New taxpayers: NBR relaxes rules on spot assessment

The National Board of Revenue (NBR) has broadened and relaxed the rules for bringing new taxpayers under the tax net by assessing their incomes on the spot.

As such, the revenue authority will be able to register new taxpayers through spot assessments from the next fiscal year, expanding its reach from shopping centres or commercial markets for identifying businesses and professionals, who despite having taxable income, still remain outside the net.

At the same time, the NBR offered a scope for businessmen and professionals to show five times the capital of their assessed income if the persons pay tax regularly.

Taxmen will not raise any question regarding the source of capital, according to the Finance Bill 2022 placed by the finance minister for the next fiscal year.

"We are offering the opportunity to encourage people to declare and come into the tax net," said a senior official of the NBR.

The move comes as the tax collector finds that many people still remain out of the tax net even though they have taxable income.

Various stakeholders, including leading chambers, have been demanding the NBR bring more people under its coverage to increase the collection of income tax, which accounts for 32 per cent of the government's total revenue.

In his budget speech, Finance Minister AHM Mustafa Kamal said Bangladesh has a middle-class population of about 4 crorebut most of them are not paying income tax.

He said his ministry is working to increase the number of registered taxpayers to 1 crore from the present 75 lakh, of which just 29 lakh filed returns as of March 2022, according to his budget speech.

The NBR said it will issue guidelines regarding spot assessment.

The tax official said the NBR did not conduct surveys at the field level over the last two years because of the coronavirus pandemic. It gathered secondary data from agencies, such as the Bangladesh Road Transport Authority and Directorate of National Savings, to find new taxpayers.

"We will also give importance to spot assessment to bring more taxpayers under the net from the next fiscal year," he said, adding that the tax authority would detail this in the tax circular to be issued later.

Snehasish Barua, partner of Snehasish Mahmud & Co, a chartered accountancy firm, said the new rule is likely to encourage small businessmen who have not declared their initial capital until now.

If anyone shows annual income of Tk 5 lakh and pays tax of Tk 15,000, he would be able to show Tk 25 lakh as initial capital.

"So, this is an opportunity for small traders who have not declared their capital yet," he said.