Stakeholders, mainly banks, are in confusion about the date when the reduced rate of source tax on export proceeds of readymade garment and other sectors would take effect. Some banks have been implementing the new rate at 0.25 per cent since January 1, the date when the rate was revised through a statutory regulatory order, while some other banks have been implementing the rate from July 1. Some banks have also sought explanations from National Board of Revenue over the issue. NBR on January 1 reduced the source tax on export earnings for all sectors, except jute goods, from 0.60 per cent amending the previous SRO of September 5 when NBR slashed the rate from 1 per cent fixed in the budget for the current fiscal year. In September, NBR set July 1 when the SRO would take effect with retrospective effect.But in the January SRO, NBR did not mention any date, which has created confusions among the stakeholders including banks, tax consultants and tax officials of exporters.Some banks including The City Bank and Eastern Bank have been implementing the new rate from January 1. Officials of the banks have said that they were doing so based on verbal instruction of NBR.Tax officials have asked the banks to consider the issuance date of the SRO as the date when the new rate is to take effect as it did not mention anything other date, they say. Some other banks including Southeast Bank have been considering July 1 as the intended date. Standard Chartered Bank on Sunday wrote to NBR seeking clarification on the issue to clear the confusion. In the letter, SCB said that the new SRO made the change of tax rate but made no mention of the date for it to take effect. ‘In this situation, shall we consider that the new SRO is effective from July 1,’ the bank wrote. A senior NBR official on Wednesday told New Age that they were informed about the issue.‘We are not examining the legal issues and will soon issue a clarification about the effective date of the SRO,’ he said.NBR officials, however, say that it is clear that July 1 is the date for the new rate to come into effect as amended SRO kept the date of original SRO unchanged. But, NBR is under huge pressure from field level income tax office, which is responsible for monitoring the deduction of source tax from export earnings, to make January 1 as effective date to keep revenue collection unhurt. The field office (income tax zone-4) will have to refund a huge amount and overall collection from the sector will steeply decline if NBR sticks to retrospective effect from July, they say, adding that NBR will get hardly any tax from the sector in next six months as traders will adjust their previously paid extra tax.The zone is also saying that they will not give any refund as source tax on export proceeds is considered a final settlement. NBR will have to issue a new SRO if it wants to make January 1 as the new date, they say.Bangladesh Garment Manufacturers and Exporters Association president Siddiqur Rahman on Wednesday told New Age that there should be no confusion about the effective date of the rate.‘The SRO has changed only the tax rate, not the effective date which is July 1,’ he said.Banks have no authority to do otherwise, he added.
