The National Board of Revenue has formed a taskforce to check whether or not the government offices and autonomous bodies are complying with the relevant law in deducting tax at source and depositing the money to the government exchequer.
Officials said the NBR recently formed the taskforce, sensing irregularities in this sector.
They said that earlier the revenue board had identified four irregularities in collecting and depositing TDS (tax deducted at source) by the government and private organisations.
The irregularities were: not deducting tax at source by the withholding authorities, deducting the tax at lower rates, dodging the tax through not depositing it to the government treasury on time and not depositing the tax.
Currently, about 2.5 lakh public and private entities, known as the withholding authorities, are responsible for deducting the tax.
There are 58 sectors including salary, supply of goods and execution of contracts, interest on securities, bank deposits, fees for professionals, different services and commissions, dividends, payment to non-residents, export earnings, from which TDS entities deduct tax at source.
Of which, the government agencies, ranging from ministries to upazila-level offices, deduct the tax mainly from procuring goods and services for implementing the annual development programme and revenue budget, payment of salaries and execution of procurement of goods and services for other purposes.
A senior NBR official told New Age that the 13-member taskforce headed by NBR first secretary Khondaker Khurshid Kamal had already started visiting the premises of the government offices and examining the books of accounts to check compliance.
The taskforce is finding mixed results from the scrutiny as in some cases the agencies are deducting the tax and depositing it to the public coffer timely and properly while some offices are not doing so, he said.
The taskforce will visit a few more offices and then will produce a report on the matter and submit it to the NBR for taking next steps in this connection, he added.
A member of the taskforce told New Age that they were mainly looking into whether the offices were deducting the tax at the applicable rates and depositing the money to the government exchequer on time.
‘We are finding some problems and a report will be prepared along with some recommendations to streamline the TSD by the public offices,’ he said.
According to the income tax rules, the withholding authorities will have to pay the tax from their own pockets if they fail to deduct the tax at source.
If they do not deposit the money to the government exchequer on time, they will have to pay 2 per cent interest on the tax amount also.
The revenue board may also file cases against the defaulters.
The NBR has formed the taskforce under the article 117A of the Income Tax Ordinance-1984 which empowers the revenue board to enter the premises of a tax deducting authority to examine, monitor or verify books of accounts and relevant records to check whether it is deducting and depositing the tax properly.
Officials said that the deducting authorities had to deposit the deducted tax within two weeks from the end of a month if the deduction was made in any month from July to May.
Deducted tax should be deposited within seven days if the tax is deducted in any day from the first to the 20th day of June, according to the Income Tax Rules-1984.
The tax should be deposited the next day of deduction if it is done in any other days of June, it said.
According to NBR statistics, around 57 per cent of the income tax in the country comes from TDS.
A large amount of the TDS comes from the execution of the annual development programme and revenue budget by the government agencies as they have to deduct source tax at the rate ranging from 1 per cent to 5 per cent on procurement of goods and services.
The government agencies are implementing the ADP worth Tk 1,57,594 crore in the current fiscal year of 2017-2018.
The government has also approved the ADP worth Tk 1,80,870 crore for the upcoming FY 2018-2019.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Tax