National Board of Revenue (NBR), the country’s central authority for tax administration, has withdrawn the obligation to submit proof of income tax return submissions in acquiring loans and credit cards for students.
The government exchequer issued an official notification in this regard on Sunday.
The obligation was withdrawn subject to tax-free income under subsection 4 of the Income Tax Ordinance 1984.
NBR’s notification states: “The obligation to submit proof of income tax return submission to scheduled banks in case of taking loans up to Tk20 lakh and for credit card transactions up to Tk2 lakhs, in the student category, has hereby been withdrawn subject to tax-free income.”
It also mentioned that this directive will remain in force till June 30 next year.
Earlier, during the National Budget for the 2022-23 fiscal year (FY), the finance minister made it mandatory for consumers to submit proof of tax return in the case of acquiring loans over Tk5 lakh, for acquiring credit cards as well as availing various public and private services.
Apart from credit card, proof of return submission to the bank is mandatory to avail of 37 other services.
Prior to the budget, an entrepreneur could take a loan by only submitting an Electronic Taxpayer's Identification Number (e-TIN) and relevant documents.
However, it was found that the number of TIN holders in the country is more than 75 lakh. Among them, only 25 lakh submit annual returns with two-thirds of TIN holders not filing tax submissions.
In order to increase the number of tax returns and augment tax receipts, the government made it mandatory to show proof of return submission for taking credit cards and bank loans of more than Tk5 lakh.
If credit cards or loans are processed without proof of submission, financial institutions can be fined up to Tk10 lakh as per the guidelines following the national budget.
The relaxation of such provisions would make it much more convenient for students to avail such financial services who do not have a taxable income in the first place, experts said.
