NBR Proposes Real-Time Bank Information Access for Taxpayers

The National Board of Revenue (NBR) is looking to establish real-time access to bank information for taxpayers. This would include details like account balances, interest income, and tax amounts withheld by banks, all connected to online tax returns. Officials believe this could help reduce tax evasion and enhance transparency, while also making it easier for individuals to file their returns.

According to sources, NBR officially reached out to Bangladesh Bank and the Finance Department on August 14 to discuss this initiative.

Experts have generally responded positively, noting that such a measure could help in minimizing tax evasion and bank fraud by making it harder to hide account details.

However, some bankers express concerns that this might compromise the privacy of taxpayers’ bank information, potentially discouraging people from keeping their money in banks.

Currently, the country has around $1.2 trillion in tax identification number (TIN) holders, but only about 45 individuals filed tax returns last year.

This year, NBR has transitioned to online tax return submissions for most individuals, with few exceptions.

A senior official from NBR, speaking anonymously, clarified that the board is not seeking full access to individual account information, just the details already included in the online tax return system.

He added that this could simplify matters for taxpayers, as banks currently require them to collect certificates for taxes deducted at source (TDS) from multiple institutions. Instant access to this information would streamline the submission process.

Another NBR official mentioned that only three types of data would be necessary: interest income, the amount withheld in taxes, and the closing balance at the end of the relevant fiscal year—no additional transaction details would be requested.

If changes to the existing Banking Corporations Act are necessary, he noted that appropriate government departments would consider them.

Governor Ahsan H Mansur mentioned that while he has yet to receive any correspondence from NBR regarding this proposal, discussions are ongoing.

He pointed out that currently, individuals attach bank statements when filing tax returns, but the NBR is suggesting that these be accessed directly from banks, raising questions about privacy.

Attempts to reach NBR Chairman Abdur Rahman Khan for comments have been unsuccessful.

At the moment, banking information is confidential under the Banking Corporations Act, meaning NBR cannot directly access depositor details without formal requests through Bangladesh Bank.

If implemented, the proposed system would allow tax authorities direct access to specific taxpayer information.

SK Zami Chowdhury, managing partner at Chowdhury Emdad and Company, noted potential challenges for both banks and taxpayers, suggesting some individuals may be hesitant to keep funds in financial institutions. Nevertheless, he expressed optimism about NBR’s intentions, arguing that traceability in banking transactions could reduce not just tax evasion but other irregularities as well.

NBR’s aim to track deposits accurately, along with improvements in online returns, has been highlighted. Individuals need to provide their NID numbers to open a TIN, and they require the same information for bank accounts.

If the online tax return system connects with banks, relevant financial data concerning total deposits, annual interest income, and taxes deducted will be readily available upon submission, aiding tax calculations.

Tax expert Nezam Uddin Mahmud pointed out that there’s currently no way to verify the amounts withheld by banks unless letters are sent to each. Given the scale, collecting data on millions of taxpayers this way is impractical, so the online filing system will help reveal concealed accounts and reduce discrepancies.

The idea’s potential for ensuring taxpayer privacy raised concerns among bankers and experts alike, with some fearing that granting access might expose confidential information.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, cautioned that broader access to taxpayer information could lead to misuse, potentially discouraging deposits in banks. He emphasized the need to safeguard sensitive data alongside efforts to prevent tax evasion.

Shahadat Hossain, former chairman of Bangladesh’s Certified Public Accountants Institute (ICAB), echoed these concerns regarding data leaks. He recommended limiting access to certain certified NBR personnel to strike a balance between prevention of tax evasion and protecting taxpayer privacy.