Economy
NBR raising source tax on income of univs, other edu institutions
The government plans to increase the source tax on the interest income of educational institutions, including public universities and schools under monthly pay orders (MPOs), as well as the income of the Bangladesh Telecommunication Regulatory Commission (BTRC) from mobile phone companies, up to double the current rate of 10% in the upcoming budget, according to finance ministry sources.
Additionally, sponsor shareholders and director shareholders in listed companies may experience a threefold increase in tax on their capital gains from share transfers in the upcoming financial year.
The National Board of Revenue (NBR) also intends to raise the corporate tax for cooperative societies by 5%, up from the current 10%, according to the sources.
Experts fear that increasing source tax on the sectors may become an indirect tax and ultimately be passed on to consumers.
The NBR aims to collect a substantial amount of revenue through source tax, targeting over Tk16,000 crore in FY25, a decision already communicated to the International Monetary Fund (IMF).
“In the upcoming fiscal policy, the NBR plans to restructure tax deduction at source for certain groups of educational institutions, BTRC’s earnings from cellular phone companies, and sponsor shareholders,” a senior finance ministry official told the news reporter, requesting anonymity.
He said, “In some cases, TDS may triple, while in others, it might be reduced.”
Meanwhile, according to sources, the income from interest for provident funds and gratuity funds, which currently faces a 15% TDS, may decrease to 10%.
Currently, public universities and educational institutions under MPOs pay a 10% source tax on their interest earnings from savings. Sources from the NBR hinted that this rate might increase to 20%.
However, sources say primary schools are likely to see TDS within the range of 10%.
There are about 57 public universities operating in the country, while the number of schools under MPOs is over 29,000.
Currently, sponsor shareholders and director shareholders have a TDS rate of 5% on capital gains from share transfers, which may increase to 15%. Additionally, other shareholders might face a 15% tax on gains over Tk50 lakh in a year, according to sources.
Moreover, the TDS on BTRC’s earnings from revenue sharing, annual fees, and spectrum charges is currently 10%. Mobile phone companies deduct the TDS amount during payment to BTRC.
Sources within the mobile phone industry said while a TDS hike on BTRC earnings may not directly impact the sector, however, any tax increases would ultimately be passed on to consumers.
Shahed Alam, chief corporate and regulatory officer at Robi Axiata Limited, told reporter, “Apparently, any tax hike on BTRC may not hurt cellular phone companies directly. However, any tax hike leads the regulator to increase charges, and we, as the company, have no other option but to pass these costs on to consumers.”
According to industry insiders, mobile companies pay 22% of every Tk100 of talk time to the BTRC as part of revenue share and other fees. In FY23, companies paid around Tk7,000 crore to the BTRC, and the NBR collected about Tk700 crore as TDS. If the TDS rate doubles, the tax earnings from the BTRC would likely increase by another Tk700 crore.
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told the news reporter, “Most of the country’s source tax comes from wages and salaries. However, in Bangladesh, it mostly comes from transactions, which are treated as a minimum tax.”
He added, “When any TDS cannot be adjusted, it ultimately passed on to the consumer as an indirect tax. In Bangladesh, most of the TDS cannot be refunded or adjusted, which may ultimately lead to an increase in product or service prices. It’s a distortion of the standard tax system, and the NBR seems to choose this as an easy way.”
The NBR collected over Tk1.12 lakh crore in income tax in FY23, with more than 50% coming from tax deduction at source. The revenue authority also collected about half of the value-added tax (VAT) through at-source deductions, known as VAT deduction at source (VDS).
Sources involved with fiscal policy measures indicated that they aim to significantly increase VAT collection through VDS by expanding its net.
Chief Adviser Prof Muhammad Yunus on Thursday paid tribute to the Armed Forces Division by placing a floral wreath at its headquarters.
Prof Yunus, who visited the division as part of his official duties, laid the wreath to honor the sacrifices and dedication of the members of the Armed Forces.
Following the wreath-laying ceremony, he signed the visitor’s book.
Chief Election Commissioner (CEC) Kazi Habibul Awal, along with four other election commissioners, announced their resignation during a press conference today at the Election Commission (EC) building. The resignation follows growing speculation and pressure.
CEC Awal stated, “In this changed situation, I and other commissioners have decided to step down. We’re handing over our resignation letters to the EC Secretary to send it to the President.” After submitting the letters, the CEC and some commissioners quickly left the premises, with no clear explanation for the absence of two election commissioners.
The resignations come amid increasing unrest tied to the registration of political parties such as Nagarik Oikya and Gono Odhikar Parishad. Sources revealed the CEC felt unsafe due to aggressive behavior from activists, prompting the decision to step down.
Protesters outside the EC building hurled shoes at vehicles carrying Election Commissioners Rashida Sultana, Md Alamgir, and Anisur Rahman as they left. Meanwhile, preparations for their exit had already been underway, with the commissioners reportedly relocating personal belongings from their offices.
The commission, appointed in February 2022 for a five-year term, had previously expressed confusion over demands for their resignation, maintaining they had conducted fair elections. However, internal discussions led to the collective decision to resign earlier than expected.
The government will now purchase LNG from the international spot market through open tender instead of negotiation.
Cabinet Committee on Economic Affairs (CCEA) in a meeting on Wednesday in principle approved a proposal in this regard.
Adviser of the interim government for Finance Dr. Salehuddin Ahmed, who presided over the meeting, said that the government will procure LNG through open tender.
The Energy and Mineral Division of the Ministry of Power, Energy and Mineral Resources placed the proposal where it sought approval to import LNG from 23 listed companies in the international spot market.
The adviser said that though such 23 companies were enlisted by the previous Awami League government and signed Master Sales and Purchase Agreement, they will remain unchanged.
He said that instead of applying the Speedy Increase of Energy and Power Supply (Special) Act 2010, the interim government will follow the Public Procurement Rules 2008 to ensure the competitive bidding process.
“We don’t want to change them as we wanted to import LNG quickly, ensuring proper competition among the suppliers,” he told reporters.
Committee also approved another proposal in principle to sign a contract to import urea fertiliser for the 2024-25 fiscal year from Fertiglobe Distribution Limited, UAE, on a G-to-G basis.
Meanwhile, the Cabinet Committee on Government Procurement (CCGP) in a meeting, presided over by the Adviser for Finance, approved 3 proposals for import of lentil and fertiliser.
As per the proposal, the Trading Corporation of Bangladesh will procure 10,000 metric tons (MT) of lentil from local firm Sahara Enterprise at a cost of Tk 98.20 crore with each kg priced at Tk 98.20.
The Commerce Ministry which moved the proposal on behalf of the TCB in the meeting mentioned in the proposal that the supplier firm was selected through open tender.
The CCGP approved two separate proposals of the Industries Ministry under which Bangladesh Chemical Industries Corporation will import 30,000 MT of bulk granular urea fertiliser from Fertiglobe Distribution Limited, UAE, under state to state contract at a cost of Tk 121.48 crore.
Each metric ton of fertiliser will cost $343.17.
Another 30,000 MT of bagged granular urea fertiliser will be procured from the local Karnaphuli Fertilizer Company Limited (Kafco) at a cost of Tk 116.99 crore with each metric ton costing $330.50.
