This software will initially be installed at 17 banks, including four which are public. Later, the software will be installed at all banks, according to NBR’s Large Taxpayers’ Unit (LTU)
The National Board of Revenue (NBR) is going to install its own internet-based software at all commercial banks, with the aim of checking the growing number of cases of VAT evasion at source.
This software will initially be installed at 17 banks, including four which are public. Later, the software will be installed at all banks, according to NBR’s Large Taxpayers’ Unit (LTU).
According to a recent report by the LTU, VAT collected by the banks is not being properly deposited to the national exchequer. The report cited a VAT evasion case by a particular bank as an example.
The report says almost all banks are evading VAT at source, due to a lack of proper monitoring by the government’s revenue collection body.
It adds that there are provisions for 4.5% VAT charge at source with 39 banking services, but the banks are not charging VAT at source using information technology. This is depriving the government of a huge amount of revenue.
As a result, the LTU has launched the pilot program to set up the software at four branches of the state-run Janata Bank, including its principal branch.
Earlier, the NBR asked the banks to submit documents on VAT at source and its deposition. The LTU, however, found that 15 banks out of 17 took service from Thomson Reuters under the Information Technology Service.
Later, 11 banks submitted their documents related to VAT at source, where it was found that one bank deposited only Tk50 lakh to the national exchequer. Growing suspicious, the LTU decided to check the information from all the banks.
The banks under the LTU are Sonali, Agrani, Janata, Rupali, Uttara, Prime, Standard Chartered, National, Brack, Islami, AB, Dhaka Bank, Duch-Bangla, Premier, Bank Asia, HSBC and South East Bank.
According to sources at the LTU, they are trying to install the software at all banks with the aim of checking VAT at source, simplifying the process, and making it transparent. “At the initial stage, the banks had shown reluctance, but now they are looking at it positively,” said an official asking to remain anonymous.
A high official at the NBR described the move as a positive step, saying it will help the government bag a hefty amount of revenue.
For FY19, the government has set a total revenue target -- tax and non-tax revenue – of Tk339,280 crore. Of the total amount, the NBR has been tasked with sourcing Tk296,201 crore.
Income tax and other direct taxes are expected to contribute Tk102,201 crore, import and export tax Tk32,589 crore, VAT Tk110,543 crore, supplementary duty Tk48,766 crore, excise duty Tk2,091 crore and turnover tax Tk11 crore.