loopholes of taxation

The loopholes of income tax: How NBR can bring all eligible citizens and business
entities under tax net easily without implementing knocking door to door policy.
As per section 75 of Income Tax Ordinance 1984, every person shall file or cause to be
filed,  a return of his income or the income of any other person in respect of which he is
assessable to tax under this ordinance. If he resides within the limits of a city corporation
or of a paurashava or a divisional headquarters or district headquarters and who at any
time during the relevant income year and owns a building which consists of more than
one storey and the plinth area of which exceeds one thousand six hundred square feet.
In this case, if policymakers introduce a policy for the utility sector and or insert a clause
under section 184 (1) that if the house owner owns more than one storey and the plinth
area of which exceeds one thousand six hundred square feet & if he wants electricity
connection and keeping existing connection continue, house owners have to submit
income tax return showing this house in the IT-10B.
When the house owner files an application for new electricity connection, he has to
submit the certified copy of the tax return or IT-10B to the electricity office with the
application for new connection and also submit to the same office annually within
prescribed time by such type of policy for keeping existing connections continue in order
to prove that he has submitted the tax return showing this house in the IT-10B.
Such a case all said type house owners will bind to submit a yearly tax return to get a new
electricity connection, reconnection or keeping existing connections continue in their said
house. As a result, NBR can catch two birds by a deal. One, NBR can confirm of
submission of annual income tax return by related taxpayers regularly and another, they
can provide an obstacle to hide the assets of taxpayers as well as hide actual income.
At the same time, if a person owns a motor car under the same section of the Income Tax
Ordinance 1984, he has to submit an annual income tax return also. In this case, if a
condition is provided by policy makers for the such type of motor car in the BRTA and or
insert a clause under section 184 (1)  that application for a fitness certificate has to be
submitted along with a certified copy of the income tax return or IT-10B. Before
providing fitness certificate of a motor car, certified copy of the annual tax return or IT-
10B must be checked by the BRTA authority, whether said motor car is shown in the
annual tax return/ IT-10B or not.
If it is shown, certificate will be provided and refused otherwise. The same things can be
applied for company owns building and motor car also. A car owner uses government-
owned road, gas, create traffic jam and taking service from traffic police on the road but
pay tax less than non-motor car owner. This is not ethical also.
A motor car owner has a binding to file an annual tax return as per the Income Tax
Ordinance 1984. Many of them file an annual income tax return showing miserable
financial condition hiding the owned motor car. To avoid this type of unethical and
unlawful activities, policy makers should make a policy for BRTA to submit certified
copies of return or IT-10B to obtain fitness certificate of a motor car. This rule may be
applied for company tax file also.
These could be examples that how NBR can bring citizens and business entities under tax
net easily without implementing knocking door to door policy. Also such type of
obligations may be applied for all cases of under section 75 as this section for "Return of
Income" where directed that who is eligible to file a tax return.
This section is the route of income tax.  If our policy makers give attention regarding this
section and make necessary policy for linkage departments like BRTA and Electricity
officials, then NBR will never knock door to door for finding new taxpayers. Though
some binding has been provided under section 184 (1) relating to section 75. But these
are not enough and not for all as well as these are not correctly implemented by the
respective department.
In finance act 2016-2017, introduces three new clauses y, z and za under section 184 (1)
in which 'za' for private sector employees to provide binding to generate 12 digit E-TIN.
Financial policy makers and Honourable Finance Minister of our country may not
observe the salary structure of the private sector employees. They could not insert such
type of clauses to generate an E-TIN otherwise, except the clauses y and z for
government and government-affiliated employees.
In accordance with the latest pay scale, salary of government and government-affiliated
employees is almost higher than private sector employees. Also, they have incidental or
speed money, if he wants. Apart from these, a government employee gets a pension, GPF
or others benefit which is beyond thinking for a private sector employee. A government
employee does not need any saving for the future because they have a huge amount of
retirement benefits. But a private sector employee has to maintain his all types of
household expenses from his salary only and then he has to think about saving for his
aged life or for his inherent.
In the clause 'za' define for private sector employees that receiving any payment which is
an income of the payee classifiable under the head "salaries" by any person employed in
the management or administrative function or in any supervisory position in the
production function, he has to generate 12 digit ETIN or submit updated ETIN to getting
salary.
In this perspective an example has been given bearing number 10-1, page number 15 in
the Paripatra-1 (Income Tax) / 2016-17 mentioning the designation of an employee as
Executive Assistant. An executive Assistant may be equivalent to a "peon" or an entry
level officer of the most of the companies. He may earn 6000 to 12000 (Gross). That
means a private sectors employee has to become a taxpayer, whether his gross salary is
6000 or 6,00,000. Is this feasible for our country?
The goal will not be achieved by this clause, but this will be treated as harassment tool
for tax men in the related assessment year. This is very difficult to understand that why
policy makers of our country would like to walk opposite way? Do they want to increase
government revenue or to make healthier pocket of taxmen? We expect that necessary
direction regarding these matters should be included in the Finance Act 2017-2018.

The writer is a member of Dhaka

Taxes Bar Association