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.
Referring to the countrywide recent havoc and atrocities, Prime Minister Sheikh Hasina today said that she had an apprehension there might be a strike like this by the BNP-Jamaat clique to pull down the country’s prosperity.
“. . . they (BNP-Jamaat) had wanted not to hold the elections, but we had arranged the elections. After election they thought it wouldn’t be accepted by all, but we’ve also made it acceptable to all and we’ve formed the government. It was an apprehension to me that there would be a strike like this,” she said.
The Premier made this remarks while exchanging views with editors, senior journalists and head of news of various media outlets, organised by Editors’ Guild at her office (PMO).
She mentioned that before and after the election in 2013-14, the BNP-Jmaat clique unleashed arson attacks and killings that left hundreds of people killed and thousands injured.
“It was little bit understandable that this (the activities and movement of the students) was a grave conspiracy,” she said.
Sheikh Hasina said that she didn’t want any incident which might invite any unwanted situation that will invite instability in the country. “It was the target to destroy country’s economy,” she said.
She questioned about the understanding level of the people who supported these mayhem aiming to cripple the country’s advancement and prosperity.
Sheikh Hasina, also the chief of Awami League, said that vested quarter is highly interested to destroy country’s independence and the continuation of the democracy that is going on for long 15 years.
She again said that she never wanted to deploy army personnel in the field while the students were there for the sake of their security.
“While they (students) declared that they are not involved in the on going subversive activities then we called for army,” she said.
The premiers also said that she also didn’t want to impose curfew as the country is going through a democratic environment for 15 years.
She requested the people to resist those who have done this bane for the country. “They have destroyed all the structures have been built for their welfare and livelihood. They have struck all those structures. Who will be the worst sufferer? Of course, mass people. Now it is the responsibility of the mass people to resist these terrorism and militancy,” she said.
The premier called for creating mass awareness against the militancy that has opened in the destructive activities.”If the people don’t become aware then what could we do or how much we could do alone,” she said.
She also mentioned that the targets of the recent mayhem was Awami League, Freedom Fighters and pro-liberation forces.
The Prime Minister said that when all demands of the quota-free movement students were accepted why they gave scope to the militants for doing such heinous activities.
“One day the quota-free movement activists have to answer to the nation, why they gave such opportunity to them for this destruction to the country,” she said.
PM’s Press Secretary Md Nayeemul Islam Khan moderated the programme, while Editors’ Guild president Mozammel Huq Babu delivered welcome address.
Senior journalist Abed Khan, Bangladesh Pratidin editor Nayeem Nizam, DBC Editor-in-Chief and CEO Monzurul Islam, Bhorer Kagoj Editor and Jatiya Press Club general secretary Shyamol Dutta, Daily Jugantor Editor Saiful Alam, Jatiya Press Club president Farida Yasmin, Dhaka Journal chief editor Syed Istiaque Reza, Head of News Nagorik TV Dip Azad, Amader Somoy Editor Mainul Alam, Bangladesh Journal editor Shajahan Sarder, DBC news editor Zayedul Ahsan Pintu, Ashish Saikat of Independent TV, Bangla Tribune editor Zulfiquer Russell, head of News of 71 TV Shakil Ahmed, Energy and Power Editor Mollah Amzad, Head of News of Kings News Nazmul Huq Saikat and Mamunur Rahman Khan of RTV also spoke.
Britain’s inflation rate held steady in June after returning to the Bank of England’s target the previous month, official data showed Wednesday, confounding expectations for another modest slowdown.
The Consumer Prices Index was unchanged at 2.0 percent in June from the same level in May, the Office for National Statistics said in a statement, compared with market forecasts of 1.9 percent.
“Hotel prices rose strongly, while second-hand car costs fell but by less than this time last year,” said ONS chief executive Grant Fitzner.
“However, these were offset by falling clothing prices, with widespread sales driving down their cost.
“Meanwhile, the cost of both raw materials and goods leaving factories fell on the month, though factory gate prices remain above where they were a year ago.”
Analysts said the data could cause the Bank of England to sit tight for a while longer before starting to cut interest rates.
“The chances of an interest rate cut in August have diminished a bit more,” said Paul Dales, chief UK economist at research consultancy Capital Economics.
Last month, the BoE kept its key interest rate at a 16-year high of 5.25 percent, despite slowing inflation in May.
Britain’s newly elected Labour government welcomed news that inflation remained at the BoE’s target level.
“It is welcome that inflation is at target,” said Darren Jones, Chief Secretary to the Treasury, in a statement.
“But we know that for families across Britain prices remain high… (which) is why this government is taking the tough decisions now to fix the foundations” of the UK economy, he said.
Labour, led by new Prime Minister Keir Starmer, has pledged immediate action to grow the economy after the centre-left party won a landslide general election victory to end 14 years of Conservative rule.
Later on Wednesday, King Charles III will read out Labour’s first programme for government in a decade and a half, when the UK parliament formally reopens following the July 4 election.
Elevated interest rates have worsened a UK cost-of-living squeeze because they increase borrowing repayments, thereby cutting disposable incomes and crimping economic activity.
The BoE began a series of rate hikes in late 2021 to combat inflation, which rose after countries emerged from Covid lockdowns and accelerated after the invasion of Ukraine by key oil and gas producer Russia.
China’s economy grew 4.7 percent year-on-year in the second quarter of 2024, official data showed Monday, less than analysts had expected.
“By quarter, the GDP for the first quarter increased by 5.3 percent year on year and for the second quarter 4.7 percent,” Beijing’s National Bureau of Statistics (NBS) said in a statement.
The figures were much lower than the 5.1 percent predicted by analysts polled by Bloomberg.
Retail sales — a key gauge of consumption — also slowed to just two percent in June, the NBS said, down from 3.7 percent in May.
The world’s second-largest economy is grappling with a real estate debt crisis, weakening consumption, an ageing population and trade tensions with Western rivals.
Top officials are meeting in Beijing on Monday for a key plenum, with all eyes on how they might kickstart lacklustre growth.
