Income Tax Law 2023 comes into effect

The Income Tax Law 2023 came into effect today, a gazette notification issued by the Parliament Secretariat said.

The law replaces the Income Tax Ordinance 1984, bringing curbs to the discretionary powers of the income tax officer.

The Income Tax Bill 2023 was passed in parliament on 18 June. 

Sources said the Finance Bill 2023 is scheduled to be passed on 25 June and will come into effect from next month.

According to the law, the specific tax rate will rise to Tk6,000 for each square metre from the proposed Tk 5,000 in buying more than 200 square metres of building spaces or apartments in posh areas such as Gulshan Model Town, Banani, Baridhara, Motijheel commercial area, and Dilkusha. 

In the municipalities in district towns, the specific tax amount will go up to Tk800 from the proposed Tk700.   

The new law also includes a condition that the National Board of Revenue (NBR) through a gazette notification will be able to amend any provision of the law except the one related to tax imposition or increase in the middle of the year. 

The new law also brings some major changes based on the recommendations of the Parliamentary Standing Committee on the Ministry of Finance. 

For instance, saving certificates will be counted as securities for taxpayers to get tax rebates and a 5% source tax will be deducted from its interest payment like other government securities, which will be treated as minimum tax. In the last fiscal, the source tax on savings certificates was 10%.

A company with a turnover of less than Tk3 crore will not have to submit their financial statement certified by a chartered accountant along with the return.

But a company with an annual turnover of over Tk3 crore will have to submit a financial statement.

Individual taxpayers are exempted from mandatory submission of wealth statements for foreign travel, except for treatment and performing religious activities such as hajj, according to the law.

As per the new law, company employees' incentive allowance will be counted as a prerequisite, which will be subject to employees' taxable income.

An individual with over Tk10 lakh in fixed deposit receipt (FDR) will have to file income tax returns and submit proof of return submission to the bank with which the FDR was opened.