Bangladesh revenue collection shortfall swells to Tk 2,968cr in July-Feb

Shortfall in revenue collection target by the National Board of Revenue swelled to Tk 2,968 crore in the first eight months of the current fiscal year 2014-2015 mainly due to political unrest-hit sluggish economic activities in the country, officials of the NBR said.

They said that the ongoing continuous non-stop blockade and frequent hartals since early January enforced by NBP-led opposition parties severely affected revenue collection as domestic consumption fell drastically and overall economic activities slowed down in the period.

According to official statistics of the revenue board published on Monday, taxmen managed to collect Tk 79,978 crore in July-February of the current financial year against the collection target of Tk 82,946 crore for the period.

Despite better performance in collection of customs duty, revenue earnings witnessed a huge shortfall in the period mainly due to gloomy performance by the value-added tax and income tax wings of the revenue board as both the wings faced significant shortfall in the period.

In July-February, VAT collection alone lagged behind the target by Tk 2,940 crore as the receipts stood at Tk 30,734 crore against the target of Tk 33,675 crore for the period, the data showed.

VAT collection which mostly depends on domestic consumption of products and services, and economic activities including production and investment were severely affected in the period, causing such a significant shortfall in collection in the period, the officials said.

The situation will worsen if the political turmoil continues, they warned.

Income tax collection also fell short by Tk 1,063 crore in the period on lower collection of corporate tax and tax at sources on sluggish economic activities.

Collection in customs duties, however, succeeded its target by around Tk 1,035 crore.

Taxmen managed to collect Tk 25,466 crore in income tax including travel tax and other direct taxes in July-February period of the fiscal year against the collection target of Tk 26,529 crore.

Revenue board collected Tk 23,777 crore in customs duties in the period against the target of Tk 22,742 crore.

The officials said that the revenue board would have to collect Tk 69,742 crore or 46.58 per cent of total target of Tk 1,49,720 crore for the entire fiscal year in the remaining four months to achieve the goal.

They said that achieving the revenue collection target would be totally impossible task in the prevailing economic and political situation in the country.

Under the circumstances, like previous year, the finance ministry may curtail the target by a significant amount after getting proposal from the revenue board, they said.

According to the data, revenue collection grew by 16.42 per cent in July-February months of the year compared with the same months of the last fiscal year when the NBR had collected Tk 68,698 crore in income tax, customs duties and VAT.

Revenue collection growth in the period also remained much behind the target for the entire fiscal year which was set at 24 per cent.

According to the data, income tax, customs duty and VAT collection grew by 17.76 per cent, 12.91 per cent and 17.32 per cent respectively in the months compared with the collection of the same months of last fiscal year. (Source: New Age, March 31, 2015)

Bangladesh: Tax-free limit of stock capital gain to be raised to Tk 20 lakh

Dhaka, June 27 (New Age): The government is likely to increase the limit of tax-free capital gains from stock investment for individual investors to Tk 20 lakh from the proposed Tk 10 lakh amid protest from the investors, officials of the National Board of Revenue said.

The government may also reduce the proposed tax on realised capital gains and increase the slabs of gains bowing down the tremendous pressure from the stock market players, they said.

In the last moment, the revenue officials on Thursday prepared an amendment proposal of the Finance Bill-2014 following the instruction from the finance minister Abul Maal Abdul Muhith.

According to the proposal, individual investors will have to pay tax at the rate of 2 per cent on capital gains from Tk 20 lakh to Tk 50 lakh in the coming fiscal year of 2014-15.

Tax will be imposed at the rate of 3 per cent on capital gains above Tk 50 lakh, officials said.

Earlier on June 5, Muhith proposed in the finance bill to impose tax on capital gains for the first time in the country.

The proposed tax rate was 3 per cent on capital gains above Tk 10 lakh but less than 20 lakh, 5 per cent for above Tk 20 lakh.

Tax-free limit of capital gains was proposed at Tk 10 lakh.

Earlier this week, finance minister in a meeting with the NBR officials organised for finanlising amendment of the finance bill categorically instructed for not to change the proposed tax rate and tax-free limit.

By this time, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange mounted pressure on the NBR and lobbied with the government high-ups to withdraw the proposed tax.

The country’s two bourses also reacted sharply to the ups and downs in the capital market.

Experts also criticised the decision saying that though the imposition of tax on higher capital gain was right but it was not the right time to do so and the decision would put a negative impact on the already volatile market.

Muhith, returning from Jeddah on Thursday morning, asked the revenue officials for changing the tax rate and tax-free threshold, officials said.

By the evening, the amendment was sent to the law ministry for vetting, they said.

The proposed amendment is final and it will not be changed unless the prime minister instructs otherwise, officials said.

The NBR also finalised an upward revision of the proposed tax exemption limit on dividend income increasing the amount to Tk 20,000 from the proposed Tk 15,000.

Currently, stock investors enjoy tax exemption on dividend up to Tk 10,000.

NBR officials said that the government imposed tax on realised gains to boost revenue collection from the sector.

The initiative was just and fair taking the amount of realised gains into consideration.

‘An investor who has high capital gains from the capital market should pay tax and the proposed slab at Tk 10 lakh capital gains in a year for imposing tax was reasonable,’ an official said.

Small investors who are dominating in the market would not be affected by the decision, he said.

Finance minister was also convinced and decided to not to change the proposal till Sunday, but he has to bow down to the pressure from beneficiaries to review the proposal, he said.

There are approximately 29.79 lakh beneficiary owner’s accounts in the country.

The revenue board expected to collect nearly Tk 200 crore from tax on capital gains. Now the amount will be significantly low.