NBR may take host of measures to boost collection

The National Board of Revenue (NBR) plans to take a host of measures to augment tax collection in fiscal 2024-25 and meet an increased portion of public expenditure through taxes, finance ministry officials said yesterday.

The measures include keeping the tax-exempt income threshold unchanged at Tk 3.5 lakh, a move that is expected to increase revenue receipts and bring more people under the tax net.

To boost direct tax collection further, the NBR may restore the highest rate to 30 percent, which existed until fiscal 2019-20.

The lifting of that rate drew criticism from many quarters, particularly from the Centre for Policy Dialogue (CPD).

The independent think-tank said reducing the highest tax rate was against the cause of promoting tax justice and proposed that it be restored to the previous level.

Besides, the tax authority is considering the continuation of tax exemptions for the IT and IT Enabled Services (ITES) sector in fiscal 2024-25.

However, entrepreneurs of some sub-sectors of the IT and ITES industry may not see the extension of tax benefits, which will expire on June 30, said officials.

"We are considering rationalisation of tax expenditure, such as exemption and rebates, to increase revenue collection," a senior official said after a meeting with Finance Minister Abul Hassan Mahmood Ali and State Minister of Finance Waseqa Ayesha Khan at the NBR headquarters yesterday.

"We are considering how to strike a fine balance between ensuring revenue collection without affecting businesses or the economy, which is passing through a turbulent period," the official added.

Insiders said the most important IT sectors are likely to get an extension of tax benefits. The IT sector has been enjoying tax breaks for the last 22 years.

Besides, in the coming fiscal year, the NBR may announce tax rates for fiscal 2025-26, shifting away from the present practice of announcing tax rates of the outgoing year at the end of the fiscal year.

Also, the revenue authority is considering curtailing the power of tax officials to assess tax returns filed by taxpayers. They will still be able to audit tax files, the official said.

Apart from that, the revenue authority plans to remove value-added tax (VAT) exemptions on several goods and services to trim the number of items in the exemption list, according to officials.

The tax collector may also cut the list of items on which reduced VAT rates are applied and impose a standard 15 percent VAT to bolster collection.