The government has taken an initiative to scrutinise income tax returns filed by car owners to prevent tax dodging through the registration of vehicles with fake taxpayer identification numbers, said officials of the National Board of Revenue (NBR).
To this end, the NBR has already started working jointly with the Bangladesh Road Transport Authority (BRTA) to verify the e-TIN information given during the registration of cars, they added.
Besides, the NBR will also evaluate car owners' tax files to see whether they are disclosing the car registration in their tax returns and if it justifies their living cost.
The NBR officials have expressed hope this move by the government will help to prevent faking e-TINs and will help to boost revenue collection from vehicle registrations and renewals.
As part of their joint endeavour to curb irregularities and tax evasion in the registration of personal vehicles, the NBR and the BRTA integrated their systems on 23 June this year.
Preliminary investigation has revealed that many car owners have hidden vehicle information in their income tax returns while many have taken registration using fake TIN to escape the eyes of the revenue authorities, said sources.
A set of plans have been taken to stop these irregularities, the sources mentioned, adding if these are implemented, registrations of cars through forgery will be stopped and car owners will be forced to pay income tax in advance.
The sources further said the vehicles registered with the BRTA with valid TINs have been listed according to tax circles in the country.
These lists were sent to the field level circles of the tax zones concerned on 13 July. The circles have been instructed to verify the income tax returns filed by car owners as per the lists. At the same time, they have been asked to inform the NBR about whether the car owners have submitted their tax returns or whether the investment in the cars is shown in the tax returns.
It is learned that at the beginning of last year, the Central Taxes Survey Zone collected information about 1,821 luxury cars from the BRTA as part of its regular activities.
The cars include BMW, Volvo, Mercedes-Benz, Audi, Lexus, Jaguar, Hammer, Prado and Harrier.
The scrutiny of TINs used in the registration of 891 of these vehicles showed that fake TINs were used in the registration of 128 vehicles.
After the system integration, TINs were found against the registration of 12, 85,572 cars in the BRTA software. Of these, 8,00,043 TINs were correct. The rest of the vehicles have been registered with fake TINs.
According to a NBR, the number of vehicles registered for personal use in the country has increased significantly in recent times. In some cases, taxpayers are reluctant to declare investment in cars at showing the actual price. There is also a tendency to hide the ownership of multiple vehicles. As a result, revenue collection is declining.
An NBR official, speaking on condition of anonymity, said the days of tax evasion for car owners are over. No one will be able to hide information in the future even if they want to, he added. "For example, many have registered vehicles using fake TINs.
The BRTA will verify the TINs during the renewal of the registrations in future. For this, the BRTA has been allowed to enter the NBR system.
"Hence, it is not possible to renew the car using fake TINs. Again, many people have bought a car using valid TINs but did not show those on their tax returns. Lists of vehicle names, model numbers, owners' names and TINs have been sent to the tax circle offices to find out such taxpayers. The circle offices have been asked to verify them."
He further said a provision has been made in the budget for the current financial year for collection of advance income tax on vehicle registration, which is expected to increase the collection of advance income tax.
"The tax zones have been given the letter to verify the tax returns filed by car owners on the basis of preliminary information. Later on, activities will be taken on a larger-scale."
The national budget for the current financial year has made it mandatory to pay advance income tax on car registration by 30 June. In case of violation of this rule, car owners have to pay fines.
According to the BRTA website, there are a total of 372,137 registered personal cars in the country.
The number of personal car registrations is increasing every year.
In 2020, 12,403 personal cars were registered. This year, the figure stands at 6,196 as of May.
Besides, the total number of vehicles including buses, trucks, pick-ups, CNG-run auto rickshaws and motorcycles registered with the BRTA stands at 47,29,000.
No fitness certificate without tax return submission
At present, vehicles can be registered and fitness certificates can be obtained by merely showing a TIN. But in future, no one will be able to obtain a fitness certificate without showing a tax returns deposit slip.
On 25 March the NBR sent a letter to the Secretary of the Road Transport Division to take necessary steps in this regard.
Sources said an inter-ministerial meeting was held on 15 March this year at the conference room of the Internal Resources Division to expedite the process of filing income tax returns and tax deduction at source. Representatives of 10 ministries and the NBR were present there.
The representatives of the ministries unanimously recommended that showing return deposit slips be made mandatory instead of TINs to get government services.
After the meeting, the NBR sent letters to those ministries and departments concerned.
According to the letter, there is an obligation to obtain e-TIN certificate for trade licence renewal, vehicle registration and renewal, vessel registration and renewal, import-export certificates, and listing and renewal of contractors, but it is observed that persons or organisations holding TINs are taking all these services by obtaining TIN certificates online but are not filing income tax returns. As a result, the rate of tax return submissions is not increasing and a large segment of taxable individuals and organisations are staying out of the tax net, the letter further says.
The letter also says that at present, a car owner can register a vehicle only with a TIN. They do not need to submit tax returns.
As per the Income Tax law, there is no scope for revocation or cancellation of TIN due to non-submission of tax returns, the letter mentions, adding, therefore, there is an opportunity to hide income and evade taxes.
Besides, tax net and tax compliance will increase if submission of tax returns slips is made obligatory in all cases, including participation in tenders, contract listing, says the letter.