Surcharge on wealth to be levied on taxpayers ==> Valuation to be determined at historical prices

FE Report (June 13, 2011)

The proposed surcharge on personal wealth or assets will be borne by those tax-paying individuals whose net worth of such property (movable and immovable) exceeds Taka 20 million (2.0 crore), revenue board officials said.

Those who do not have income earnings beyond the annual tax-exempted limit and as such do not file annual tax returns, will not have to pay the proposed surcharge under the Income Tax Law.

When asked about those who do not have tax identification number (TIN), despite enjoying annual income above the tax-exempted limit and also having assets or wealth above the limit of Taka 20 million, a concerned official said these are cases of tax evasion or avoidance and should not be mingled with the proposed wealth or property surcharge.

The National Board of Revenue (NBR), upon the approval of the proposed Finance Bill 2011 by the Jatiya Sangshad (JS) and being assented to by the President of the Republic, will collect surcharge at the rate of 10 per cent on the value of assets only on the amount that exceeds the limit of Tk 20 million, a senior income tax official told the FE Sunday.

The taxmen will not collect any "surcharge" on the people do not have any taxable income even though having assets valued at above the proposed limit, he said.

The taxmen will accept the value that the taxpayer will show in their tax return files, he added.

The cost of land, real estate property or other forms of assets or wealth will be considered for valuation under the proposed surcharge at acquisition or historical prices, he said.

Explaining this, he said the base-price for slapping surcharge will be the original cost or acquisition value of property.

"If any taxpayer shows the land value at the price when he purchased it, to cite an example, 20 years ago, the taxmen will accept that value," the official said.

According to an estimation of the revenue board, 20 per cent of the existing taxpayers might fall under the new tax measure that will come within the purview of Income Tax Act.

However, there are yet no detailed studies about how many taxpayers have net personal assets worth above Tk 20 million.

The new rule for imposition of surcharge on income tax is incorporated in the Finance Bill-2011, placed in the parliament on June 9.

Taxmen said taxpayers in the Large Taxpayers Unit (LTU) will mostly come under the category of the proposed surcharge. All of them are directors of different banks and companies.

There are a total of 706 individual taxpayers in the LTU. Of them, 675 are active taxpayers while others file nil returns or had died.