Condition of salary payment thru bank transfer relaxed for taxpayers

The revenue board has clarified that the requirement in the new tax law of paying staff salaries only though bank transfers will not apply to employers in filing returns this year.

However, in terms of calculating income or tax free income limit will be effective as per the new income tax law.

According to the previous fiscal's income tax ordinance provisions, any company paying more than Tk20,000 per month to an employee, during the calculation of "income from business", was required to do so through bank transfer. 

Otherwise it was treated as non-allowable and tax was levied on it.

According to the clarification, in case of last year's income calculation in return submission, even if the monthly salary payment of less than Tk20,000 is paid in cash, it will be treated as allowable expenditure, or not taxed.

The National Board of Revenue (NBR) issued a clarification in this regard yesterday. 

The clarification was issued because there has been confusion among taxpayers and even field level tax offices regarding the massive changes brought in new income tax law passed last June.

Other benefits given or curtailed in the new law will be effective while filing returns this year, the clarification said.

For instance, the new tax free income limit of Tk3.5 lakh will be applicable from this year.