National Board of Revenue has turned down a plea of Farmers Bank Ltd seeking time extension by around five months to deposit tax deducted at source to the government exchequer citing acute liquidity crisis.
Officials said that revenue board last week also asked the private bank to immediately deposit the taxes it already deducted or collected at source to the state coffer as per law.
Income tax wing of the NBR in a reply to a letter of the bank said that in the income tax law and rules, there was no scope for extension of time limit for depositing TDS or source income tax.
Rather, there are provisions to impose penalty for not depositing the amount within the time frame, it says.
In a letter to NBR chairman Md Mosharraf Hossain Bhuiyan, Farmers Bank managing director Md Ehsan Khasru on January 22 sought the time for depositing value-added tax deducted at the source citing its acute liquidity crisis.
‘We are suffering acute liquidity crisis as depositors started withdrawing their deposits frantically from the bank due to adverse reports in some newspapers against the bank,’ Khasru said in the letter.
Deposits stood at Tk 4,592 crore on the date decreasing from Tk 5,408 crore on October 31, 2017, he said.
The liquidity crisis was so severe that the bank failed to keep cash reserve ratio and statutory liquidity ratio requirements of Bangladesh bank, he said, adding that the bank could not even payback depositors’ money on time.
The bank also took various steps including reshuffling the board of directors, arrangement of new investment from some financial institutions, issuance of bonds to improve the situation, according to the letter.
With all these cash injection, the bank will be able to overcome the liquidity crisis within the shortest possible time, it says.
The bank has deducted all the TDS and VDS and kept in its liability account. As soon as the liquidity crisis is over, the amount will be deposited to the government exchequer, it stated.
‘Therefore, we hope that you would consider our current circumstances and allow us time for depositing the TDS and VDS until June 15,’ Khasru appealed in the letter.
Officials of the NBR said that the bank did not say anything about the tax liability.
TDS should be deposited within two weeks from the end of the month in which the tax was deducted or collected, NBR officials said referring to the Income Tax Rules-1984.
They said that the authorities responsible for deduction or collection of TDS got the highest 45 days for depositing the amount if they deduct the tax on the first day of a month.
On the other hand, VDS should be deposited immediately after deduction.
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