Business Standard. 

Sanchayapatra investors pay 5-10% source tax on interest. 

As per the income tax ordinance, a taxpayer will get tax rebates on sanchayapatra investment. He will get a 15% rebate for investing 25% of his annual income in sanchayapatra. 

But there will be no rebate on investment exceeding that figure. For example, a person earning Tk4 lakh a year can get rebates for investing Tk1 lakh. The rebate will amount to Tk15,000.         

The NBR recently wrote to tax zone officials, asking them to verify taxpayers' sanchayapatra investment information.      

Signed by its tax information management and valuation department's Second Secretary Lincoln Roy, the letter said verifying sanchayapatra investment information would ease taking legal steps against investors. 

But it should be ensured that taxpayers and marginal investors are not harassed while the process should be carried out by officials of joint commissioner and additional commissioner ranks, said the letter.  

It asked officials to send different types of information of taxpayers, including their names and tax identification numbers, the amount of sanchayapatra investment, and whether they had submitted tax returns, every 15 days.   

At the pre-budget discussion on 10 March, NBR Chairman Abu Hena Md Rahmatul Muneem said the government was making efforts to widen the tax net and determine the right amount of taxes using all legal tools.      

NBR sources said a large segment of taxpayers submitting tax returns claim tax rebates against sanchayapatra investment every year. 

But their investment information could not be verified in the past as the NBR database was not connected to that of the national savings department, leading to the misuse of tax rebate facilities.  

Requesting anonymity, a senior NBR official said there had been cases of taxpayers providing false investment information. 

He said integrating the NBR system with that of the national savings department was necessary to deal with such frauds.   

"There are other fraudulent activities too. For instance, many taxpayers buy sanchayapatra just before submitting their returns only to avail rebates. They sell sanchayapatra after submitting returns, which is a serious irregularity. It is like deceiving the government," he explained.         

A five-year sanchayapatra yields 11.28% profit at maturity. Up to Tk30 lakh can be invested in a single name, and Tk60 lakh in joint names. There is no upper limit for institutional investors.