JS passed finance bill Big discounts for rich

Staff Correspondent: The money bill has passed yesterday, reducing the income tax rate for the rich. The environment surcharge on company cars for the wealthy is waived to ‘justify’ the tax. Also, the National Board of Revenue (NBR) will not audit the tax file if the return shows 15 percent more income than the previous year. Provisions to exempt pension income under public pension scheme from tax are being added to the Income Tax Act.
According to information, the maximum tax rate for individuals has been reduced from 30 percent to 25 percent in the 2020-21 budget. This tax rate continued for 3 years thereafter. The proposed budget for the fiscal year 2024-25 proposes to increase the tax rate to 30 percent. This rate is applicable if the annual income is more than Tk 38.50 lakh.
But NBR is withdrawing from that position under the pressure of influential people. In this case, NBR’s argument is that the decision has been taken to reduce tax. On the other hand, tax breaks are also being given to the cars of the rich. The affluent of the society usually do not buy cars in their own name. They use cars bought in the name of the company. They are being given the benefit of waiving the surcharge on vehicles purchased in the name of the company. On the other hand, many middle-class people buy multiple cars in their own name and drive them on rent-a-car or Uber-pathways. They will not get this benefit. They have to pay environmental surcharge. Environment surcharge on government vehicles is also being abolished.
Incidentally, on May 17, 2015, the NBR issued a notification levying an additional 50 percent of the regular income tax as advance tax on the second vehicle in case of registration of multiple vehicles under the same ownership. Later it was included in the old Income Tax Ordinance and finally in the new Income Tax Act as Environment Surcharge.
Relaxation in audit: Relaxation of audit conditions to reduce harassment. For this reason, Finance Minister and State Minister of Finance have approved the proposal to amend the Income Tax Act through the Finance Bill.
Under the new rules, if the return shows 15 percent more income than the previous year, the tax file will not be audited. This provision will be applicable in case of revised return. Only individual tax payers will get this opportunity.
Heba Deed: In the proposed budget, immovable property such as land-plot-flat donation or Heba Deed was taxed at source, so at the time of transfer of property in Heba Deed like general sale, the transferor had to pay income tax at a fixed rate according to the area, class of land. The government withdrew from that decision in the face of criticism. That is to say, without paying tax at source as per the previous rules, property transfer can be done between siblings, parents, sons and daughters, husband and wife, grandparents, grandparents and grandchildren. Currently, tax of Tk 2,510 has to be paid on the Heba document. Notable among them are registration fee Tk 100, stamp duty Tk 1000, affidavit stamp Tk 300, court fee Tk 10 etc.
Tax on capital gains of trust-funds: A 15 percent gains tax is levied on the capital gains of funds and trusts like companies. And in the stock market, capital gains up to Tk 50 lakh remain tax-free. However, if the capital income exceeds Tk 50 lakh, the gain tax has to be paid. In this case, the gain tax will be collected from individual tax payers in two ways. First, if the profit is earned by selling the shares within 5 years of purchase, the individual will have to pay tax as per the tax slab. For example, if a person buys shares and sells them after 6 months or one year and makes a profit of Tk 51 lakh, in this case Tk 50 lakh will be tax free. He has to pay gain tax. This Tk 1 lakh will be added to the total income of the taxpayer and the taxpayer will have to pay income tax as per the slab. Secondly, if the person buys the shares and earns the same profit after 5 years, his tax calculation will be different. In this case also his Tk 50 lakhs will be tax free. On the remaining Tk 1 lakh, income tax of Tk 15 thousand has to be paid at the rate of 15 percent.
Economic Zones Tax Holiday Retained: Through a May 29 notification, the NBR withdrew 8 tax benefits including tax holidays for investors in Private Economic Zones. Withdrawal of the 10-year tax holiday is expected to result in a tax rate of 20-27.5 percent or more on companies’ income depending on the industry. Besides, foreigners working as technical assistants in economic zones would get 50 percent income tax exemption on their salary for the first three years. That too was cancelled. The 10-year tax exemption on dividends, capital gains, royalties, technical know-how and technical assistance fees for companies established in these territories was also abolished. The National Board of Revenue (NBR) has backed away from the decision to withdraw the tax holiday for private economic zones under the pressure of local and foreign entrepreneurs. That is, investors in private economic zones will get tax holiday benefits as before.
Tax amnesty on black money: Despite criticism from various quarters, tax amnesty or special benefits for laundering black money is being maintained. There is an opportunity to display black money by taxing 15 percent and plot-flat returns by taxing at a fixed rate per square meter.
Incidentally, every year the government changes the income tax, VAT and customs laws through the Finance Act in the budget. The Finance Act 2024 has passed in the National Parliament yesterday.