Exemption from income tax on different types of allowances will not be applicable to state-run corporations and companies as the benefit is preserved only for the government employees defined in pay scales, according to a clarification notification of National Board of Revenue.
Employees of the organisations, who do not receive salary under any of the six gazette notifications related to National Pay Scale-2015, will have to pay income tax on both salary and other allowances as employees of private organisations pay, said the notification issued on January 16.
NBR in 2015 exempted the government employees from paying income tax on allowances and other benefits including lump sum provided during retirement by the government and said that income tax would be applicable only to their basic salary, festival allowances and bonus.
Income tax policy wing issued the latest clarification signed by its second secretary Sumon Das to remove confusion created among various state-owned corporations, companies, state-owned commercial banks and other relevant entities about applicability of the benefit.
Officials of NBR said that employees of state-run entities like Power Development Board, gas transmission and distribution companies, Biman Bangladesh Airlines, Bangladesh Shipping Corporation, state-run commercial banks like Sonali Bank, local government organisations including city corporations and many other organisations had been taking the benefits claiming that they were public or autonomous bodies.
The claim is creating legal disputes in field-level income tax offices as tax officials are rejecting the claim of the employees of such organisations who have been paying income tax only on basic salary, festival allowance and bonus like the government employees do, they said.
Field-level tax offices now will realise the due tax remained unpaid on allowances, they added.
According to the notification, the benefit of income tax calculation based on only basic salary, festival allowance and bonus will only be applicable to government employees under six gazette notifications for civil, public bodies and autonomous bodies, bank, insurance and financial institutions, police, Border Guard Bangladesh, judicial service, and joint services instructions for joint forces under the National Pay Scale-2015.
People who directly receive their salary or financial benefits from the government exchequer will come under the purview of the exemption.
It also said that the allowances and benefits which the government employees received from the government but were not mentioned in the pay scale would also come under tax.
Officials said that income tax would be applicable to various types of allowances provided by the government for different types of activities but were not included in the pay scale.
For example, executive magistrates receive allowances for conducting mobile courts under various government agencies, they said.
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