Published : Thursday, 3 June, 2021 at 12:04 PM, Update: 03.06.2021 12:50:11 PM
To increase revenue collection in the upcoming budget fiscal year 2021-22, the maximum limit of tax-free investment at individual level is set to be reduced.
According to the Ministry of Finance, individual taxpayers can invest up to Tk1.5 crore free of tax in the current fiscal year.
However, in the coming national budget, it is being reduced to Tk1 crore.
Besides, the minimum tax rate for privately owned businesses is also being slashed from 0.50 % to 0.25 %.
At present, tax rebates are available on investments in nine sectors, including savings certificates and donations in 13 sectors.
Investment up to 25% of a taxpayer's total annual income in these sectors is considered concessional.
If anyone invests or donates more than this, s/he will not get rebate for the extra portion.
However, the minimum tax for mobile operators, cigarettes, bidis, chewable tobacco, smokeless tobacco including all other tobacco companies will remain unchanged.
The sectors in which tax rebates are available are: investment in savings certificates, shares of companies listed on stock exchanges, purchase of stocks, mutual funds or debentures, life insurance premiums, contributions to government officials' provident funds or provident funds, employers and employees in recognized future funds.
In addition to this, in the next budget, interest-free income on loan of cooperative society may be given tax-free facility.
In cases where bank transfer is mandatory under the Income Tax Ordinance, mobile financial services may be added along with bank transfers.
Meanwhile, a minimum tax is levied on annual transactions every year. The budget for the next financial year, income from microloans of Micro-Credit Regulatory Authority-registered institutions may also be given tax-free facility.
For this, the sixth schedule of the Income Tax Ordinance is being amended through a money bill.
Currently, NGOs registered with the NGO Bureau are getting this facility.
However, all income other than interest income from microcredit is taxable.
Whatever the profit or loss of the business, they will have to pay this tax. Business organizations have been demanding the repeal of the minimum tax, calling it contrary to the principles of the Income Tax Ordinance.
At present, businesses that sell products worth Tk3 crore or more annually have a minimum income tax of 0.50%.
However, in the case of industries engaged in the production of goods, the minimum tax rate for the first three years after the commencement of production is 0.10%.
Apart from this, the minimum tax rate is 2% on turnover irrespective of the profit and loss of mobile operators and 1% in the case of tobacco manufacturing companies.