The National Board of Revenue is planning to review the provision related to filing income tax returns with no tax payment as its field-level offices have observed that a large number of taxpayers file such returns.
Officials said that income tax wing of the NBR on Tuesday sought data related to tax returns with no tax, also known as nil returns, for the fiscal years of 2018-2019 and 2019-2020 from the field offices as part of the move.
The revenue board will make a policy decision after analysing the data it will receive from the field offices, they said, adding that field officials were asked to provide the data by January 23.
The field officials have also been asked to provide data about tax returns filed with payment of income tax at reduced rates and the amount of income shown under the provision of reduced tax benefits.
Field-level income tax officials said that a large number of individual and company taxpayers filed nil returns every year showing income below the taxable limit, which is Tk 2.50 lakh in the current fiscal year of 2019-20.
The number of nil returns may be seven to eight per cent of the total returns submitted by taxpayers, they said.
According to the NBR data, some 22 lakh income taxpayers submitted income tax returns in the current fiscal year.
So, the number of nil returns may be nearly 2 lakh in the year, the officials said.
They said that though there was no bar in the income tax law on filing nil returns, the number should not be so high.
A senior tax official said many taxpayers might conceal part of their income to avoid income tax payment and subsequently filed nil returns.
Income tax practitioners or tax lawyers might also file such returns for some personal gain, keeping the taxpayers in dark about nil returns as there is no mandatory provision of mentioning anything about the nil returns in the income tax certificate, he said.
In many cases, employees and officials at the tax offices also help the taxpayers to show income below the taxable limit.
Field-level income tax officials usually do not mention the nature of returns whether the taxpayer paid any tax with the returns or not in the tax certificate, the official added.
The revenue board may introduce a token tax with tax returns having no taxable income, replacing the nil returns.
It may also instruct the deputy commissioner of taxes, who issue income tax certificates, to mention the nature of returns in the certificates so that taxpayers can be informed if there is any manipulation by tax practitioners in their returns.
Generally, filing income tax returns is mandatory, with some exceptions, for people having taxpayers’ identification numbers (TIN).
Currently, there are more than 47 lakh TIN holders in the country.
More than half of the TIN holders did not file their tax returns in FY20.
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