Thursday 18th of July 2024

Housing sector losing investment due to 24-fold increase in source tax

Morning Mirror Desk »

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As the source tax is 24 times for land registration, many people have turned away from buying land. Many people feel that it will not be safe to invest in land as the registration tax has become more than 24 times based on the area.

Many small and big businessmen think investing in land is profitable and safe. However, since the registration tax has increased 24 times, they do not think it is safe to invest in land in Dhaka or big cities. And the Bangladesh Land Developers Association (BLDA) thinks that additional taxation is a threat to the housing sector. In a letter signed by Ahmed Akbar Sobhan, president of the organization and chairman of Bashundhara Group on July 6, this organization of owners of land development related institutions expressed such fears to the Prime Minister.They feel that the investment in the country’s housing sector will decrease due to the additional tax imposed on land registration. In addition, many people will be interested in living outside the country, as a result of which the fear of money laundering will increase

It is known that the National Board of Revenue (NBR) has determined the new tax in the withholding tax rules under the Income Tax Act 2023.

On June 26, the rules were gazetted. Transfer of ownership of immovable property or land and flats in any area of ??the country shall be taxed at 24 times or more than the area based. The buyer has to pay Tk. 3 lac to 20 lac per plot only as tax at source for registration of land, flat or any structure. Previously were Tk. 16500 to 2 lac.

According to Section 6 of the Income Tax Rules entitled Tax collection from transfer of property, the property registration tax has been increased from 4 percent to 8 percent in various areas of Dhaka, Chittagong and Narayanganj. Source tax has been increased from 3 percent to 6 percent in Gazipur, Munshiganj, Manikganj, Narsingdi and Dhaka and Chittagong areas outside City Corporation and municipal areas located in district headquarters. Apart from this, the property tax under any municipality in the country has been increased from 2 percent to 4 percent and in other areas from 1 percent to 2 percent. On June 1, the finance minister made a proposal in this regard in his budget speech. And that proposal has been included in the rules.

BLDA’s request for tax rescheduling: In a letter to the Prime Minister, BLDA said, In the budget of the last fiscal year 2022-2023, the tax rate at source was only 4 percent on the deed value in the case of transfer of land, land including house, any building, flat, apartment or floor space located in different areas of Dhaka, Narayanganj and Chittagong cities. But in the budget of the financial year 2023-2024, instead of 4 percent, 8 percent on the deed value or 20 lakhs, 12 lakhs, 10 lakhs, 8 lakhs, 6 lakhs and 3 lakhs per katha based on different areas has been fixed. As a result, the tax rate has been increased by more than 24 times.

The letter also said that people would be discouraged from investing in land, houses, flats etc. due to such high taxation. Besides, they will be interested in investing outside the country. Due to these reasons, there is a possibility of money laundering abroad. This will cause extreme instability in the housing sector of the country along with loss of government revenue. Calling the high tax rates as unreasonable, inhumane, arbitrary and unenforceable, the letter requested for rescheduling of withholding tax to bring house, flat and land registration tax to bearable level. Due to the increase in taxes, the sale and purchase of land will decrease, thereby reducing the revenue collection of the government. Also, about 10,000 industries are directly and indirectly involved in housing business and employment of 1 (one) crore people. 10,000 industries will close down and 1 crore people will become unemployed if other taxes including source tax are not reduced. As a result, there will be social and political instability in the country

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