The economy is yet to bounce back from Covid shocks, but income tax and VAT receipts in FY2020-21 demonstrate a recovery to the pre-pandemic level.
The amounts collected by the National Board of Revenue in income tax and VAT in the year rose 14.11% and 10.82% compared to the previous year.
Officials at the NBR said the scope of whitening untaxed money, digitalisation of the revenue system, emphasis on the collection of source tax and strengthening of the monitoring of the revenue collector were the reasons behind the growth.
However, the outbreak of Covid-19 last year led to negative growth in both income tax and VAT collection.
Economists said the economy had gained momentum overcoming Covid setbacks to a large extent, and that was reflected in the rising exports and imports at the beginning of this year, and the domestic production and supply gathering pace. As a result, revenue climbed up, but since the FY2019-20 had negative growth, the next year seems to have seen a big boost.
Despite the growth in revenue, Executive Director of Policy Research Institute Dr Ahsan H Mansur said, it was far less compared to the gross domestic product.
"More revenue is needed to provide cash assistance to people [who need it] during the pandemic. The NBR has to increase revenue collection further through automation," he said.
According to the data of the NBR, the growth in income tax – 14.11% -- was the highest in revenue collection, increasing the total collection to Tk85,000 crore against the target of Tk97,000 crore.
Officials at the income tax department said 86% of the money collected in income tax had been cut out as source tax, which was why income tax from individuals and institutions did not fall short.
Besides, the monitoring has been intensified amid the pandemic, they said.
A major part of the revenue collection in income tax came from large taxpayers. The Large Taxpayers' Unit surpassed its target by realizing Tk24,011 crore at a growth of 15.22% in FY2020-21, compared to the previous year.
The unit collected tax from large enterprises, including mobile phone companies, banks, insurance and financial institutions, pharmaceuticals, cement and ceramic companies.
The opportunity to invest untaxed money also played a role in the jump in revenue collection, NBR officials said.
Large Taxpayers' Unit Commissioner Md Iqbal Hossain told The Business Standard that the rising demand in the economy and improved relationship with the taxpayers made the success possible.
The government has been imposing movement restrictions since the outbreak to contain the virus transmission. It has affected small business entities badly but big companies have continued to make profits and so the VAT collection from cigarette and mobile phone manufacturers, banks and large companies of consumer products went up.
The Large Taxpayers Unit recorded significant growth in VAT collection as well.
More than 50% of Tk93,000 crore in VAT came from 157 large companies.
Overall VAT collection rose 10% but the collection from large taxpayers increased by more than 16%.
Former chairman of NBR Muhammad Abdul Mazid considers the revenue growth as a significant success of the NBR.
Though incomes of individual taxpayers slumped, large companies did not see a dent in their business amid Covid-19, and the revenue collector was successful in making them compliant, he said.