Experts question restriction on extending tax return deadline

Tax experts have raised concerns over the provision that restricts the extension of time for submitting tax returns after 30 November, calling it illogical.

"There may be justifiable reasons for not submitting the return within the stipulated time. But we (Income Tax Act) did not keep this time. As a result, the taxpayer will be deprived of getting investment rebate in addition to the additional fine," former National Board of Revenue (NBR) member Md Alamgir Hossain said on Monday in a dialogue organised by Business Initiative Leading Development (BUILD) in Dhaka's Motijheel.

The dialogue, titled "Income Tax Act 2023 – Due Diligence by the Taxpayers," brought together tax experts, senior officers from the NBR tax department, and representatives from the business community. The discussion touched upon various aspects of the new income tax law and its implications for taxpayers.

Under the previous system, taxpayers with justifiable reasons could apply for an extension through the Deputy Commissioner of Taxes for additional time to submit returns. However, the new income tax law eliminates this provision, allowing returns to be submitted at any time of the year. If the return for the relevant income year is submitted after 30 November, a 4% fine is imposed, and taxpayers lose eligibility for investment rebates.

The NBR's decision to abolish the provision has sparked widespread discussion and criticism. Implementation challenges at the field level have been reported, with tax officials grappling with the complexities introduced by the new income tax law.

In the discussion, speakers also addressed the issue of progressive taxation, advocating for higher tax rates for high-income individuals. Currently, the maximum tax rate for individual taxpayers is 25%.

Dhiman Kumar Chowdhury, chairman of Dhaka University's Accounting and Information System Department, proposed a maximum tax rate of 35% for higher-income taxpayers, with a corresponding increase in surcharge.

Supporting the call to increase the surcharge, Md Alamgir Hossain emphasised the importance of addressing income inequality through a higher surcharge on the wealthy. He criticised the current system of collecting withholding tax, arguing that it contributes to increased tax liabilities and hinders companies from benefiting from reduced corporate taxes.

The discussion also highlighted the need to improve trust and confidence between tax officials and taxpayers. Former NBR chairman Dr Muhammad Abdul Mazid urged the NBR to adopt a pro-people approach.

GM Abul Kalam Kaikobad, NBR member and chief guest of the dialogue, addressed concerns about the taxation of multinational tech companies. He suggested a review of the Double Taxation Avoidance Agreement (DTAA) to enable the collection of taxes from entities like Google and Facebook.

Speakers at the event raised issues of taxpayer harassment, attributing it to weaknesses in the NBR's automation. Business Initiative Leading Development CEO Ferdaus Ara Begum presided over the programme, emphasising the importance of addressing these concerns for a fair and efficient tax system.