The Institute of Chartered Accountants of Bangladesh (ICAB) hailed the government for announcing a 'business-friendly budget' which will help overcome the current pandemic.
"We would like to congratulate the Government for announcing the budget equivalent to 17.9% of GDP amounting to Taka 5,68,000 crores in this pandemic situation. Total budget increased by 13.24% as compared to the revised budget of 2019-20 while the development budget increased by 6.27% as compared to revised budget as well", said ICAB in a statement.
The statement said however, revenue as targeted Taka 3,78,000 crores, will be difficult to collect due to the negative impacts of current pandemic on trade, commerce, industries, import, export and services. We expect that the Government will finance the deficit from money market without reducing the credit flows to private sectors.
No doubt, the proposed budget is ambitious and involves lot of challenges in the implementation process. Impediments to on-time implementation of ADP projects should be addressed for achieving the targets of GDP growth set in the proposed budget," Mohammad Farooq, president of ICAB, said in a statement.
"We appreciate that the proposed budget of FY 2020-21 has prioritised health, agriculture, social safety net and job creation for recovering from the current pandemic crisis. Corporate tax rate reduced from 35% to 32.5% is a relief for the local companies and this will also encourage industrialization and Foreign Direct Investment in Bangladesh."
The threshold of tax-free income has been raised to Tk 3 lakh from Tk 2.5 lakh for individual taxpayers and a 5 percent tax slab has been introduced instead of existing 10 percent. The highest tax slab has also been reduced to 25 percent from existing 30 percent.
This will give a relief to low-income people and encourage to disclose the actual income by the tax payers, which will boost the country image and global ranking to attract FDI, ultimately bringing positive impact in revenue collection and employments.
In view of the current unusual situation, as an extra-ordinary measure, we find rationality in widening the areas of investment for previously undisclosed income by paying taxes at the lower rate.
"However, we expect that this extra ordinary measure will not be continued beyond the stipulated year. To curb the under invoicing we appreciate the provision for imposition of penalty at the rate of fifty percent (50%) on the amount of the difference.
However, it will require judicious application, in view of the fact that normal business transactions are not arbitrarily valued for imposition of such penalty", the statement also said.
Without reduction of deduction rate (10% /12%), treating as the deduction under section 52AA(1) as final tax under section 82C, (which means earning of profit @ 37% of gross receipts) is impracticable and will be unjust. We therefore, recommend to reduce the rate from 10% /12% to 8%.