In the 2024–25 fiscal year, the Bangladeshi government has introduced significant changes to its tax policy, aiming to broaden the tax base and enhance compliance. A pivotal aspect of this reform is the requirement for individuals seeking certain services to submit proof of income tax return (PSR). To obtain this proof, a minimum tax payment of BDT 2,000 is necessary.
Services Requiring Proof of Income Tax Return
The National Board of Revenue (NBR) has mandated the submission of PSR for a range of services, including:
- Savings Instruments: Purchasing savings certificates or postal savings exceeding BDT 500,000.
- Bank Loans: Applying for loans over BDT 500,000.
- Bank Deposits: To benefit from a reduced withholding tax rate of 10% on interest income, PSR must be provided; otherwise, a 15% rate applies.
- Property Transactions: Registering, selling, or transferring property valued over BDT 1,000,000 in city corporation, district headquarters, or cantonment areas.
- Credit Cards: Obtaining a credit card from any bank or financial institution.
- Vehicle Registration: Registering or transferring ownership of motor vehicles, excluding two- or three-wheelers.
- Education: Enrolling children in English medium or English version schools within city corporations or district headquarters.
- Utility Connections: Securing gas or electricity connections for residential or commercial purposes in specified areas.
- Rental Income: Earning income from renting out property.
- Employment: Government employees earning a basic salary of BDT 16,000 or more, and private sector employees, are required to submit PSR.
- Teachers: MPO-listed teachers with monthly incomes exceeding BDT 16,000.
- Building Approvals: Obtaining construction approvals in major cities like Dhaka, Chattogram, Khulna, and Rajshahi.
- Political Candidacy: Running for positions in national or local elections.
- Trade Licenses: Acquiring or renewing trade licenses in city corporation or municipal areas.
- Digital Services: Selling products or services through digital platforms.
- Mobile Banking: Receiving commissions or fees via mobile banking or electronic transfers.
- Cooperative Societies: Membership in societies or clubs registered under the Societies Registration Act.
Additional professions and activities requiring PSR include:
Membership in professional bodies for doctors, lawyers, chartered accountants, engineers, and architects.
- Engaging in consultancy, catering, event management, manpower, or security services.
- Obtaining licenses as marriage registrars or qazis.
- Securing import-export certificates or opening letters of credit.
- Holding positions as company directors or shareholders.
- Membership in business or trade associations.
- Registering as insurance agents or surveyors.
- Applying for licenses related to arms, pharmaceuticals, fire safety, environmental clearance, or BSTI certification.
- Obtaining survey certificates for vessels like launches, steamers, trawlers, or cargo ships.
- Operating brick kilns or transport services.
- Acting as distributors or agents for companies.
- Submitting tenders for government supply contracts.
- Receiving foreign donations for NGOs or microcredit organizations.
Policy Rationale
These measures aim to enhance tax compliance and increase revenue collection. Bangladesh’s tax-to-GDP ratio stands at approximately 7.3%, which is lower compared to neighboring countries such as India (12%), Nepal (17.5%), and Bhutan (12.3%). By linking essential services to tax return submissions, the government intends to encourage a broader segment of the population to participate in the tax system.
Implementation and Flexibility
The NBR has indicated that while these requirements are being enforced, there is room for flexibility. Under specific circumstances, the NBR may issue general or special orders to exempt individuals from submitting PSR for certain services.