A catastrophic situation is created due to the 24 times increase of tax at source at a time in lands and flats registration in the year of election. According to the people concerned, in some cases, the tax could be increased by 50 to 60 times, which might risk the future of 20,000 factories and 1 crore people related to real estate sector. They regarded it as a deep conspiracy against the government.
This extra tax will be a threat to real estate sector, according to Bangladesh Land Developers Association (BLDA). The President of the organization and Chairman of Bashundhara Group, Ahmed Akbar Sobhan, in a letter sent to Prime Minister on July 6, has expressed his concern over this matter. The organization of land developers think, the extra tax imposed in land registration will reduce investment in real estate sector. In addition, many people will go for constructing building abroad which will increase money laundering as well.
According to the businessmen in this sector, the extra tax at source is unprecedented. They said the people previously thought investing in land as safe and profitable. Now, due to this extra tax, investment in lands in Dhaka or big cities will become non-profitable, as well as reduce the transaction of lands. As a result, the government will lose a big amount of revenue. They also think this step as a conspiracy against government.
The concerned also said that apart from land and flats, there are about 20 thousand industrial factories associated with the housing sector. Over five hundred products including bricks, sand, cement, rods, tiles and electrical materials are used in the construction of a house or building. If land purchase cost increases due to registration, the number of house construction will also decrease. And if house construction slows down, the connected institutions will suffer directly. And about 1 crore people working in these institutions may become unemployed. 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 relevant rules were published in the gazette form. According to the rules, the transfer of ownership of immovable property or land and flats in any part of the country shall be taxed at 24 times the locality or somewhere more. The buyer has to pay Tk 3 lakh to Tk 20 lakh per plot only as tax at source for registration of land, flat or any structure, which was previously Tk 1,06,500 to a maximum of Tk 2 lakh. According to Section 6 of the Income Tax Rules entitled to tax collection from transfer of property, the property registration tax has been increased from 4 percent to 8 percent in various areas of Dhaka, Chattogram and Narayanganj. In Gazipur, Munshiganj, Manikganj, Narsingdi, Dhaka and Chattogram areas outside the city corporations and municipal areas located in district headquarters, the tax at source has been increased from 3 percent to 6 percent. 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 reassessment of tax: In a letter to the Prime Minister, BLDA said that in the budget of the last financial year 2022-23, there was only tax rate at source in case of transfer of land, house with land, any construction of house, flat, apartment or floor space located in different areas of Dhaka, Narayanganj and Chattogram cities, which was 4 percent on deed value. But in the budget of the financial year 2023-24, instead of 4 percent, 8 percent on the deed value or amount of 20 lakhs, 12 lakhs, 10 lakhs, 8 lakhs, 6 lakhs and 3 lakhs per Katha based on different areas have been fixed. As a result, the tax rate has been increased from 24 to 60 times depending on the area.
The letter also said that people would be discouraged from investing in land, houses, flats etc due to such high taxation. Furthermore, they will be interested in investing in foreign countries. Due to these reasons, there is a possibility of money laundering. This will cause extreme instability in the housing sector of the country along with loss of government revenue. Calling the high tax rate unreasonable, inhumane, arbitrary and unenforceable, the letter requested reassessment of tax at source to bring house, flat and land registration tax to a bearable level. Due to the increase in the said tax, land sales will decrease, which will lead to reduce the government's revenue collection. Apart from this, about 10 thousand industries are directly and indirectly involved in housing business and employment of 1 (one) crore people depend on it. 10,000 industries will close down and 1 crore people will become unemployed if other taxes including tax at source are not reduced. As a result, there will be a chance of occurring social and political instability in the country.
@The report was published in Bengali on print and online versions of The Bangladesh Pratidin on July 10 and rewritten in English by Lutful Hoque
