Opinion: Tax-free Income Limit should be Tk. 5 lakh

Md. Zillur Rahaman :
The government presented Tk. 6.78 lakh crore National Budget on June 9, 2022 in the National Parliament targeting tax revenue earnings of Tk. 4.33 lakh crore. For the past two years, taxpayers have been expecting an increase in the tax-free income limit for individuals, but that hope has been dashed out. Earlier, after a long five years in the 2015-16 financial year, the tax-free income limit was increased from Tk. 2.5 lakh to Tk. 3 lakh in the 2020-2021 financial year.
As in the current 2021-22 financial year, in the proposed budget for the next 2022-23 financial year, the personal income limit has been kept fixed tax-free upto Tk 3 lakh. Besides, according to the proposed budget, those earning more than Tk 3 lakh will get 5 per cent for next one lakh, 10 per cent for next 3 lakh, 15 per cent for next 4 lakh, 20 per cent for next five lakh and 25 per cent for more i.e., you have to pay income tax at the rate of aforementioned percentage. In addition, the tax-free income limit for women and 65-year-old taxpayers has been increased from Tk 3 lakh to Tk 3.5 lakh, for disabled taxpayers has been increased to Tk 4.5 lakh and for gazetted war-wounded freedom fighters has been increased to Tk 4.25 lakh. Interestingly, in the current fiscal year 2021-22, the taxpayers had the opportunity to invest 25 percent of the total income, but in the proposed budget for the next fiscal year 2022-23, it has been proposed 20 per cent. In turn, this will increase the income tax of the individual and it is a kind of evasion with the taxpayers!
The tax-free income limit has not increased one side, but on the other hand, in order to get some services from the government, you have to show proof of filing annual income tax return. For example, if someone goes to the bank to raise interest income, then the source tax is deducted. For so many days, if the tax identification number (TIN) certificate was shown, the interest income would be taxed at 10 percent at source. To get this facility from now on, you have to show the proof of return submission to the bank. It has been proposed to deduct withholding tax at the rate of 50 percent more in the budget from the contractor or supplier in case of failure to submit the return submission certificate instead of the TIN certificate. In the new budget, it has been made mandatory to file such income tax returns in case of receiving 38 types of services. However, the matter has been turned a little. Provision has been made to impose a fine of upto Tk. 10 lakhs to the regulators. Among the services required to submit returns are to apply for a loan of more than Tk. 5 lakhs, purchase of savings certificates of more than Tk. 5 lakhs, to be a director or shareholder of a company, to be a member of a business association, to attend English medium school for children or pets, weapons licensed etc. Besides, if you are a candidate in Upazila, Municipality, Zila Parishad, City Corporation and National elections, you have to show proof of return submission. Until now, it was mandatory to file returns only to avail services in these sectors. But this time the service provider has been given the responsibility to look at the return submission form.
Over the past two years, the impact of COVID-19 has taken its toll on people’s livelihoods and made it very difficult for people to pay income tax. In the face of rising commodity prices, people’s sufferings know no bounds. The rise in fuel prices since the start of the Ukraine war has added a new dimension. Rising transport and production costs have created opportunities for price increases in stages. There are no essential commodities in the market, starting from rice, pulses, edible oil, cooking gas, onions, vegetables, the prices of which are not skyrocketing. There is no denying that our standard of living has improved and our per capita income has increased, but uncontrolled rise in commodity prices is not making consumers happy. Consumers are suffering, especially the low-income people, who end up buying the least amount of food to make a living. They no longer have the money to spend on health, medical care and education. The long line of consumers in front of the government’s TCB car tells how helpless they are to the price of goods!
Inflation has been above 6 percent for the past three months. This means that the cost of living has increased more than before. Individual taxpayers who have an annual income of just over Tk. 3 lakh, their expenses have increased. But next year they will have to pay the same taxes as before, which will be an additional burden for many. However, if the tax-free income limit is not increased, some people are included in the tax net every year. On the other hand, if the tax-free income limit is increased, some taxpayers will get out of the tax net. Analyzing the above issues, we strongly urge the government to increase the tax free income limit from Tk 3 lakh to Tk 5 lakh in the national budget.
 
(The writer is a Banker).