The bank accounts of at least 12 private universities have been frozen for not following the National Board of Revenue's instruction to pay 15 percent income tax.

Until yesterday, the NBR also sent notices to more than 30 private universities, including these 12, directing them to clear their tax payments, said sources at the Association for Private Universities of Bangladesh (APUB).

The letters were sent out after the Appellate Division of the Supreme Court scrapped the High Court verdict that declared illegal the government orders imposing 15 percent tax on private universities, and private medical, dental and engineering colleges.

Sheikh Kabir Hossain, chairman of the APUB, a guild of private university owners, yesterday said the authorities have frozen the bank accounts just ahead of Eid-ul-Fitr.

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15pc income tax on private universities could lead to closures: APUB

"This could result in delay in payment of salaries and festival allowances for staffers, and impact essential services for students ahead of Eid," he told this newspaper.

"I think this move is to embarrass the government."

"This [bank account freezing] could result in delay in payment of salaries and festival allowances for staffers, and impact essential services for students ahead of Eid."

— Sheikh Kabir Hossain Chairman of Association for Private Universities of Bangladesh

According to the APUB, the 12 universities that received letters from their banks about the freezing of accounts are: North South University; American International University Bangladesh; University of Asia Pacific; East West University; Southeast University; Daffodil International University; Independent University; University of Liberal Arts Bangladesh; Notre Dame University Bangladesh; Prime University; World University of Bangladesh; and Shanto-Mariam University of Creative Technology.

On Sunday, the APUB in a statement said this recent tax imposition by the government could lead to the closure of some of the private educational institutions, which would severely limit the access to higher education.

It added that the NBR has begun sending letters to the private universities, demanding tax, even before the full text of the verdict and observations of the apex court are released.

APUB Chairman Kabir said they would respect the verdict of the court.

"But the authorities could have taken the decision once the full text of the verdict is released, so that we could call for a review."

At least, he said, they could have held discussions with the stakeholders of private universities before taking the steps.

In the statement, the APUB demanded that the government intervene immediately for withdrawal of the account suspensions and delaying the tax collection until legal issues are resolved.

It said private universities that rely solely on tuition fees without government grants are already burdened with various taxes, including VAT on salaries, educational materials, and campus construction.

Despite these challenges, they allocate remaining funds from tuition fees towards activities benefiting students and faculties, such as improving education quality, supporting research, and expanding campus facilities.

The Covid-19 pandemic has exacerbated the financial strains on private universities, with decreased enrolment and operational limitations, the statement read.

The additional 15 percent income tax threatens to push them further into the crisis.

APUB said that according to the section 44(7) of the Private University Act 2010, "the general fund of the university shall not be used for any purpose other than the necessary expenses of the university. These universities are "non-profit organisations" in line with the law.

"So, the founders and directors of non-profit private universities cannot take any money from the university's general fund. Similarly, using it for income tax or spending it in any other way is a direct violation of the university act," said the statement.

Furthermore, it said it is important to have discussions with stakeholders to determine the appropriate course of action for private universities and regarding amendments to relevant conflicting sections of the income tax law and private university law. 

A top NBR official yesterday said they imposed the income tax according to income tax law.

About the private university authorities saying it should not be levied as the universities are non-profitable, he said, "That is their opinion. The issues have already been settled in court."

In June 2007, the NBR imposed the 15 percent income tax on private universities, to be effective from July 1 of that year.

Following that, 46 separate petitions were filed by 12 private universities and a student, challenging the government's decision.

The HC on September 5, 2016, then delivered a verdict declaring illegal the tax imposition on private universities and private medical, dental, and engineering colleges.

The HC also scrapped three orders on the imposition of tax issued by the government on these private institutions in 2007 and 2010.