Budget for FY'21: Penal tax likely on fake investment, misinvoicing

3.0pc AIT on raw material import, higher excise duty on large deposits


Doulot Akter Mala | Published: June 09, 2020 09:24:16 | Updated: June 11, 2020 09:57:17


Budget for FY'21: Penal tax likely on fake investment, misinvoicing

The government may impose penal tax at a rate of 50 per cent on the amount involved in misinvoicing and fake investment in the upcoming budget (FY 2020-21).

The penal tax in the case of misinvoicing in external trade transactions is aimed at checking money laundering, while the same for fake investments shown in the tax returns is designed to curb tax evasion.

Trade-based money launderers, who siphon off funds through under- or over-invoicing, and investors, who show fake or inflated amount of investments by obtaining bank loans or other means, would be made liable to pay penal tax.

The income tax authority is set to incorporate a new provision in the Income Tax Ordinance-1984 for the purpose.

With this new provision, taxmen would be able to collect the penal tax even by seizing the properties of the offenders.

The penalty may be imposed on the value gap or difference to be found between the declared value and actual value of import, export, and investment, people familiar with the development said.

They said many people show bank loan for investment or claim inflated amount as investment in land or properties in the tax return to obtain rebate.

However, taxmen, in some cases, have found partial amount of loan is invested while the rest remained traceless.

Taxmen would be able to demand 50 per cent penal tax on the amount if they detect such false declaration, they added.

A senior tax official said they have found an IT company showing fake investment in the Hi-tech Park and capital machinery import to avail tax benefit.

Taxmen could not take action against the company due to the lack of required provisions in the income tax law, he said.

Officials said a private university has also shown a significant amount of investment in the purchase of land which proved inflated later on.

In such cases, the new provision in the income tax law would help mobilise revenue from the grey economy, they said.

The National Board of Revenue, NBR, officials said the budget for FY 2020-21 would mainly impose higher tax on the well-off section of people.

Excise duty on bank deposits worth over Tk 50 million might be increased to collect more taxes from millionaires.

The NBR may introduce a new slab, 3.0 per cent, of advance tax on the import of raw materials.

However, such taxation at 5.0 per cent would remain unchanged for commercial products.

A number of products, exempted from the payment of customs duty and other taxes, are likely to get exemptions from paying this tax in the upcoming fiscal year.

Currently, account holders with bank balances below Tk 0.1 million are exempted from the payment of excise duty.

Bank depositors have to pay excise duty at Tk 150 in a year if they have a balance between Tk 0.1 million and Tk 0.5 million.

For people with bank balance of over Tk 50 million, payment of excise duty has been slapped at Tk 25,000 a year.

Meanwhile, source tax on exporters may go up to 0.50 per cent from the existing 0.25 per cent in the upcoming FY.

doulot_akter@yahoo.com

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