Income tax collection falls Tk4,000cr short of target in 3 months

The income tax collection fell by Tk3,803 crore short of the target set for the first three months of the current financial year 2023-24, according to National Board of Revenue data.  

Large Taxpayer Unit (income tax) of the NBR collected a total of Tk23,195 crore against the target of Tk26,998 crore set for the period.

However, stakeholders think that the amount would increase once the Customs and Value Added Taxs are added with it.

According to the reports, the International Monetary Fund (IMF) has gradually paid more attention to direct tax collection than indirect tax collection. Although this issue is practiced in different countries of the world, the context of Bangladesh is different. Revenue is still being collected depending on the Value Added Tax (VAT). According to the target given by the IMF, Tk137,800 crore should be collected from the income tax sector in the current financial year.

In addition, the target of this sector in the financial year 2024-25 should be Tk162,700 crores while Tk195,200 crores to be collected in the financial year 2025-26. However, according to the data of the first three months of the current financial year, the sector is behind by Tk3,803 crore in revenue collection.

According to the strategy paper, the regular growth rate of the Income Tax Department is 13.59 percent. If this rate is maintained, Tk15, 400 crores will be collected while Tk9,100 crores will fall short.

To collect the amount, authorities would collect extra tax from other sectors. To meet the shortfall, Income Tax Department has plan to collect Tk3,000 crores from land registration, Tk500 crores from travel sector, Tk300 crores from tobacco tax, Tk500 crores from environmental surcharge, Tk250 crores from increase in tax scope, Tk1000 crores from carbonated beverages, and Tk3,550 crore through tax arrears.

In another development, the government recently reduced the rate of source tax and change the method of its collection from land registration. 

Meanwhile, the turnover tax on the carbonated beverages industry reduced to 3%, which was set at 5% for fiscal 2023-24.

In such cases, the plan of collecting Tk3,000 crore from land registration and Tk1,000 crore from carbonated beverages will not be successful during the targeted period.