The word Mainka Chipa is very popular in old Dhaka. Its exact meaning is not found that way. However, if you observe its use, it can be understood that this chip is a very chip. Getting stuck in it and getting out of it is excruciatingly painful. That is, to be stuck in the mainka chipa means that it is as difficult to get rid of it, as it is more unbearable to be stuck in it!
Private employees of this country have fallen into such a trap. They are constantly earning by the sweat of their heads to their feet or below the ground. From there they are taxing the government in various ways. Besides sweating, many of them may have the thought that they will surely get some money from the provident fund at the end of the job, whatever the cost. That thought, however, can now slowly turn into anxiety. Because, they have to pay more taxes than the money of the provident fund!
The water has been muddied a lot with this high taxation. First, the recently approved Income Tax Act 2023 included new provisions for taxation of provident funds. It is said that according to the law, from this financial year, private companies will have to file tax returns on the income earned from the provident fund. At the same time, if the provident fund money is invested somewhere, the income will have to be taxed at the rate of 27.5 percent. Due to this, the fear of reducing the retirement benefits of the private sector workers became highly discussed.
A lot of commotion started about this. Either criticism. At one point, the finance ministry sought an explanation from the National Board of Revenue (NBR). After that comes a dramatic change. The National Board of Revenue (NBR) is finally going to reduce the tax levied on the provident fund income of private sector employees in the face of criticism, according to media reports. NBR chairman Abu Hena Mohammad Rahmatul Munim has sent a proposal to Finance Minister AHM Mustafa Kamal to reduce the tax rate from 27 and a half percent to 15 percent. Board officials have confirmed this information.
The recent proposal of the National Board of Revenue is certainly a relief. If it is passed, it will definitely be good for private sector employees. For this we have to thank those concerned. But there is one thing in my mind. That is, the private employees have to keep making that high taxing machine? What must be kept in their knowledge of discrimination?
Earlier, tax was not deducted from the provident fund of any government or private sector employees. Provident Fund and Gratuity Fund – Both of these were not subject to income tax. This rule runs till 2016. Since then, 5 to 10 percent tax was deducted as tax at source on private sector investment profits. But the public sector remains tax-free. And the recently approved Income Tax Act 2023 has included new provisions for taxation of provident funds. First, if the provident fund money is invested somewhere, it is said that the income will be taxed at the rate of 27.5 percent. Now 15 percent has been proposed. But as before, government employees remain out of touch.
Provident Fund is actually a social security structure for employees. This fund gives some extra money to them at the end of the job. The Labor Act provides for the creation of a provident fund or provident fund for the post-employment financial protection of employees. A certain amount is deducted from the salary every month. The employing organization pays an amount equal to this amount. All in all, the Provident Fund is formed. The company invests the money deposited here in various types of profitable sectors including buying savings bonds. This profit is then distributed among the employees. This profit is actually increasing the tax rate. As a result, the financial benefits of private employees will naturally decrease.
The problem is that while private sector workers will suffer, the sky is the limit when it comes to government benefits. It has been proposed to reduce the tax from 27 and a half to 15 percent, but in the end, the sharp sword of tax cutting has been placed on the neck of the private sector. By reducing their benefits, the benefits of the government were ensured. But this additional 5 percent could easily be levied on the provident fund of government employees. Because they have already been getting tax free benefits for a long time. Even if they were taxed at 5 percent, they would still be privileged. Because even then private individuals had to pay 10 percent tax. However, they did not have to take the additional tax burden! By doing this, the current disparity between the public and private sectors of the country may be reduced to some extent.
The question may arise that the discrimination between public and private sector workers is actually how much? In the case of Provident Fund, one sector is tax-free and the other sector is taxed more – or how logical?
The last change in the pay structure of government employees came in 2015. At that time the salaries of all grades of government employees were increased. In some grades it is increased to more than 100 percent. According to the increase in basic salary, provident fund and other benefits also increase. As a result, the earlier claim that private sector workers are paid more according to the market as compared to the public sector is no longer valid. Because private sector employees have very little opportunity to increase their salary by more than 100 percent at one stroke. All those who work in the private sector can feel this reality. Again, this year, the employees are getting an additional 5 percent salary increase beyond the annual fixed increment.
On the other hand, the private sector is already in danger due to the pressure of high inflation and global economic crisis in this country of free market economy. The progress and decline of the private sector and its employees is largely dependent on various ifs and buts. There are also concerns about job stability. Because just as the private sector gets some benefits in good times of business or economy, it also has to suffer the disadvantages of the global economic crisis. The fear of job loss in the private sector never touches the public sector. Why the educated youth of this country prepare for the government job examination for several years after their studies – knowing the reason, one can know about the benefits of government sector jobs. No detailed research is required for this. A little inquiry among acquaintances is enough.
When this is the case, while the provident fund of one sector is crushed by tax, workers of another sector are being given tax-free benefits. However, the public sector employees are now far ahead in various benefits compared to the private sector employees. As a result, the private sector employees have to deal with the stress on the stress. As pressure on pressure, more pressure on it!
But this pressure could easily be kept a little tolerable. It could be done by reducing the disparity between public and private sector employees. But that’s not going to happen anymore. Who else wants to take pressure, say?
But yes, the 12.5 percent cut in tax rate is definitely to be thanked by the National Board of Revenue officials. In a letter written to the Finance Minister, NBR said that lowering the tax rate will reduce the tax burden on private sector employees. Savings will be encouraged in the country. In other words, the fact that the tax burden is on the private sector employees has at least been accepted. A-O or less! But savings will actually decrease. In fact, in a provident fund, savings are made every month.
Let him go. Even if one party’s funds decrease, the other party’s funds are increasing. Private employees are now happy to fill the pockets of others, right? Their main slogan is the same – ‘All of you stay happy, let the fire burn in my chest’!
Author: Report Editor, Independent Television