Role Of Income Tax In Economic Development Of Bangladesh 1f1l5k

Role of income tax in economic development of Bangladesh: Tax is contribution exacted by the government. It is a non-penal but compulsory and unrequited transfer of resources from the private to the public sector, levied on the basis of predetermined criteria. In a country like Bangladesh it is a major source of revenue for the government. In Bangladesh the tax revenue for the government s for nearly 80 percent of the total government revenue. In the fiscal year 2010-11 the revenue from income tax was 28 percent of the total tax revenue. As per budget of the fiscal year 2011-12 income tax revenue target for 27,561 crore taka which is 29 percent of total tax revenue. So the first and foremost aim of income is to raise public revenue to meet the over increasing public expenditure Socio-economic development through simplification in taxation system: Direct Tax plays a major role in the socio-economic development and helps to eradicate discrimination. The principle of direct Tax is to establish equality and to achieve it the government has increase the tax free limit given below: Tax Rate Male Female Handicapped

Nil(previous) 165,000 200,000 250,000

Now 180,000 200,000 250,000

And for those people whose yearly income is up to 12 lakhs will get other benefits and for those people who got asset valued 2 crore need to give surcharge of 10 percent on tax. This will generate more revenue and will

play a good role in the socio-economic development as government will be able to spent more money on the public interest and welfare. Tax holiday scheme: An industrial enterprise established within prescribed time limit shall be exempted from tax for certain period i.e 5 to 7 years but the Finance minister has proposed to increase the time limit from 7 to 10 years which has come into action from 1st January 2012. This tax holiday scheme will encourage new investor to invest more and it will ensure economic development through industrialization and it will also create more employment as more industry more worker. Specially, sector like tourism can attract tourist specially, foreign tourist and from them we’ll be able to obtain more foreign currency that will help in the development of our country. Tax intensives for encouraging saving (incomplete) The government has decided to decrease the tax rate from 10 percent to 5 percent. This will obviously attract more people to invest in saving certificate which will help in economic development. Encourage Local publishers:

1) Investment allowance 2) Accelerated depreciation allowance 3) Tax incentives for small and cottage industries 4) Tax exemptions in certain expenditures. 5) Tax incentives for foreign investors. 6) Allowance for scientific research 7) Tax incentives for remittance to Bangladesh.