An Assessment of the Income Tax Planning Measures in Bangladesh: Individual Taxpayer’s Perspective.

Abstract

Despite several reform measures, the Tax-GDP ratio in Bangladesh has been increased from 3.41% (1972-73) to 11.2% (2019-20) only, which is one of the lowest among the developing countries as well as the similar economies. In a country of around 17 crore people, the number of individual taxpayers is less than 2 percent. Tax evasion and avoidance, poor tax administration is the main problem of poor tax performance in Bangladesh. An effective use of tax planning measures can improve the tax compliance behavior of the individual tax payers. In view of the existing tax savings measures under the current income tax legal framework, an attempt is made to analyze the tax planning measures available for the individual taxpayers. By conducting qualitative document analysis, the study identified that analyzing tax slabs and tax rate differentials, claiming rebates for investment allowances, selection of businesses based on tax incentives, and maximizing tax savings from allowable deductions may reduce the tax burden significantly. Effective tax planning also leads to effective fund management to meet the financial objectives.