In light of a recent directive of the Appellate Division to impose a 15% tax on private universities in Bangladesh, the National Board of Revenue (NBR) has taken action by freezing the bank accounts of eight universities.
This decision has sent ripples of concern among the hundreds of teachers and employees who rely on this sector, fearing delays in receiving their salaries and bonuses before Eid.
On March 29, the Association of Private Universities of Bangladesh (APUB) requested that the authorities unfreeze the bank accounts of private universities before Eid.
Earlier, the APUB also appealed to President Mohammed Shahabuddin for guidance and counsel to resolve the issue.
However, till now no action has been taken in this connection.
Eight universities
The Assistant Commissioner of Taxes (Circle-3) office suspended the bank accounts of eight private universities, citing non-payment of the 15% income tax. Official letters were sent to the universities, notifying them of this action.
These letters, dated March 4, informed the universities that a dues notice had been issued in accordance with Section 214 of the Income Tax Act 2023, with a deadline for payment set for March 15. Failure to comply with this deadline might result in further legal action, including the imposition of penalties, as per Section 275 of the Income Tax Act 2023.
The letters, signed by Assistant Commissioner of Taxes Zahirul Islam Bhuiya, also said if the tax had already been paid, relevant documents should be submitted to the Circle office by March 15. Failure to provide such evidence may result in the university's objections regarding the outstanding claim being disregarded.
The affected universities in the first phase of this action include North South University (NSU), American International University Bangladesh (AIUB), World University, University of Asia Pacific (UAP), East West University (EWU), Southeast University (SEU), Daffodil International University (DIU), Independent University, Bangladesh (IUB) and University of Liberal Arts Bangladesh (ULAB).
It is anticipated that the bank accounts of other universities will face similar suspensions in subsequent stages.
What teachers say
Professor Abdul Mannan, former chairman of the University Grants Commission (UGC), expressed concerns regarding the potential impact of taxes on financially vulnerable universities, suggesting that such measures could lead to closures.
Questioning the timing of the decision, he said: “If the decision to suspend the accounts had been taken after Eid, there would be no loss. Tens of thousands of people, who work in universities as teachers, officials and employees, wait for salaries and bonuses before Eid.”
He also emphasized the need to adhere to court decisions while considering the unique circumstances of private universities, suggesting the possibility of granting them additional opportunities.
Md Zakir Hossain, a professor in the Law Department of Chittagong University, said: “Private universities all over the world are not taxed because they are serving the state and society. These are charitable institutions.”
He said many universities are spending large sums of money to build their campus and other infrastructure as per government orders.
“If tax is imposed in this situation, there are many universities which will not be able to pay teachers properly or spend on research. In such a situation, I don't think money should be taken from this important sector right now,” the law professor said.
Rasheda Rawonak Khan, an associate professor at Dhaka University, criticized the timing of the decision by the NBR, urging a more considerate approach that would avoid creating undue hardship, particularly during festive periods like Eid.
She emphasized the responsibility of state institutions to prioritize the welfare of citizens.
Pranab Kumar Pandey, a professor at Rajshahi University, echoed concerns about the timing of the decision.
He said: "Teachers and officials, as employees, bear no direct responsibility for administrative irregularities, which typically stem from the higher echelons of management. Thus, it seems unjustifiable to burden the personal and familial lives of the Muslim community by freezing accounts before Eid. Both the authorities and the affected parties should have deliberated on the appropriateness of the timing for such actions.
Aftab Hossain, an assistant professor at Daffodil International University's Department of Journalism and Communication, said: "I find this decision untimely, especially considering the upcoming Eid festivities. Many people have made plans for the occasion, and with the start of a new month, matters such as salaries and bonuses are of concern. It would have been more prudent for both the trustees and the government to collaborate on this matter. Acting before Eid has unnecessarily disrupted plans and caused anxiety."
What happened earlier
The NBR issued a gazette notification on June 28, 2007, imposing the 15% income tax on private universities, to be effective July 1 of that year.
In another gazette notification, the NBR imposed the same 15% income tax on private universities, medical, engineering colleges, and ICT institutes.
After that, different universities filed 46 petitions challenging the government's decision.
Upon the final hearing on the petitions, the High Court on September 5, 2016, found the notifications illegal, thus ordering the NBR to refund the money realized in line with government circulars.
Subsequently, the state pleaded to be allowed to file a leave to appeal with the apex court, which was finally granted on February 9, 2021.
The Appellate Division also stayed the High Court's order on refunding money to the private universities.
On April 6, 2023, the Appellate Division of the Supreme Court upheld a High Court order asking the NBR not to collect income tax from private universities in the country.