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The recently passed Income Tax Bill 2023 on Sunday, includes various changes for individuals, businesses, and corporations.
Tax returns have been simplified for everyone. Currently, 29 different types of documentation must be submitted when filing a company’s tax return. It is being reduced to 12.
Apart from individuals, all other entities would be deemed corporations, regardless of whether they are registered under the Companies, Societies, or Partnership Act, which now includes NGOs and English medium schools.
All taxpayers are now required to file a tax return using the universal self-assessment approach.
The Income Tax Bill 2023 was passed in parliament replacing the incomeTax Ordinance of 1984.
The new Income Tax Act takes effect on July 1.
There are 345 sections, 25 chapters and eight schedules in the new Income Tax Act.
Black money whitening
The tax rate for the purchase of flats with black or undeclared money will be per square meter from now on. As a result, the anticipated tax rate per square meter has been somewhat altered.
Aside from housing, there is a possibility to invest in black money via taxes in the establishment of new industries. The present 10% tax exemption for economic zones and high-tech parks will be extended until June of next year.
Corporate tax for English medium schools, NGOs
Under the new law, all educational institutions with an English medium curriculum and an English version are considered a firm and must pay corporate tax.
Educational institutions, Samity, trade and commerce groups, foundations, and non-governmental organizations (NGOs) would all be considered corporations under the new law.
Those with a Bangla curriculum and those on the Monthly Payment Order (MPO) will be excluded from this system.
Investment rebate
The investment rebate limit on monthly savings schemes would be raised from Tk60,000 to Tk120,000.
Furthermore, according to the legislation, bank depositors with fixed deposits of more than Tk10 lakh must file tax returns.
Income derived from microcredit services would be considered tax-free if it is a ‘revolving fund’ and spent on any asset for the services rather than capital for other enterprises.
Except for life insurance, premium income from other insurances is currently deemed ‘allowable expenses’ up to 10%.
It would be eliminated since a financial statement prepared in accordance with International Financial Reporting Standards (IFRS) allows for actual expenditure.
Bangla with international practice
For the first time, the government may receive a completely new law in Bangla beginning with the upcoming fiscal year (FY).
Instead of the Income-tax Ordinance, 1984, which was written in English, the Income Tax Bill, 2023 is written in Bangla.
The provisions’ contents have been translated into plain Bangla.
The proposed act has also been streamlined and brought into line with worldwide best practices.
The act includes a mathematical formula to aid taxpayers in calculating their taxes.
The proposal will make it easier for taxpayers to file their income tax forms online.
Discretionary powers of officers
As per the proposed law, income tax officers cannot fix income tax as per their wish and income tax will be determined according to the formula prescribed by law.
Tax on MFS
The tax would be imposed on the interest amount disbursed by the Mobile Financial Services (MFS) providers and also the interest amount of loans taken from any citizen of Bangladesh, except the bank.
Audited statements
Firms, associations of persons and funds having turnover of more than Tk2 crore will have to submit audited financial statements under the new law.
Wealth statement
Before passing the new Income Tax Act, parliament abolished a provision for mandatory submission of wealth statements for persons travelling abroad except for medical treatments or religious purposes.
Drop TIN
Under the proposed law, taxpayers will be able to close their tax registration number if he has no taxable income, leaves the country or passes away.
(DT)
