Everything you should know about statement under section 108A

A statement under section 108A is required to submit to the tax circle each year consisting the information of tax return filings by the employees of an organization. As per section 108A of Income Tax Ordinance 1984, every employee shall furnish the following information to the employer by the 15^th April each year:

• Taxpayer’s Identification Number;
• Date of filing of the return of income; and
• The serial number provided by the income tax authority upon filing of the return of income.

You know, individual taxpayers return submission deadline is 30 November though the taxpayer has the option to extend the time for return submission only for reasonable cases. So, after submission of tax return by the eligible employees, shall submit their tax filing related information to their company.

After receiving the required information related of tax return filing, the responsible person disbursing the salaries shall furnish a statement as prescribed manner to income tax authority by 30^th April each year. The statement shall contain the following information:

• The name, designation and the Taxpayer’s Identification Number;
• Date of filing of the return of income; and
• The serial number provided by the income tax authority upon filing of the return of income.

Provided that this statement shall not apply to a payment made by the Government.

What to consider before preparing 108A?

Last week, we have published an article about information regarding payment of salary under section 108, which consist the total payment of salary to employees during the financial year, either taxable or not. But statement under section 108A, is applicable for only the employees who are required to file tax return mandatorily.

So, you have to comply several important requirements before preparing and filing information under section 108A. First important requirement is to comply with tax deduction at source from salary of employees. As you are going to file this statement only for employees who have submitted tax return, so their salary income is taxable and that’s why you have to disburse salary after deducting tax at source.

As per section 50, the responsible person making any payment under the head “Salaries” shall deduct tax at average rate at the time of making such payment to the employees. So, the employees who are under taxable, shall calculate TDS on salaries and find out the monthly TDS to deduct during payment. And this TDS calculation have to be done for each employee. So, develop a simple excel sheet so that you could complete the calculation within few minutes.

Tax deduction and timely depositing to the government treasury are important part to avoid penalty or huge tax burden. As per section 30, if any payment was made to the employees under the head “Salaries” without deducting and depositing to the government treasury then such payment shall be considered as inadmissible expenses. And the amount shall be added with the total taxable income for tax at 32.5%.

So first, you have to deduct and deposit tax and then after submission of tax return filing by the employees, you shall prepare the statement as per prescribed format provided in tax rules for filing to the tax circle.

Where you will get the format?

The prescribed format for the statement is provided under rule 23A of the Income Tax Ordinance 1984. In rule 23A, an eight-column table has been provided where you have to provided the information as we discussed in the beginning of this article.

This statement is easier than statement under section 108. You need to convert the table provided under rule 23A into excel sheet, and it will help you in future to prepare quickly. So, if you once develop a sheet in excel then in future just edit and it will be ready to submit with less effort.

The easiest way to prepare the statement under section 108A is to collect the tax return filing ‘Acknowledgement’ receipt from each employee before 15^th April. The photocopy or scan copy of the acknowledgement will provide you all the information requires to prepare the statement under section 108A.

Submit the statement before 30^th April after preparing otherwise have to face penalty for failure to filing the statement.

What is the penalty for failure to submit 108A?

As per section 124, where any person has failed to file or furnish statement under section 108A without reasonable cause then the Deputy Commissioner of Taxes (DCT) may impose penalty.

The amount of penalty shall be at 10% of tax imposed on last assessed income or BDT 5,000, whichever is higher. In addition to that a further penalty of BDT 1,000 for every month or fraction which default continues. So, you have understood that the amount of penalty is huge if any company fails to submit this information to the tax circle. It is better to circulate a mail to all of the employees at the fist day of April to submit the acknowledgment copy to you. If the number of employees is huge then keep the reasonable time in your hand so that you could complete everything before the deadline.