New income tax act with many changes to be introduced

The Income Tax Ordinance, which has been in place since 1984, is going be replaced by the new Income Tax Act which is likely to be tabled in Parliament next week.

If passed by Parliament, the new act will come into force in July.

The new act said about reducing the discretionary power of tax officials and increasing the scope of tax with some changes to ensure tax compliance. The proposed act has also been simplified and aligned with international best practices. In addition, there are proposals to increase the tax rate in some cases, said sources at the National Board of Revenue.

"Instead of 'Income-tax Ordinance, 1984' made in English language, the Income-tax Act, 2023 has been made in Bengali language by making it more contemporary and modern. The contents of the provisions have been converted into simple Bengali," said Finance Minister AHM Mustafa Kamal at the budget speech on Thursday.

"In addition to reducing the discretionary power of officials as much as possible, the proposed law has included accounting methods, depreciation and amortisation rules, provisions related to capital gains, income from intangible assets, transfer pricing, alternative dispute resolution provisions, etc," he added.

At present, 29 types of documents are required to submit while filing a company's tax return. It is being reduced to 12, he said further.

Snehasish Barua, a tax expert who was a member of the review committee of the draft, told The Business Standard, "Several sections have been added to make the proposed law simple and business friendly. It has also given special importance to ensuring compliance."

Currently, there is a requirement to submit Proof of Submission of Tax Return for availing 38 types of services. The new law adds this condition for availing six more services. Besides, it also proposes to double the tax on the sale of land in Dhaka city.