The tax authority may impose a limit on cash transactions from merchant accounts through Mobile Financial Services (MFS) in the upcoming fiscal year (FY), sources said.
The tax officials would not allow cash transactions beyond the cap and the amount would be considered as taxable, the sources said.
The authorities would also impose such a cap on the cash transactions for purchasing industrial raw materials by the corporate taxpayers.
In both cases, the authorities would not allow cash transactions above Tk 50,000. The transactions will have to do through the banking channel from the next FY.
According to the Income Tax Ordinance-1984, the taxpayers are not allowed to show their financial transaction above Tk 50,000 without banking channel.
However, there were no instructions in the law earlier for these two types of transactions.
The officials said the new fiscal measures might be incorporated in the FY2021-22budget, aimed at ensuring financial transaction through formal channel.
Officials said the new measures are expected to help minimise the size of informal economy.
MFS providers said the businesses having merchant account have different limits of their transaction ceiling, provided by the Bangladesh Bank, as per their nature of businesses.
Talking to the FE, president of Dhaka Chamber of Commerce and Industry (DCCI) Rizwan Rahman hailed the move and said it would help thwart creation of black money in the economy.
He, however, suggested increasing the ceiling to Tk 50,000 initially, but suggested gradually bringing it down to help businesses adopt the new rules of tax compliance.
"There should be a three- to five-year roadmap for imposing tax or new fiscal measures," he said, adding that it is difficult to prepare business plan on the basis of fiscal measures of a FY.
He said the new measure may force small businesses to pay VAT and other taxes, but ultimately they will have to be tax complaint.
Tax officials said they would consider the expenditure shown in the income tax returns as taxable if the taxpayers fail to produce bank statement in support of the transactions.
Transactions through MFS has increased significantly due to imposition of lockdown in several phases during this Covid pandemic.
From March 2020 to January 2021, the MFS service providers added around 18.0 million new customers, taking the number of registered clients to 100.6 million.
According to the BB data, transactions through mobile phones stood around Tk 5.35 trillion during the period, which was Tk 4.10 trillion in the corresponding period of last year.
In the budget proposal, the trade bodies also requested the government to ensure financial transactions through banking channel. There was no restriction on conducting financial transactions through banking channel on purchase of raw materials by the industries.
It was learnt that some of the corporate taxpayers were showing large volume of cash transactions against purchase of industrial raw materials allegedly to evade tax.
In the upcoming budget, the National Board of Revenue (NBR) may also impose source tax at a rate of 10 per cent on public auction.
Currently, source tax on public auction ranges from 5.0 to 7.5 per cent, which might be increased to 10 per cent at all level. However, the source tax at a rate of 1.0 per cent for tea auction would remain unchanged.
The income tax authority may also impose a lump amount of tax worth Tk 50,000 on licence renewal and issuance fees of recruiting agencies.
doulot_akter@yahoo.com