Black money holders get more time to whiten their undisclosed income through pouring in money in stocks as the parliament today passed the Finance Act 2021 by giving the unquestioned amnesty against such investment.
However, the tax on such investment has been raised from this fiscal year’s 10 per cent to 25 per cent and the tax has to be paid within 30 days of making the investment.
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The window for investment of black money in stocks without facing any question on the source will remain open from July 1 this year to June 30 in 2022.
Moreover, the investors will have to pay a penalty of 5 per cent tax on the amount of the 25 per cent tax they will pay to whiten the black money.
In 2020-21 fiscal year, Tk 282 crore was whitened by means of investments in the stock market by paying a 10 per cent tax and the exchequer got around Tk 28 crore as tax against this investment.
“We don’t expect to see big investments to come due to the high tax on the undisclosed money for the upcoming fiscal year,” said Sayedur Rahman, president of the Bangladesh Merchant Bankers’ Association.
Investment was not that high also this fiscal year when the tax on the undisclosed money was 10 per cent, said Rahman, who is also the managing director of EBL Securities.
“So, a tax of over 30 per cent will ultimately discourage people to whiten money. But, it’s like something better tha nothing. The thing is a scope is there if anyone wants to whiten money.”
Today’s Finance Act also made it mandatory for the tax to be paid only in pay order or automated challan and a declaration in the prescribed form will have to be submitted to the respective deputy commissioner of taxes.
An additional penalty of 10 per cent will be imposed if the sum invested is withdrawn from the capital market within one year from the day of such investment, according to the new act.
It was also mentioned in the act that ‘securities’ mean stocks, shares, mutual fund units, bonds debentures and other securities of the companies listed in and approved by Bangladesh Securities and Exchange Commission.
All other government securities and bonds tradable in the capital market are also included in the category, according to the act.
