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Income tax on private universities to stay
Students won't have to pay VAT: Muhith
Finance Minister AMA Muhith Tuesday ruled out the possibility of exemption of 15 per cent income tax and other taxes of non-government universities in the current fiscal year, reports UNB.
"At the moment, we're not exempting income tax of the non-government universities. It needs further review and there is no possibility of exemption of 15 percent income tax in the current fiscal," he told reporters after meeting a 6-member delegation of Association of Private Universities of Bangladesh (APUB) at his ERD office in the afternoon.
The Finance Minister, however, said that VAT will not be charged on the tuition fees of the private university students and a decision has already been taken in his regard.
"Legal steps will be taken on the issue. I also asked them (APUB) not to charge VAT and it is more or less resolved," he added.
The APUB delegation, led by its chairman CM Shafi Sami, requested the Finance Minister during the meeting to exempt the non-government universities from paying tax on the mandatory FDR apart from 15 per cent income tax.
The government has imposed a 40 per cent tax (10 per cent at source and 30 per cent on assessment) on the reserved fund of the private universities kept in FDR/TDR including mandatory deposit of Tk 5 crore as FDR.
The Finance Minister said the income tax on the private universities has been reduced to 15 percent from earlier 37.5 per cent considering their social responsibility.
He informed the newsmen that so far 33 private universities have filed writ petition against the imposition of income tax on the private universities.
"One judgment on a writ petition filed by East West University has come out and that went in favour of the government," he added.
APUB vice chairman Abul Quasem Haider, IUBAT founder Vice Chancellor Prof M Alimullah Miyan and president of the Board of Directors of East West University Jalaluddin Ahmed were present on the occasion.
As the government earlier imposed 4.5 per cent VAT on tuition fees, the authorities of the private universities transferred it to the students by increasing their tuition fees.
Finding no other way, the aggrieved students took to the streets last week protesting the government decision and demanded immediate withdrawal of the VAT on their tuition fees.
The students of the Southeast University, East-West University and American International University, Bangladesh staged protests and barricaded Mohakhali-Airport road to press home their demand.
An FE report adds: The National Board of Revenue (NBR) is reviewing the impact of possible withdrawal of income tax and Value Added Tax (VAT) slapped on private universities in a bid to consider exemption of the levy for the sector.
The government slapped 4.5 per cent VAT and 15 per cent income tax on private universities from the current fiscal.
A number of students of the private universities recently staged demonstration protesting the newly imposed VAT that raised their tuition fees.
Private universities have also filed a total of 33 writ petitions in the court against the newly slapped 15 per cent income tax on their earning.
The government slapped the taxes in the budget for fiscal 2010-2011.
Finance minister AMA Muhith sat with the heads of income tax and VAT departments Tuesday to review the existing tax on educational institution.
"The process of waiving the VAT on private universities is underway as per recent instruction of the finance minister," said NBR member Value Added Tax (VAT) Abdul Mannan Patowary.
The NBR is yet to issue any order regarding this, he said.
Aminur Rahman, Income Tax policy head of the NBR, said: "The government is yet to decide on exemption of income tax, which will be collected of the basis on earning of the private universities.
"I don't think it would be wrong to collect tax on earnings of the private universities. They usually show exaggerated figurers on expenditure," he said.
The government has slapped tax at reduced rate of 15 per cent while they are supposed to pay 37.5 per cent tax on their income, the rate is applicable for others, Rahman added.
Dr Rashid ul Ahsan Chowdhury, senior teacher of a private university, said: "It would be unjust to collect tax from students. They are paying much higher tuition fees than that of public universities."
Majority of the private university students come from mid-income group, he said adding that well-off section of people sent their children abroad for higher study.
Chowdhury teaches international relations (IR) in Bangladesh University of Business and Technology. He is the former member of customs department in NBR.
He strongly supported the income tax on profits of the private universities claiming that some universities only concentrate on making profits rather than providing quality education.
Income tax on private universities to stay