The new law will help in achieving the revenue collection targets
Dr. SM Jahangir Alam :
On modernizing the country’s income tax management, I have written several articles in several local newspapers about bringing all the adult citizens of the country under the scope of return filing within the next five to seven years by introducing the system of filing returns in a completely digital manner.
That is why there was considerable interest in the Income Tax Act 2023.
After the enactment of this law recently, I read the law with great interest. Income Tax Act 2023 has been formulated as the complete income tax law of the country.
It can be said that Income Tax Act 2023 is the first Income Tax Act in the country, because for so long the country’s income tax has been managed according to the Income Tax Ordinance 1984.
This Income Tax Act 2023 has been enacted as a comprehensive law by repealing the Income Tax Ordinance of 1984. Thanks to NBR (National Board of Revenue) and Ministry of Finance for this.
Specific 25 parts and 345 sections are included in this new Income Tax Act. Under each part there are separate chapters, under which are the corresponding clauses.
Apart from this, eight schedules are attached to this new income tax law.
A special feature of this Act is that although there are different sections of the Act and separate chapters under each section, Sections 1 to 345 of the Act are mentioned serially.
As a result, in referring to a particular section of the law, there will not be any problem even if the section is mentioned directly without the relevant section and chapter.
For example, Section 171 of Chapter I of Part IX of this Act deals with the time for filing income tax return.
As a result, if something is said about the time of filing income tax return by only referring to section 171 without mentioning the section, then no one will have any difficulty in understanding it or comparing it with the provisions of the law.
Another special aspect of this law is that this law is written in quite simple language. Generally, the language of the law is quite complex.
From that point of view, the new income tax law has been formulated in very simple and easy language, so many common people will not have much difficulty in understanding, although the law may seem difficult to many due to the complexity of the subject matter.
It is an excellent law for return filing, assessment of income tax, payment of income tax and assessment in the current mode of filing of returns i.e. paper-based returns in manual mode.
But it remains to be seen how helpful it will be in modernizing the income tax administration by making it completely digital.
There are so many ‘conditions’, ‘if’, ‘but’, ‘beneficial commissioner thinks’ and various issues of income tax are stuck in the net of conditions, it is difficult to build a good quality user-friendly software or application by applying those conditions and parameters.
Even if a technology is developed, it will create complexities in working with it, which the authorities will have to struggle to deal with.
The situation may be such that technology or smart income tax management may be blamed, because simple conditions and parameters are prerequisite for good quality user friendly software or application.
The simpler the conditions and parameters, the more advanced and user-friendly the software or application will be.
According to the definition of taxpayer in section 166 of this Act, every citizen of the country has to file income tax return and that is what it should be.
But in this type of killing, many people can live without giving a return. The issue can be easily defined in such a way that every adult citizen can file returns.
However, those whose annual income falls under the taxable age limit prescribed by the government must file an income tax return and pay the prescribed income tax. Every adult must file a return as a citizen of a developing country.
That is why the NBR should work towards bringing all adult citizens of the country under the scope of return filing within the next five years. And this goal will be achieved only when return filing is fully digitized.
Digital return filing does not mean that people will file the return online, and the tax officer will assess the return and issue an assessment letter.
To do so, when the returns of 10-12 crore people of the country are collected, then if it is to be done manually, several lakhs of income tax officers will have to be appointed. For this, the increased cost may not be collected as income tax.
A true digital income tax system is a technology driven system where everything from return filing to reconciliation is done automatically and assessment letter is also issued to the returnee. Tax officer has no role in this entire work.
If returns are filed in this manner, there will be issues in some returns and those will be resolved by the tax officer. Apart from that, some of the returns which will be automatically assessed will be randomly selected and audited every year.
Section 167 of this Act mentions the submission of statement of assets and liabilities along with filing of income tax return. However, it has been clearly stated that assets worth more than 40 lakh rupees as on the last date of the income year have to be filed. But almost all return filers are required to furnish statement of assets as there are other conditions.
The matter can be simplified and directly stated that those who have wealth more than 40 lakh rupees have to submit wealth statement. One of the most important points not included here is that first-time return filers are not required to file any proof of source of funds for showing a certain amount in the statement of assets.
Apart from that, in case of showing assets like bank surplus, bank fixed deposits, savings certificates or wage earners development bonds, it is not right to attach any kind of evidence in favor of the source of money, because these assets have to be purchased with legitimate money.
There is no opportunity to buy these assets with illegal money. If there is, it is the weakness of other government offices. It is not fair if another government office blames someone for the weakness of one government office.
This is all the more important at the moment because many people are unable to file their income tax returns for fear of submitting this wealth statement even if they want to.
The pension of 20 years ago has increased four-five times, the person should not have any documents to prove it. However, the proof of the amount received as pension must be there.
Section 171 of this new Act mentions the time limit for submission of income tax returns. The provision of this section remains as before. That is, the obligation to file income tax return within the time frame fixed by NBR has been kept and was the same earlier.
It would be best to bring some changes in this clause to bring the largest population of the country under income tax returns.
The clause can be framed in such a way that current taxpayers and returnees from whom the government is liable for income tax, must file their returns within the prescribed time frame fixed by the NBR.
But for new filers and for whom no income tax is due to the government or who have already paid more tax to the government due to deduction of tax at source, the provision of filing returns at any time of the year can ensure maximum returns and also government revenue.
It will also be possible to better monitor the achievement of collection targets.
Most importantly, a comprehensive income tax law has now been enacted in the country. First of all, it is not expected that all the problems will be solved in that law. Now, with the necessary changes and modifications based on this law, the law may reach its full extent in the course of time.
Smart Income Tax Management will be introduced in Smart Bangladesh very soon. Then we hope that if this Income Tax Act 2023 can be amended, modified and converted into a digital Income Tax Act, the mentioned issues will be solved well.
(The writer, a Bir Muktijoddha, is former Tax Commissioner and Director-Bangladesh Satellite Co. Ltd.)
