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Corporate - September 26, 2023

Verification of tax files of building owners to start

Rent to Bank-Insurance-FIs

Staff Correspondent: Branches of banks, insurance and financial institutions are spread all over the country. These branches are run on building or floor rent. There are 66 state-owned banks, private banks, foreign and non-scheduled banks in the country. The number of branches of these banks is about 13,015. Again, the number of 35 non-banking financial institutions, 35 life insurance and 46 general insurance branches is about 3,049. Many of the owners of these buildings or floors rented out as branches of banks, insurance and financial institutions do not have e-TIN. Again, even if you have e-TIN, you don’t give returns. Even if returns are given, many people do not give correct account of rent.
The National Board of Revenue (NBR) has taken the initiative to bring under tax the owners of these buildings or floors that rent branches to banks, insurance, financial institutions as part of identifying new taxpayers. Therefore, letters have been sent to the tax zones to provide information to the owners of buildings or floors rented by branches of banks, insurance and financial institutions. NBR officials say that by verifying the information of building or floor owners, E-TIN and return filing will increase on the one hand, on the other hand, action can be taken against the owners who used to hide the building and rent information in the return.
According to NBR sources, the second secretary (Tax-15) Mir Md.Arif Hossain signed the letter. This letter was sent to the commissioners of all tax zones. The letter said, NBR has provided policy support through recent finance laws and the new Income Tax Act, 2023 to increase the number of new taxpayers. NBR believes that through successful implementation of this policy support, field tax offices can increase the number of taxpayers by ‘encouraging new taxpayers to adopt e-TIN’ and ‘encouraging e-TIN registered taxpayers to file income tax returns’.
State-owned commercial and specialized banks, private banks, foreign banks, non-scheduled banks, non-banking financial institutions, life insurance, general insurance branches have branches across the country. These branches are being operated by renting a building or a floor somewhere. Tax is applicable at source at the rate of 5 percent on building or floor or house rent. Many of the owners of these rented buildings or floors do not have e-TIN. It is alleged that income tax returns are not filed. Especially outside Dhaka, building or floor owner does not have e-TIN. Again, even if you have e-TIN, you don’t give returns.
In the letter, the tax commissioners have been instructed to keep copies of the contracts executed by the owners of rented buildings or houses with banks, insurance and financial institutions at the tax office; Which should be sent if NBR wants. And the house or building owners who do not have e-TIN should be brought under e-TIN registration. Besides, collection of tax at source applicable on the rent from the date on which the rent was paid to the branches till the present time. Owners who do not file returns should ensure filing of returns. The members of the ‘Survey Task Force’ formed by NBR will conduct on-site inspection of the tax offices. The tax office has been instructed to keep the information of the owners of the house properties rented out by the branches of banks, insurance and financial institutions to the tax office in tabular form during the inspection; So that the task force can verify the accuracy of the information. Along with the letter, the list of branches of 185 banks and financial institutions across the country along with their names and addresses has been sent to the tax office by e-mail. NBR has been directed to send the information by October 20.
The list of state-owned commercial banks, state-owned specialized banks, private banks, foreign commercial banks, non-scheduled banks, non-bank financial institutions, insurance, life insurance companies or corporations, general insurance companies or corporations of the country has been given with the letter. Besides, the address of all branches of these banks and insurance has been given. These branches have been asked to verify whether the owners of the rented buildings have been deducted at source while paying the rent, whether the building owners have e-TIN or not, if they have e-TIN, whether they have filed returns or not. At the same time, the commissioners have been directed to ensure the e-TIN registration and return submission of the e-TIN holders. Besides, it has also been asked to ensure deduction at source on rent.
The list shows that 52 state-owned and private banks have a total of 11,786 branches. Besides, nine foreign and five non-scheduled banks have a total of 1,229 branches. These include six state-owned commercial banks. Among these banks, Sonali Bank has 1,222 branches across the country. Besides, there are 922 branches of Janata, 971 branches of Agrani, 586 branches of Rupali, 59 branches of Bangladesh Development Bank and 72 branches of Basic Bank. There are three state-owned specialized banks. Among them there are 1,000 branches of Bangladesh Krishi Bank, 26 branches of RajshahiKrishiUnnayan Bank and 121 branches of Prabasi Kalyan Bank. There are 43 domestically owned private banks. Among these banks, Pubali Bank has 500 branches. Besides Uttara 245, AB Bank 104, National 221, City Bank 148, Islami Bank 394, IFIC 184, UCB 356, ICB 33, Eastern 33, NCC 126, Prime 150, Southeast 137, Dhaka Bank 136, Al-Arafa 258, Social Islami Bank 179, Dutch-Bangla 240, Mercantile 151, Standard 138, One 111, Exim 148, Commerce Bank 106, Mutual Trust 54, First Security 204, Premier Bank 132, Bank Asia 136, Trust Bank 112, Shahjalal Islami 145, Jamuna 123, BRAC 187, Padma 156, Meghna 47, Midland 39, SBAC 61, Global Islami 224, Madhumati 48, NRB 74, NRB Commercial 743, Union 112, Shimonta 24, Community Bank 18, Bengal 21 and Citizen Bank 6 branches.
On the other hand, 9 foreign banks have a total of 270 branches. These include Standard Chartered 20, Habib six, State Bank of India five, Ceylon 20, National Bank of Pakistan four, City Bank NA 148, Uri 59, HSBC seven, Bank Alfalah seven. Five unscheduled banks have a total of 959 branches. Among them, there are 247 branches of Ansar-VDP, one Cooperative, one Gramin, 220 Employment and 490 branches of Palli Sanchay Bank.
As also seen, there are 36 non-banking financial institutions. The number of branches of these 36 institutions across the country is 435. There are two institutions namely Insurance Development and Regulatory Authority and Bangladesh Insurance Academy. There are 35 life insurance companies. They have 1,413 branches across the country. There are 46 general insurance companies. They have 1,990 branches across the country. Non-bank 36 financial institutions, 35 life insurance and 46 general insurances have a total of 349 branches across the country.
According to NBR sources, the tax zones have started listing the banks, insurance and financial institutions under their jurisdiction based on the address after letters were sent to the NBR seeking information. Already the list has been sent to NBR after verifying the information from about 13-14 tax zones. However, NBR sources said that the list of all tax zones will be sent within the stipulated time.
In this regard, an NBR official told Daily Industry on condition of anonymity that banks, insurance and financial institutions have branches across the country. These branches are run on building or floor rent. According to the Income Tax Act, tax is to be deducted at source at the rate of 5 percent on the rent of house property. Again, the rent of these buildings or floors is not low. By verifying the details of the building or floor owners of each branch, we can ensure that no owner does not have e-TIN, does not give returns. Those who do not have e-TIN, will be registered with e-TIN; Return submission will be confirmed. On the one hand, new taxpayers will increase, on the other hand, tax collection will be ensured. Again, the owners of buildings or floors who file the return, but do not show the income of the building or floor correctly in the return. The tax office can also take action against them. Further instructions will be issued from NBR after receiving information from all tax zones. However, the field tax office has started working after receiving this instruction from NBR to increase the tax payer.

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