The Bangladesh government has proposed increasing the rate of penalty by 10 times for offences related mainly to tax deduction at source and submission of withholding tax returns under the income tax law in the national budget for the fiscal year of 2018-2019.
Finance minister Abul Maal Abdul Muhith made the proposal incorporating some amendments to the Income Tax Ordinance-1984 in the Finance Bill-2018.
Officials of the National Board of Revenue said that the move had been taken to rationalise the rate of penalty as the existing rates were very low compared to the degree of offences.
Taxpayers, mainly withholding tax deducting authorities including employers, will face an additional amount of penalty for various types of noncompliance with the tax law, rules and regulations of the tax authority once the proposal is passed by parliament by the end of June, they said.
Muhith proposed raising the principal amount of penalty to Tk 5,000 (one time) for the noncompliance from the existing Tk 500 (one time).
Defaulters will also have to pay Tk 1,000 every month for continuous failure in compliance in the case of principal penalty amount Tk 5,000 (one time).
Currently, the rate of penalty for continuous failure is Tk 250 per month.
According to the proposed Finance Bill-2018, withholding tax deducting authorities such as employers, government offices, banks and financial institutions, stock exchanges, companies, different types of authorities and suppliers, will have to face Tk 5,000 for failure in filling a statement on withholding tax deduction to the tax authority.
Companies, co-operative societies and NGOs will have to pay penalty at the rate of 10 per cent of applicable income tax or Tk 5,000, whichever is higher, and Tk 1,000 per month for failure in filing half-yearly withholding tax returns.
Employers will also have to pay the penalty at the same rate for not filing the statement regarding payment of salary to their employees and statement regarding filing of returns by their employees.
The NBR in the finance bill proposed making mandatory submission of information regarding filing of returns by employees.
The budget also proposed raising the penalty on authorities responsible for
deducting tax at source on interest or profit on securities to Tk 5,000 (one time) and Tk 1,000 per month for not submitting the statement regarding deduction of the tax.
Companies will also have to pay the additional penalty at above mentioned rate for failure in filing the annual statement on deduction of tax from dividends.
Currently, the rate of penalty is Tk 500 (one time) and Tk 250 per month for noncompliance.
The finance bill also proposed increasing the rate of penalty to Tk 5,000 (one time) and Tk 1,000 per month from current Tk 500 (one time) and Tk 250 per month for not displaying by businesses electronic taxpayers’ identification number at a visible place of their business premises.
According to the income tax law, traders need to display the e-TIN at their business premises in a manner so that it becomes visible to visitors.
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