Citing the proposed budget of Tk 568,000 crore for the fiscal year 2020-21, targeting an 8.2 percent GDP growth, as ambitious, the country’s chartered accountants have expressed optimism that it is possible to implement the budget under the leadership of Prime Minister Sheikh Hasina.
Muhammad Farooq, president of the Institute of Chartered Accountants of Bangladesh (ICAB), at a post budget press conference titled ‘Chartered Accountants Thoughts on the Proposed National Budget’ held through webinar made this comment today.
In his welcome speech, he said, “Amid the global pandemic, the finance minister has said that the proposed budget for the next financial year will increase the reliance on internal sources to address the deficit. Hence, the finance minister has announced a loan of about Tk 85,000 crore from the bank”.
Citing reliance on bank as nothing negative, he added that, “There is a risk that the private sector will be deprived due to the government's dependence on banks. However, we think that if the government spends this money properly in the development sector, it will come back to the private sector through the circulation of money”.
Terming the budget as time-befitting, he further said that, “At this global critical time, the proposed budget has undergone structural changes from conventional budgets. The health sector has been given the highest priority this time and the agriculture sector gets second priority to ensure food security during and after the epidemic.
We consider it reasonable to allocate extra budget in this sector as compared to the previous year to provide social security to the large population who have gone below the poverty line due to long period of general holidays, lockdowns etc”.
While talking about the chartered accountants’ role, Farooq said, “Chartered accountants have been playing an important role in raising revenue for the government. Chartered accountants assist taxpayers and the government in tax planning, as tax consultants, in the proper compliance and implementation of tax laws. Above all, the role of chartered accountants in the national economy is undeniable through increasing revenue”.
To prevent foreign trade, foreign remittances and foreign investment from being hampered by the epidemic, two percent incentive on foreign remittances, continue export incentives on RMG export, and reduce corporate tax rate will encourage foreign investment, former ICAB president and current chairman of Taxation and Corporate Law’s Committee Humayun Kabir said.
“To reduce the taxpayers’ tax burden due to the outbreak of coronavirus, in the budget it has been proposed to reduce the tax rate of unlisted companies from 35 percent to 32.50 percent, which is commendable. ICAB has been proposing this for a long time”, he added.
“In the proposed budget, the tax-free income limit for general taxpayers has been increased from Tk 2.5 lakh to Tk 3 lakh. A new phase of 5 percent tax on total income up to Tk 1 lakh has been introduced which is currently 10 per cent”, he continued. “In addition, in case of maximum income, the tax on total income has been reduced from 30 percent to 25 percent. The reduction in the maximum tax rate from 30 per cent to 25 per cent will also reduce the tax burden on the upper-class taxpayers,” Humayun added.
He said the proposed budget has provided an opportunity to legalize undisclosed funds as in previous financial years. The government thinks that as a result, a significant amount of undisclosed money will enter the mainstream of the economy in the next financial year, he added.
Humayun said increase in source tax is poising challenge to export-oriented industry, therefore ICAB proposed to reconsider the proposal to increase the source tax on export earnings, otherwise it will be main reason of increasing essential commodities price.
