The revenue administration has abolished the black money whitening provision, a scope that allowed both individuals and companies to legalise their undisclosed income by paying a 15 percent tax and avoid any potential scrutiny.

Terming the provision "discriminatory" for a fair and equitable tax system, the National Board of Revenue (NBR) scrapped the provision yesterday by issuing a notification.

A maximum of 25 percent tax is payable on an individual's income.

A taxpayer having over Tk 4 crore-worth net assets also has to pay a wealth tax surcharge on top of their regular income tax. The maximum surcharge rate is 35 percent, according to NBR.

"So, allowing black money to be whitened by paying merely a 15 percent tax is discriminatory to a just and equitable tax system," said the NBR's notification.

The development comes a few days after the interim government said it had decided to scrap the money whitening provision.

Asked whether there was any pressure opposing the NBR's latest move, NBR Chairman Abdur Rahman Khan said, "The interim government was against the provision and the decision came from the advisory committee led by Prof Muhammad Yunus."

"It simply demoralises the honest taxpayers and weakens the tax administration," he said.

The scope to whiten money had drawn sharp criticism from economists, trade bodies and civil society.

Backtracking on its promise to eliminate black money, the then government hoped the money-whitening facility would increase the cash flow to the economy.

However, the measure had failed to yield any substantial benefit.

According to the provision, no authority can raise any question if a taxpayer pays tax at fixed rates for immovable properties such as flats and land and 15 percent tax on other assets, including cash, irrespective of the existing laws of the country.

Since independence, schemes to legalise undeclared money have been introduced at least 22 times. But the response has been lukewarm.

According to data from the National Board of Revenue (NBR), nearly Tk 45,522 crore was whitened between 1972 and 2022, with the collector getting Tk 4,641 crore in taxes in total.

In fiscal year 2020-21, the government had offered full amnesty to black money, leading to a record Tk 20,600 crore being legalised, yielding the NBR Tk 2,064 crore.

In fiscal year 2006-07, the caretaker government offered the scope to legalise black money following the payment of a penalty, which is not normally levied. That year, Tk 9,682 crore was whitened.