Forecast

Our review for the first half of boys season 3.



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Over the last couple of months, various sections of society called upon the government to raise the tax-free income limit amid the rising cost of living.

Their argument is an upward revision of the ceiling will protect the buying capacity of low-income people to some extent from spiralling inflation and prevent erosion of their living standard.

The demand, as it seems from the proposed tax measures for the next fiscal year, remains unmet with the tax-free income limit staying unchanged for another year.

This means a person with a monthly income of more than Tk 25,000 will have to pay tax even if he or she cannot afford basic commodities to lead a decent life.

The initial tax rate and corresponding slabs of income are to remain unchanged.

But the limit of eligible investment for an individual has been reduced as the National Board of Revenue seeks to cut it to 20 percent from 25 percent of a taxpayer's total income.

It wants to do away with the slabs and introduce a uniform rate of 20 percent for eligible investment and a uniform rate of 15 percent in case of tax credit.

According to NBR officials, there were claims that too many slabs on tax rebates create complexity in tax credit calculation, prompting the tax authority to bring uniformity to the rate of tax rebates.

In the outgoing fiscal year, an individual taxpayer, who earned up to Tk 15 lakh a year, could get 15 percent tax credit on the amount of eligible investment which is 25 percent of the taxpayer's total income. The tax credit rate was the same for an individual earning up to Tk 15 lakh.

In the next fiscal year, the tax credit rate for individuals with annual income of above Tk 15 lakh is going to increase to 15 percent from 10 percent.

Based on the changes, the amount of overall rebate will decline, increasing tax burden mainly on the middle-income taxpayers.

For example, a taxpayer who earned Tk 6 lakh a year was entitled to a tax credit of Tk 22,500 in the outgoing fiscal year.

According to the changes proposed by the NBR, the tax credit will fall to Tk 18,000. This will increase tax burden on the taxpayer, leaving him or her with less money to pay for food, education, healthcare and other necessities after tax payment.



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