NBR should look into tax evasion in the informal sector
Dr. SM Jahangir, Alam :
68 percent of people in the country do not pay income tax despite earning taxable income. That is, two-thirds of people do not pay tax even though they are eligible to pay tax. On the other hand, 2 lakh 13 thousand companies are registered in joint stock companies, but only 45 thousand companies have filed returns. In the country, the government is losing about 84 thousand crores of revenue annually from the informal sector. CPD believes that the trend of tax evasion is also increasing as the corporate tax rate is high. This is what CPD is all about. Last year 2022, 24 lakh people paid income tax. The fact that 24 lakh people pay income tax out of a population of 17 crores is very inconsistent. As of February 2022, the number of motor vehicles in the country is 56 lakh 61 thousand 418. There is no account of the number of multi-storied houses. As of the last financial year (2021-22), the total revenue GDP stood at 9.78 percent. Among them, tax GDP is 8.70 percent, non-tax 1.1.8 per cent.
It should be noted here that the NBR (National Board of Revenue) direct reduction. The direct tax rate was 34.7 percent in the fiscal year 2015-16 which decreased to 30.21 percent in the last fiscal year 2021-22. Tax evasion is a common issue in Bangladesh. And in the developed world paying taxes is considered a matter of pride. According to the information of CPD, according to the calculation of 2021, about 84 thousand crore rupees are being evaded in the year, it is said that 2 lakh 13 thousand companies are registered in the joint stock companies of the country, but only 45 thousand companies have filed returns.
Again, 68 percent of the people who can pay taxes in the country are not paying taxes. According to the 2021 calculations, the government is losing revenue of about 84 thousand crore rupees from this huge informal sector. Earlier the informal sector was 36 percent, now it is 30 percent. “As our economy has grown, the institutional economy has not grown. As a result, a large portion of this sector remains out of our economy.
As a result, the amount of tax loss is also increasing. In such a situation, the tax-GDP ratio falls to 8 percent, it is said, “According to the IMF and World Bank standards, an emerging economy country should have a tax-GDP rate of 12 to 15 percent.” If we want to improve our tax collection situation, we are lagging behind by about 2 lakh 50 thousand crore rupees. Due to the high corporate tax rate, the trend of tax evasion is also increasing. Our corporate tax rate is still the highest in South Asia. But revenue collection compared to GDP is lowest in Asia and even South Asia after Afghanistan.
That is, it is true that the country is paying high tax rates, but we are not able to enjoy its benefits. Again, even if the tax is reduced, the revenue will increase, that too is not guaranteed. The difference between the tax GDP ratio and the tax rate in South Asia is the highest in Bangladesh. In Bangladesh, only one percent of the total population of the country pays income tax.
The number of TIN number holders in the country is more than 4 million and is increasing day by day. Why is the amount of income tax deposit not increasing in that proportion? Between 22 and 24 lakh taxpayers filed income tax returns – data from the National Board of Revenue. But having a TIN number means being eligible to pay tax or not, a statement of his annual income and expenditure, i.e. income tax return, has to be submitted to the Board of Revenue at the end of the financial year.
Filing of income tax return is mandatory for those who have Tax Identification Number or TIN as per Bangladesh law. However, filing the return does not mean that the income tax has to be paid. If one’s But remember that even if you think of avoiding trouble now, you may have to get into more trouble later. Failure to file the income tax return within the stipulated time as per Section 75 of Income Tax Ordinance 1984 shall be liable to penalty as per Section 124 of Income Tax Ordinance, 50 percent additional simple interest as per Section 73 and late interest as per Section 73A.
In Bangladesh, the revenue target set in the national budget every year is not achieved in any year. The fiscal deficit has become a minor issue. Fiscal deficit means budget failure. which has to be loaned. Till February of the current financial year, the deficit in revenue collection of the National Board of Revenue (NBR) is Tk 22 thousand 978 crore. Among these, the biggest deficit is at the level of import and export (customs). The amount of this deficit is 13 thousand 814 crores. Then there is ¯muske (VAT) at the local level. The deficit in this sector is 5 thousand 738 crores. The lowest deficit is Tk 3,425 crore from income tax and travel.
NBR sources have given this information. For the current fiscal year 2022-23, the target of NBR revenue collection has been set at 3 lakh 70 thousand crores, last financial year which was 3 lakh 30 thousand crores. In the current financial year, there is a target of collecting 1 lakh 11 thousand taka from import and export, 1 lakh 36 thousand 900 taka at local level and 1 lakh 22 thousand 100 crore taka from income tax and travel. At the end of the financial year, it will be seen that the amount of deficit has become quite large. Not paying taxes, evasion cannot be done by any conscious citizen. As a conscious citizen everyone should be responsible. How do we see that 68 percent of people who have the ability to pay taxes do not pay taxes? Can we call them conscious and responsible? However, NBR should play a stronger role in this matter, if necessary bring them under the law. NBR has to play a stronger role.
(Author: Veer Muktijoddha. Former Tax Commissioner and Director-Bangladesh Satellite Co., Ltd.)
