Cabinet comes to panic-struck taxpayers’ rescue

The cabinet yesterday decided to bring in changes in direct and indirect tax laws with the view to thwarting taxpayers from getting slapped with a penalty for their failure to comply with deadlines owing to the shutdown.

It was decided that a provision would be added to the VAT and Supplementary Act 2012 such that the revenue authority can extend the deadline for submission of value-added tax returns during extenuating circumstances like natural calamity, pandemic and other emergencies.

A similar provision would be added to the Income Tax Ordinance 1984 so that the National Board of Revenue (NBR) can waive the penalty and interests for the failure of taxpayers to comply with time-bound rules and extend time -- a move that is likely to give respite to a large number of taxpayers from the risk of fine.

The decision comes nearly one-and-a-half months after the government declared a general holiday and enforced a stay-at-home order to slow the spread of highly contagious coronavirus that has wreaked havoc all over the world.

Most of the businesses save for essential commodity processors and marketers, drug makers, superstores, groceries and perishable foods and banks have remained shut since March 26.

While the NBR kept its field offices of VAT open from April 12 to April 15 to receive VAT returns from businesses, the majority of the businesses could not file returns timely because of the adverse environment.

Subsequently, various trade bodies including the Federation of Bangladesh Chambers of Commerce and Industry appealed for extending the deadline for submission of VAT returns without fine.

Last month, the NBR got 31,000 returns, which is half of what it received the previous month, officials said.

As per rule, businesses have to submit details of transactions of the previous month and deposit VAT paid by the end consumers to the state coffer within the 15th of the following month.

Firms have to pay Tk 10,000 as a penalty for failure to submit VAT returns within the deadline.

They can also seek time for delayed furnishing of return but they have to pay 2 per cent simple interest monthly for delayed submission, according to rules.

In the face of rising concerns and difficulties faced by businesses, Finance Minister AHM Mustafa Kamal last month said that the deadline for submission of VAT returns would be extended.

Apart from VAT, there are various time-bound provisions in the income tax law.

Many taxpayers who got permission to file tax returns after petition could not file their income and expenditure statement as the lockdown began ahead of their submission deadline, said a senior official of the income tax department.

Besides, employers have to submit statements of return filings by their employers within April 30 every year to avoid a penalty, which many could not do.

Companies are also required to deposit the tax deducted at source of goods and services of the current month within the first half of the following month.

There is also a time-related obligation regarding disposal of tax-related appeals in the present rules, said officials and firms.

But many could not do them for the shutdown.

Now, a senior official of the NBR said time equivalent to the number of days lost for the shutdown will be extended so that taxpayers can comply without facing a penalty.