Taxation

Tropic: Assignment on Factor affecting avoidance of Income Tax in Bangladesh

Supervised ByMd Masud Rana

Assistant ProfessorDepartment of Business Administration

Submitted To:Department of Business Administration

Northern University Bangladesh

Submitted By:Section- A

Sl No Name ID01 S.M. Al-Shahriar BBA 120304790

Submission Date: 18-04-2016

Tax experience in practical life

Assesse Mrs Farhana Rob Sampa, who is above 40 years old. She have completed her graduation. She have income from 2 sources, from where she earned above Tk 300000 in a year. She have proper knowledge about taxation of Bangladesh. She never avoid income tax.

How she pay taxShe pay her income tax by flowing the steps:

Compute income for each Source of Income Aggregate the income from various sources under the respective Heads of Income Arrive at the Gross Total Income Claim the Deductions available Arrive at the Total Income Compute the Tax payable on the Total Income Reduce the Rebates, if any from the tax payable Add Surcharge as applicable to the tax Arrive at the Gross Tax Liability From the Gross Tax payable, reduce the Tax Deducted at Source Arrive at the Net Tax Payable or the Refund due From the net tax payable, reduce the Advance Tax Add the Interest to the balance amount to arrive at the Self-Assessment Tax Payable / Net Refund Due Pay the Self-Assessment Tax File the Return physically or upload the return electronically.

Recent Tax payment system

Sources of income can be classified into 7 categories, which are: Salaries. Interest on securities. Income from house property. Agricultural Income. Income from business or profession. Capital gains. Income from other sources.

Tax Rate (Assessment Year 2015-16) (As per Finance Act, 2015):

For individuals other than female taxpayers, senior taxpayers of 65 years and above, retarded taxpayers and gazetted war-wounded freedom fighter, income tax is payable for the

On first upto Tk. 2,50,000/- Nil On next upto Tk. 4, 00,000/- 10% On next upto Tk. 5, 00,000/- 15% On next upto Tk. 6, 00,000/- 20% On next upto Tk. 30, 00,000/- 25% On balance amount 30%

For female taxpayers, senior taxpayers of age 65 years and above, income tax is payable for the

On first upto Tk. 3, 00,000/- Nil On next upto Tk. 4, 00,000/- 10% On next upto Tk. 5, 00,000/- 15% On next upto Tk. 6, 00,000/- 20% On next upto Tk. 30, 00,000/- 25% On balance amount 30%

Tax Rebate for investment: [Section 44(2)/only allowable for Resident/Non Resident Bangladeshi]

Rate of Rebate: Amount of allowable investment is - actual investment or 30% of total (taxable) income or Tk. 1, 50, 00,000/- whichever is less. Tax rebate amounts to 15% of allowable investment.

Who should submit Income Tax Return? If total income of any individual other than female taxpayers, senior male taxpayers of 65 years and above, retarded taxpayers and war wounded gazetted freedom fighter during the income year exceeds Tk 2,50,000/-. If total income of any female taxpayer, senior male taxpayer of 65 years and above during the income year exceeds Tk 3,00,000/-.

Time to submit Income Tax Return: [Section 75(2) of the Ordinance] (a) For Company Taxpayers: By fifteenth day of July next following the income year or, where the fifteenth day of July falls before the expiry of six months from the end of the income year, before the expiry of such six months. (b) For Other Taxpayers: Unless the date is extended, by the Thirtieth day of September next following the income year.

Problem Face in paying TaxThere are some Problems faced by Tax payer in Bangladesh are as follows

Return Errors Lack of proper Tax Audit Inefficient Tax CollectionInefficient Taxation SystemManual taxation systemCorrupted Tax officer

RecommendationTax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions.

To increase tax collection the authority should take some steps

1. Solve the problems faced by tax payer2. Educate the people properly about Income tax3. Stop corruptive practice of Tax government and administration4. Who evade tax repeatedly should receive a jail sentence.5. Increase transparency in tax collection system.6. Tax collection system should be modernized.