Different types of allowances drawn by the employees of state-owned enterprises (SoEs), corporations, semi-government, and autonomous bodies will be subject to tax payment, said the National Board of Revenue (NBR) in a clarification.
It said different types of allowances given to in-service government employees and lump sum grants on their retirement would continue to get tax exemption, as defined in the National Pay scale.
However, all the employees of the government, semi-government and autonomous entities, having taxable income, have to pay income tax on their basic salary and festival bonus.
The NBR issued the clarification, dated January 16, following confusion among the officials of the semi-government and autonomous bodies regarding the issue.
The officials concerned said the employees of the semi-government and autonomous bodies will have to pay tax like the employees of private sector organisations.
They also said the officials of various SoEs, corporations, companies, state-owned commercial banks (SoCBs) and other similar entities are claiming tax exemption in the case of their allowances.
Some of them have paid income tax in the current fiscal year (FY) only on their basic salary and festival allowances.
Various state-run entities like Bangladesh Power Development Board, gas transmission and distribution companies, Biman Bangladesh Airlines, Bangladesh Shipping Corporation, SoCBs like Sonali Bank, local government bodies like city corporations, and many other organisations claimed the tax exemption for their officials in line with the government employees.
The NBR issued the clarification to avoid legal disputes with the officials of SoEs, the officials further said.
Recently, NBR's field-level tax offices claimed unpaid tax on allowances from the employees of various SoEs.
According to the notification, the benefit of income tax calculation based on basic salary, festival allowance and bonus will be applicable only for the government employees as described under the six gazette notifications for civil, public bodies and autonomous bodies, bank, insurance and financial institutions, Bangladesh Police, Border Guards Bangladesh, judicial service, and joint forces under NPS 2015.
It also said the employees, who receive their salary or financial benefits directly from the public exchequer, will come under the purview of the tax exemption.
The allowances and benefits, which the government employees receive from the government but are not mentioned in NPS, will also be subject to tax payment, it added.
The tax parity between the officials of the government organisations and the semi-government or autonomous bodies has been a long-disputed issue.
In FY 2014-15, NBR planned to impose income tax on allowances of the government officials to make tax treatment equal with the employees of the SoEs and autonomous bodies.
However, the board could not implement the measure due to opposition from the government officials.
Since 2010, officials of all the government offices have been paying tax on their basic salary.
Until FY 2009-10, the public servants used to get refund of their paid tax from the government coffer.
In the budget for FY 2009-10, the government withdrew the tax refund facility for its officials as per the Pay Commission recommendations following hike in the government officials' salary.
NBR deducts tax at source from the salary, drawn by the government officials.
According to available data, NBR receives more than 50,000 tax returns every year from the government officials.
