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The National Board of Revenue (NBR) is going to make income tax the government’s primary source of revenue as the budget size is increasing every year, requiring the government to raise its income.
According to NBR sources, the tax net is being expanded with the aim of collecting the highest amount of income tax in addition to simplifying the tax collection system. All people and organisations eligible to pay taxes will be brought under the tax net.
At the same time, initiatives have been taken to reduce the fear of paying tax. As a result, the number of taxpayers is increasing, said NBR.
The country’s revenue-GDP ratio is lower than many countries. Due to the low rate of revenue collection, budget allocations and growth potential in key sectors are not being fully utilised.
For this reason, the government has initiated reforms in revenue policy and revenue administration by modernising the income tax and VAT systems. In particular, changes are being made to the way revenue is collected.
A senior NBR official, who did not wish to be named, told The Daily Messenger, “Tariffs were once the main source of revenue in the country. In the past years, dependence on import duties decreased and revenue collection from direct taxes (income tax) increased. As a result, income tax is going to be the main source of revenue in the future.”
“The dormant tax identification numbers (TINs) have now started to become active. Various surveys have also been undertaken to increase tax coverage. e-TIN registration has crossed the one crore mark already,” he added.
According to Finance Division sources, 31.6 per cent of the total revenue collected by the NBR in the financial year 2017-18 came from income tax. It was 30.8 per cent in FY19, 35.1 per cent in FY20, 33.1 per cent in FY21, and 32.8 per cent in FY22.
Muhammad Abdul Mazid, former chairman of NBR, told The Daily Messenger income tax collection had increased in the last 10 years but more is expected.
“By implementing reforms at the earliest, the entire process should be brought online. Not only the NBR but also stakeholders should be brought under online services.”
He said revenue collection was once dependent on import duties.
“Now income tax and revenue collection is increasing. In the future, import duties will be reduced further because there will be duty-free commercial relations if there are agreements with various countries,” added Mazid.
Bangladesh is moving forward with the goal of becoming an upper-middle income country by 2031 and a developed country by 2041. Apart from this, the Bangladesh Vision Plan 2021-2041 has been made. There, the government is moving forward with the plan to raise the revenue-GDP ratio to 19.55 per cent by 2031 and 24 per cent by 2041.
There have been revolutionary changes in the revenue sector in the last 10 years. The NBR achieved great success in the income tax sector. However, it still lags behind globally.
Revenue collection from import duties has decreased compared to the past while income tax collection has increased. Stakeholders believe there is more scope for improvement in this sector.
In the first budget in FY73, the NBR’s revenue target was Tk 166 crore. Of that, Tk 69.96 crore was targeted from import duty and Tk 59.18 crore from excise duty. The income tax collection target was Tk 10.36 crore.
The NBR’s revenue collection target for FY24 is Tk 4,30,000 crore. Out of this, the target of income tax collection is Tk 1,53,260 crore. The target of value added tax collection has been fixed at Tk 1,63,837 crore, and the remaining amount will come from various customs sectors.
Messenger/Fameema
