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The National Board of Revenue (NBR) has decided to go tough on the tax evading real estate developers.
The Board has formed a high-level committee to find out the extent of tax evasion in the real estate sector and suggest measures to stop it, according to sources.
Commissioner of Tax Zone-5 Bashir Uddin Ahmed has been named as the head of a five-member committee that has been asked to come up with specific suggestions to stop tax evasion by the real estate businessmen. The committee has been asked to submit its report by April 06 next.
The NBR formed the committee out of the feeling that more than 200 operators engaged in booming real estate business were not paying the actual income tax and value added tax (VAT).
At present, there is no comprehensive guideline to determine the actual income and tax of the real estate business houses, he added. The committee has been asked to determine whether there is a need for prepare a guideline for streamlining the tax realization system for the real estate sector.
The government has introduced 1.50 per cent VAT on the sale value of each of the apartments from the current fiscal year
The Real Estate and Housing Association of Bangladesh (REHAB) claims that they are paying more than Tk 7.0 billion as revenue to the public exchequer. But the concerned NBR officials are certain that the government is being deprived of a substantial amount of revenue by the real estate developers through tax evasion
REHAB president Taufiq M Siraj told the FE that they would always welcome government move to consolidate the position of the sector.
"But the government should keep in mind whether the new move would hurt the normal growth of the sector," he added.
Siraj said 1.5 per cent VAT that has been introduced from the current budget has already proved to be a good tool for the NBR in increasing substantial revenue from the sector.
REHAB vice-president Anwar Hossain said it is better for the country's real estate sector if the NBR holds discussion with the real estate operators before brining in any change in the existing guideline.
"We will not be able to sustain growth of the sector in case of any hard approach by the board," he added.
The REHAB officials said the growth of the sector has already declined substantially due to the recent hike in the prices of iron rod and cement.
REHAB began its activities in 1991 with only 11 members. Now the organisation has 161 members.
The annual turnover of the country's real estate sector, according to REHAB, is more than Tk 75.0 billion and it contributes 12 to 14 per cent to the gross domestic product (GDP) of the country.
More than 80,000 apartments were sold during the last 20 years, including 7000 apartments handed over to buyers last year. Developers also develop 4000 to 6000 plots each year.
Country's real estate sector now provides direct employment to more than 1.50 million people.
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