Why Automation Needed in Tax Revenue Collection?

In Bangladesh to increase Tax Revenue other than Non-Tax Revenue it needs to be automated and fully digitalized because it’s the fastest way of Assessment & Tax Collection. 

According to the National Board of Revenue (NBR) at the end of the income tax fair on January 2, the number of taxpayers who have given their returns in FY 2021-22 was only 2.3 million and the number of people with Tax Identification Number (TIN) in the country was 7.4 million and it’s growing rapidly. But submission of tax returns is less than half of the total number of TIN holders.

The tax to GDP ratio is very low in South Asian countries and It’s less than 8%. Many Researcher thinks that the tax to GDP ratio should be 18%-20%. Every year increases the number of TIN holders with a few numbers of tax returns submitted but still, the tax to GDP ratio is laid between 7%-8%.

Last FY 2021-22 NBR introduce its Online Tax Return submission system with a few limited services called e-Return and many taxpayers enjoy their hustle-free Tax Return submission system in e-Return. They enjoy their first ever non physically in-person return submission & paperless return submission direct to the NBR. The response of most of the taxpayers who submitted their tax returns for the FY 2021-21 through this e-return system has been quite impressive & satisfying.

Generally, taxpayers submit their tax return in their Tax Circle office under the Taxes Zone as per the TIN and they wait for their Tax Acknowledgement Slip until it is signed by the Deputy Commissioner of Taxes (DCT)/Assistant Commissioner of Taxer (ACT). Most of the time taxpayers got their Tax Acknowledgement Slip following the next working day. If any Taxpayers apply for their Income Tax Certification which is in general not valid by Income Tax Ordinance,1984 but is sometimes needed for applying for any loan application & other similar things it will take at least three days to give an Income Tax Certificate it’s signed by the DCT. But e-Return provides taxpayers with their Tax Acknowledgement Slip & Income Tax Certificate instant.

Sometimes tax circle office lost taxpayers’ return documents or taxpayers applied for a certified copy of the Tax Return tax office could not provide the right time and also taxpayers cost a lot. But the e-Return system stores taxpayers’ information the following year anytime taxpayer can access their return information. If any taxpayer needs to submit his/her Tax Acknowledgement Slip to the Bank or other places they can download/print it anytime from the e-Return system and the Tax Acknowledgement Slip & Income Tax Certificate do not need to be signed by DCT/ACT/Commissioner of Taxes it will be automated generated QR code available here which is no need to signed by authorized person.

In FY 2021-22 e-Return system doesn’t allow that taxpayer to submit their Tax Return which has Tax Deduction at Source (TDS)/Advance Tax, only allow that taxpayer who has no TDS/AT can submit their Tax return. That year NBR does not configure with e-TDS systems & IBAS++ that’s why they do not allow all kinds of taxpayers to submit their tax returns for accurate tax returns of taxpayers. Government employees (Without IBAS++) & other private sector employees whose organization tax is deducted on a source monthly basis as a withholding entity and all of those employees could not claim their TDS at the e-Return system.

At last to fastest way to collect Tax revenue, NBR needs to overcome all of those issues and find the fastest way of Tax Return assessment as like e-Return with all kinds of services i.e. all kinds of taxpayers can submit their tax returns. And also need the fastest payment system with a low charge like Automated Challan (A Challan), Sonali Seba, etc. Most of the time TIN holders try to avoid the tax office & they fear about taxation system to avoid this kind of issue it needs to be user-friendly online submission with no physical contact & paperless attachment.

  1. MD. Fazla Rabbe Sarder, FMVA®, MAT (A&IS, DU), is a Valuation Analyst, Tax Accountant & Consultant.