• Thursday, October 23, 2014

Homeowners get some relief

NBR relieves them of separate bank accounts for collecting rents

Star Business Report

Homeowners who earn more than Tk 25,000 a month from rents have been exempted from the obligation to deposit the sum into separate bank accounts, the National Board of Revenue said in a notice yesterday.

But they would still have to deposit the rental incomes into their existing bank accounts from this month, according to a notice from the tax authority.

The development comes following demands from homeowners for relaxing the rule, which made separate bank accounts compulsory for rent collection from this fiscal year.

“We have eased the rule for the convenience of taxpayers as maintaining separate bank accounts for rental incomes will be a hassle for them,” said a senior official of NBR.

Failure to deposit rents in bank accounts would lead to a fine of Tk 5,000 or 50 percent of the tax applicable on the income from the property.

The move to enforce rent collection through bank accounts comes after the tax authority learnt that a sizeable number of homeowners dodge taxes by masking their true rental incomes.

As of April this year, there are 45,601 such homeowners in the country, with 30,000 of them in Dhaka alone, where rents are exceptionally high and a section of landlords live solely on the income from rents.

Yesterday's notice also said that homeowners will have to maintain separate registers to record particulars such as names of tenants, their addresses and the dates of payment of rents.

They will have to inform deputy tax commissioners of compliance with the rule and submit tax returns along with bank statements relating to rent deposits, it added.

The rent should be paid monthly through an account payee cheque or bank deposits. If any tenant pays rent in cash, the homeowner will have to deposit the money to his/her bank account, said the tax authority.

But if homes are owned by more than one person, separate bank accounts will have to be opened for those shareholders whose monthly rental income exceeds Tk 25,000.

In case of homeowners who stay abroad, the person holding the power of attorney on the property will have to deposit the rent in bank accounts.

The NBR expects that the new compulsory rule would increase revenue by reducing the scope to evade taxes, but it is yet to form an estimation of the sum to come.

“We hope the tax net will widen and so will the revenue. It will also facilitate in ensuring transparency in income statements of homeowners,” the official said.

However, some analysts had earlier expressed doubts over the success of the measure, fearing that it might increase negative practices among both the landlords and tax officials.

Published: 12:00 am Wednesday, July 23, 2014

Last modified: 1:09 am Wednesday, July 23, 2014

TAGS: NBR compulsory tax authority homeowners separate bank accounts

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