The fresh strategy of the National Board of Revenue (NBR) will help to achieve the big revenue target of Tk 3,30,000 crore in the proposed budget for the 2020-21 fiscal.
In order to increase the revenue in the next fiscal year, the government has adopted several strategies this time including tax rebates on online returns, investment facility for black money, increase in tax at source of garments and 50 percent penalty to prevent money laundering, a NBR official told Bangladesh Post.
He said the proposed budget has been given a chance to bring black money into the mainstream of the economy in the 2020-21 fiscal as a strategy to increase revenue.
Finance Minister AHM Mustafa Kamal proposed the introduction of an incentive for investment of undisclosed or black money to bank deposits, savings certificates, shares, bonds or any other securities on paying 10 percent taxes, he added.
The official mentioned that the proposed national budget for FY 2020-21 has kept a provision of giving a tax rebate of Tk two thousand to all the taxpayers who will file their income tax returns online for the first time.
As a strategy to increase revenue, the corporate tax of non-listed companies has been reduced from 2.5 percent to 32.5 percent, he said adding that as another major source of revenue, Finance Minister AHM Mustafa Kamal has sought to fix the withholding tax at 0.5 percent for all export oriented sectors including the readymade garments, which was 0.25 percent before.
The proposed budget also plans to reduce the tax rate and create 5 lakh taxpayers in the new fiscal year, he added.
Citing revenue earning as much lower in proportion to GDP, the Finance Minister said that revenue collection can be exceeded through automation.
“We can even surpass the target if we can earn 15-16 percent of the GDP,” he added.
Experts say while the huge amount of revenue collection in the outgoing year remains unrealized, the next fiscal target will be an ambitious one as the Covid-19 pandemic has already destroyed the country’s economic activities.
In the first 10 months (July-April) of the current 2019-20 fiscal year, the deficit in the collection of duties and taxes is Tk 62,000 crore.
The National Board of Revenue (NBR) estimates that the deficit could exceed Tk 80,000 crore from the revised target by the end of the fiscal year.
The main target of NBR in the current fiscal year was 3,25,600 crore.
This target has been reduced to Tk 3,00,500 crore due to non-collection of revenue at the desired rate.
Executive director of Policy Research Institute (PRI) Ahsan H Mansur said the target set for revenue collection in the next fiscal year is unrealistic.
The National Board of Revenue (NBR) does not have the capacity to collect so much revenue, he mentioned.
In such a situation, it is not possible to collect so much revenue without radical reforms in the revenue sector, he informed.
This reform cannot be done in one day, he said adding, “The government should take short and long term reforms from the next financial year. Firstly, automation should be ensured.”
This will help reduce corruption and irregularities, he mentioned.
Mansur said tax offices should be spread to the field-level.
In addition, the rule of law must be established to prevent tax evasion, he said adding that the existing laws need to be updated quickly.
