The National Board of Revenue (NBR) has connected with the database of the Directorate of National Savings (DNS) to verify the investment information on the savings certificates shown in the tax returns.
This step has been taken to stop the misuse of the tax rebate facility.
With the new system, it will be easier to detect hidden savings certificate information put in the tax returns by only prying into the taxpayer identification number (TIN).
Out of 31 tax zones across the country, a few have already begun such search on a pilot basis of cross-checking information in the tax returns with the DNS data. For this purpose, user ID and password have been given to tax regions by the DNS.
According to the law, tax rebates are available on the purchase of savings certificates. A taxpayer currently gets a 15% tax rebate if he invests 25% or more of his annual income in savings certificates.
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NBR Spokesperson Syed A Momen told Dhaka Tribune on Wednesday that an application programming interface (API) within the two government organizations has been completed to exchange data.
“The tax zones have been directed to verify the authenticity of the taxpayers' investments from the DNS database and will send them to the NBR in a formatted form every 15 days,” he informed.
A recent letter in that regard, issued by NBR to the zonal tax authorities, said that using user IDs and passwords sent by the DNS would make it easier for taxpayers to take legal action under the Income Tax Ordinance, including tax increase, desk audit, and field audit.
However, it is important to ensure that taxpayers, including marginal investors, are not harassed in any way.
For this, the work has to be done under the supervision of officers with the rank of joint and additional commissioner.
At the same time, the letter also asked the officials to send the information of investors in the form of a chart.
It has been directed to send a report every 15 days mentioning the name of the taxpayer and TIN, income year, amount of investment in savings certificate, whether he has filed a return or not, and the amount of savings certificate investment shown in the income tax return.
Former caretaker government's finance adviser AB Mirza Azizul Islam told Dhaka Tribune: “Savings certificates are the best savings for the poor and middle class. Meanwhile, as the bank's interest rate has come down, the investment in savings certificates is already increasing.”
Due to the high-interest rate on investment, it also comes with tax rebate benefits. But rich people are often taking illegal advantage of this. All in all, the government has to think about it from every angle, he added.
“It is often seen that many decisions are not implemented due to the lack of coordination among government agencies, but they are eventually done very slowly. This will increase transparency and efficiency between the two government agencies,” he said.
“I believe that this new venture will catch fake investments and those who do not intend to evade taxes with false information should not have any complaints about it,” he further said.
The latest DNS data shows that the total sales of savings certificates were Tk99,557 crore in the first 11 months (July-May) of FY2020-21, breaking the previous record of Tk90,342 crore in FY2018-19.
Considering this high selling and the low interest rates of bank deposits, Bangladesh Bank (BB) recently passed an order.
In that notification, the central bank said that the inflation rate should be taken into account during the determination of interest rates on fixed-term deposits with periods of three months and above to protect the interest of depositors, and to prevent an imbalance of liabilities in the banking sector.
Also Read - Bangladesh Bank will not allow deposit rate below inflation
In the current fiscal budget, the NBR relaxed the tax measure on the savings certificates for savers. Now, savers will need to submit TIN only if they buy Tk2 lakh or more worth of savings certificates. Earlier, people had to submit TIN regardless of how much they spent on savings certificates.
Executive Director of the Policy Research Institute (PRI) Dr Ahsan H Mansur told the media that tax implications on investors in savings tools are nominal. So, they should disclose the information in tax returns without concealment, unless the investors have fears of getting increased tax liability, having wealth in another sector.
According to NBR sources, a large portion of the taxpayers who file returns every year demand tax rebates against investments in savings certificates.
So far, it has not been possible for the tax department to verify the authenticity of the investment. It was difficult to identify whether the taxpayer has any declared investment at all, or has taken tax rebates with false information.
In case of doubt, the accuracy of the investment would be verified by letter to the DNS on a case-by-case basis. For this reason, tax rebates were misused in savings certificates.
But from now on, it will be easier and more transparent.
