Waiver of source tax demanded to ease essentials price pressure

To ease price pressure on consumers amid a period of high inflation, the Institute of Cost and Management Accountants of Bangladesh (ICMAB) has proposed withdrawing the existing 2% source tax levied during the supply stage of daily essential agricultural products including rice, wheat, potatoes and onions.

At a pre-budget discussion yesterday, the ICMAB said if tax is imposed on daily essentials, it would have an adverse effect on the purchasing power of the common people.

During the discussion organised by the National Board of Revenue (NBR) at the NBR Bhaban in the capital's Agargaon, the accounting experts also said agricultural products are mainly purchased from small traders and marginal farmers, making tax deductions at source virtually impossible.

Abdur Rahman Khan, president of ICMAB, said, "Taking into account the complexity of the process and purchasing power, all types of agricultural products and daily necessities should be kept out of the scope of source tax deduction."

For the past one year, the prices of daily necessities in the country have been rising rapidly, increasing the cost of living.

At present, 2% source tax is also deducted at the supply stage on all types of daily commodities including garlic, pulse, turmeric, chilli, maize, flour, salt, edible oil, sugar and fruits.

Besides, the ICMAB also proposed withdrawing the existing 5% source tax on imported life-saving drugs.

It also proposed exempting individuals who have a Tax Identification Number (TIN) but no taxable income from the obligation of filing annual tax returns.

Currently, it is mandatory for all TIN holders to submit tax returns. However, out of the total 86 lakh TIN holders in the country, only 30 lakh filed income tax returns last year.

ICMAB president Abdur Rahman Khan said, "Many do not have a taxable income, but have to submit returns. The government does not get any money from this, but it is a hassle for the individuals."

Besides, the Institute of Chartered Secretaries of Bangladesh (ICSB) proposed to increase the limit of tax-free income from the existing Tk3.50 lakh to Tk7 lakh.

Referring to reforms, NBR Chairman Abu Hena Md Rahmatul Muneem said, "Introducing a lot of changes suddenly can lead to resistance. There is also the matter of developing our capacity. But there is no alternative to automation."

Representatives of other organisations of accountants and tax professionals also presented their proposals at the meeting.

Is wrong policy responsible for money-laundering?

In the afternoon on the same day, various organisations of construction sector entrepreneurs took part in the discussion and highlighted the existing crisis in the sector. 

Participating in the discussion, SK Masadul Alam Masud, a leader of the Bangladesh Steel Mills Association, blamed NBR's policy for the growing number of false declarations through under-invoicing.

He said, "If the raw material for rod is imported at an increased price, additional duty tax has to be paid. Unscrupulous importers import at $400 per tonne but show $200 to avoid higher taxes. The remaining $200 is sent through hundi or other means. If there was a fixed tax, importers' would be encouraged to show actual value, while they could also get the goods cheaper."

He also said the foreign reserve crisis had made imports impossible, while highlighting the amount of demurrage he had to pay at the port due to the arbitrary power exercised by customs officials at the import stage. 

In the meeting, leaders of the construction sector, including cement and steel, demanded a reduction in import duty during the current period. 

Bangladesh Cement Manufacturers Association President Md Alamgir Kabir and Vice President Md Shahidullah were present during the meeting.