Income tax act lacks pro-people attitude

There should have been more consultation with stakeholders before the finalisation of the recently-passed Income Tax Act 2023 as there is a scope for taxpayers to fall prey to harassment during payment of tax, experts said.

The act was passed in the national parliament on June 15 this year after being taken from the cabinet committee on June 8, leaving the standing committee of the parliament with inadequate time to discuss the act.

For instance, no provision was included for the extension of tax return submissions after the expiration of the set timeframe. There is no option for submitting applications to the tax administration, either from individual taxpayers or corporations. Only the tax administration can extend the tax return submission deadline under certain conditions.

If the date is not extended for any reason, taxpayers will face a big challenge, experts added.

Another concern is that many people are not aware of the act although it is closely related to their income and life. Even international communities are not aware of this act, which may affect the inflow of foreign direct investment.

The income tax act is also missing principles of justice as there is a possibility of collecting tax from individuals who are not supposed to be paying taxes, said Alamgir Hossain, former member of the National Board of Revenue (NBR), as a panel discussant at a seminar titled "Income Tax Act 2023 - Due Diligence by the Taxpayers".

Business Initiative Leading Development (BUILD) organised the seminar at its office in the capital's Motijheel, where experts, former and current senior officials of the NBR, journalists and chartered accountants participated.

Since it is a new act, the NBR should have played a proactive role before passing the law so it could be a more pro-people policy, Alamgir added.

He suggested taking initiatives to disseminate information about the act to raise awareness.

The act was passed mainly to expand the tax net and to increase the tax-GDP ratio from around 8.9 percent to 17.4 percent by 2031 and to 21.9 percent by 2041.

The government will not only collect tax from people in cities, but also from other areas, where many are unaware that the act has been passed and what its implications are.

Muhammad Abdul Mazid, former NBR chairman, echoed Alamgir's sentiments, saying the act was not well-discussed at the grassroots level.

Dhiman Kumar Chowdhury, chairman of the department of accounting and information systems at the University of Dhaka, said the current structure of the NBR needed to be reformed and that independent intellectuals should be incorporated into the board.

Hasan Mahmood, partner at MJ Abedin and Co, said there was some discrimination in the payment of tax on pension funds and other such savings measures.

GM Abul Kalam Kaikobad, member (Tax Audit Intelligence and Investigation) of the NBR, said tax files would not be investigated and audited for silly reasons.

Before the current act was passed, tax rules were applied under the Income Tax Ordinance 1984, which was made time befitting almost every year.

Snehasish Barua, partner at Snehasish Mahmud & Co, and Md. Nooruzzaman, senior research associate at BUILD, presented two separate keynotes at the event. Ferdaus Ara Begum, chief executive officer of BUILD, also spoke.