Over two-thirds of TIN holders didn't submit tax returns by 30 Nov

Only a third of eligible taxpayers filed their returns by the 30 November deadline, reveals the National Board of Revenue (NBR) data.

Despite the deadline, only 27.87 lakh out of around 90 lakh Tax Identification Number (TIN) holders in the country submitted their returns, representing a slight 8% increase from last year. While this rise is encouraging, it leaves a significant portion of taxpayers non-compliant.

According to NBR sources, around 36 lakh tax returns were submitted last fiscal year (till June). And 25.77 lakh returns were submitted by the deadline of 30 November last year.

Despite provisions in the new Income Tax Act requiring nearly all TIN holders to file returns, many remain outstanding. Experts point to several factors, including ongoing political unrest, confusion over the new law's complexities, and an anticipated last-minute deadline extension, as contributing to the low submission rate.

The NBR has stepped in to address the low tax return submission rate, extending deadlines for both individual and company taxpayers. Individuals now have until January 31st, 2024, to file, while companies have until February 28th. Taxpayers can submit their returns within the extended periods without facing penalties or interest and still claim their investment rebate.

Under the new tax act, missing the return submission deadline comes with consequences. Taxpayers will be subject to a 4% interest charge on their income tax and also forfeit their investment rebate.

Bazlul Kabir Bhuiyan, former commissioner of taxes told The Business Standard, "With nearly 90 lakh TIN holders, receiving fewer than 28 lakh tax return submissions falls below expectations, especially now that the new law requires almost everyone to file." 

Stating that at least 45 lakh returns should have been filed this year, he said, "Confusion surrounding the new tax act, ongoing political unrest, and a widespread expectation of a last-minute deadline extension have all contributed to the lower-than-expected tax return filings."

He, however, welcomed the NBR's decision of time extension.

However, experts caution against a simplistic comparison to the total number of TIN holders. Many factors contribute to the lower return rate.

Firstly, the figure includes deceased individuals and inactive TINs. Secondly, not everyone with a TIN generates taxable income. Those who hold TINs for land transactions, small savings, or bank loans without taxable income are not expected to file returns, they said.

"Unlike many countries where TIN holders with no income are exempt from filing, Bangladesh requires returns even in those cases," said Bazlul Kabir Bhuiyan, adding: "But the good news is, filing with zero income won't incur any tax charges."

In a significant shift, the new tax act introduced a provision for suspending the TINs of certain categories of TIN holders, including those who have passed away or have non-taxable income for three consecutive years.

According to NBR sources, the number of such TIN holders is around 10 lakh.