The National Board of Revenue (NBR) has introduced a new rule exempting taxpayers, both corporate and individual, from scrutiny of the taxmen provided they (taxpayers) show in their returns, at least, 20 per cent higher income than that of the previous year.
The board made the rule effective from July 1, especially for the tax returns filed under universal self-assessment method, to remove fear among the taxpayers relating to use of discretionary power of the taxmen.
The revenue board, introduced the rule for the first time, to encourage income taxpayers file their tax returns without being panicked by taxmen's scrutiny.
For corporate taxpayers, the new income tax rule restricts transfer of initial capital within five years. If any taxpayer transfers the capital within the stipulated time, the amount of the particular year thus transferred will be considered as income from other sources of the taxpayers.
Under the existing rule, a taxpayer can stay away from audit of the taxmen by showing an initial capital four times higher than the income shown in the tax files in the previous year.
The new rule empowered the taxmen to audit four categories of tax files despite showing 20 per cent higher income in the returns, according to the rules incorporated in the income tax law for 2011-12 fiscal year.
Taxmen will audit the tax returns if any taxpayer shows tax exempted income in his or her tax file which he or she is not entitled to enjoy under the tax law.
Taxpayers will also have to face the audit procedures if they show wealth as gifts in the tax returns. Universal self-assessment tax files will be audited if taxpayers show loans in the files taken through non-banking channel.
Taxmen will also audit tax files if they see mismatch between increase of wealth and family expenditure in the tax file.
"We have tagged the conditions to check abuse of the new opportunity for universal taxpayers," said a senior tax official.
There is possibility of abusing the facilities by showing large amount of income in the tax files from the sectors that enjoy tax-exemption like poultry, fisheries and others, he said.
The NBR in 2008-09 introduced the new rules of universal self-assessment to minimise discretionary power of the taxmen.
Taxmen are not empowered to scrutinise the tax files filed under the method without having any specific ground. Field offices have to obtain prior permission of the top tax officials to check or audit the tax files.
A C Nath, FCA and former president of ICAB (The Institute of Chartered Accountants of Bangladesh), welcomed the new rule saying that it will help the taxpayers file tax returns without hassle.
Usually, a number of taxpayers have to pay higher tax after auditing and assessment, he said.
They will have to bear additional cost in tribunal and court to resolve disputes on fixation of tax, he added.
Revenues worth billions of taka of the government have remained stuck up with the pending cases, he added.
Officials said the universal self-assessment method has gained huge popularity among the taxpayers. Around 90 per cent of the income taxpayers file tax returns under the method.
The board made the rule effective from July 1, especially for the tax returns filed under universal self-assessment method, to remove fear among the taxpayers relating to use of discretionary power of the taxmen.
The revenue board, introduced the rule for the first time, to encourage income taxpayers file their tax returns without being panicked by taxmen's scrutiny.
For corporate taxpayers, the new income tax rule restricts transfer of initial capital within five years. If any taxpayer transfers the capital within the stipulated time, the amount of the particular year thus transferred will be considered as income from other sources of the taxpayers.
Under the existing rule, a taxpayer can stay away from audit of the taxmen by showing an initial capital four times higher than the income shown in the tax files in the previous year.
The new rule empowered the taxmen to audit four categories of tax files despite showing 20 per cent higher income in the returns, according to the rules incorporated in the income tax law for 2011-12 fiscal year.
Taxmen will audit the tax returns if any taxpayer shows tax exempted income in his or her tax file which he or she is not entitled to enjoy under the tax law.
Taxpayers will also have to face the audit procedures if they show wealth as gifts in the tax returns. Universal self-assessment tax files will be audited if taxpayers show loans in the files taken through non-banking channel.
Taxmen will also audit tax files if they see mismatch between increase of wealth and family expenditure in the tax file.
"We have tagged the conditions to check abuse of the new opportunity for universal taxpayers," said a senior tax official.
There is possibility of abusing the facilities by showing large amount of income in the tax files from the sectors that enjoy tax-exemption like poultry, fisheries and others, he said.
The NBR in 2008-09 introduced the new rules of universal self-assessment to minimise discretionary power of the taxmen.
Taxmen are not empowered to scrutinise the tax files filed under the method without having any specific ground. Field offices have to obtain prior permission of the top tax officials to check or audit the tax files.
A C Nath, FCA and former president of ICAB (The Institute of Chartered Accountants of Bangladesh), welcomed the new rule saying that it will help the taxpayers file tax returns without hassle.
Usually, a number of taxpayers have to pay higher tax after auditing and assessment, he said.
They will have to bear additional cost in tribunal and court to resolve disputes on fixation of tax, he added.
Revenues worth billions of taka of the government have remained stuck up with the pending cases, he added.
Officials said the universal self-assessment method has gained huge popularity among the taxpayers. Around 90 per cent of the income taxpayers file tax returns under the method.
Source: The Financial Express
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