Black Money in Bangladesh: Legal Provisions, Regularization, and Consequences
Black money, commonly referred to as undisclosed or untaxed income, is a persistent issue in Bangladesh’s economy. It undermines tax compliance, promotes corruption, and destabilizes formal economic channels. The Government of Bangladesh has, from time to time, provided legal mechanisms to declare black money under certain fiscal policies. This article outlines the legal framework, consequences, and regularization options related to black money in Bangladesh.
What is Black Money?
Black money refers to income or assets that are:
- Not reported to tax authorities
- Earned through illicit or legal but undeclared means
- Accumulated without paying income tax or VAT
This includes unreported business income, property transactions without proper valuation, undeclared foreign income, or bribes.
Legal Framework Governing Black Money
| Law / Regulation | Relevance |
|---|---|
| Income Tax Ordinance, 1984 | Governs undisclosed income and penalties |
| Money Laundering Prevention Act, 2012 | Covers black money derived from criminal activities |
| Finance Act (Annual) | Provides legal pathways to declare undisclosed income |
| Anti-Corruption Commission Act, 2004 | Targets illicit accumulation of wealth |
Sources of Black Money in Bangladesh
- Under-invoicing or over-invoicing in trade
- Unaccounted cash transactions in real estate
- Bribes and embezzlement in public procurement
- Hundi and informal remittance channels
- Unreported business profits or professional income
Legalization of Black Money
The Finance Acts of different fiscal years allow individuals to declare black money by paying a fixed or proportional tax.
Example: FY 2023–24 Provisions
Under the Finance Act 2023:
- Undisclosed land/building: Legalized by paying a fixed amount per square meter, depending on location.
- Investment in capital market: Declaration allowed with payment of 10% tax.
- No question asked by tax authority under certain conditions.
- Declarations must be made in the Income Tax Return (ITR) and tax paid accordingly.
These provisions vary each year and are usually time-bound.
Penalties for Possession of Black Money
| Offense | Penalty |
|---|---|
| Willful concealment of income | Up to 300% of tax evaded (Section 165 of ITO 1984) |
| Money laundering | Up to 12 years imprisonment + fine (MLPA 2012) |
| False declaration in tax return | Criminal prosecution, fines, imprisonment |
| Illegal foreign account holdings | Seizure, fines, imprisonment under FERA 1947 |
| Possession of disproportionate wealth | Investigation by ACC, legal proceedings in special courts |
Tax Incentives for Voluntary Disclosure
- Declaration during tax amnesty periods avoids scrutiny or penalty
- Encourages investment in real estate, capital market, or manufacturing
- Promotes inclusion of hidden wealth into the formal economy
Role of Anti-Corruption Commission (ACC)
- Investigates accumulation of wealth beyond known income sources
- Can initiate cases against public officials and private individuals
- Coordinates with Bangladesh Bank and NBR on suspicious financial transactions
Legal Risks for Non-Declaration
If black money is not declared or legalized under permitted provisions, it may lead to:
- Tax raids or audits
- Freezing of bank accounts
- Asset seizure
- Court cases and imprisonment
- International investigations in case of foreign assets
Legal Assistance in Dealing with Black Money Issues
A tax or corporate lawyer can assist with:
- Reviewing and regularizing financial disclosures
- Preparing accurate Income Tax Returns (ITR)
- Filing declaration under amnesty or voluntary disclosure schemes
- Defending against tax evasion, money laundering, or ACC proceedings
- Legal structuring of investments in compliance with current fiscal laws
Recent Trends
- The Government has intensified the use of automated data matching between banks, NBR, land offices, and customs.
- Benami transactions and layered ownership of assets are under greater scrutiny.
- NBR is using AI-assisted audits to detect undeclared income and fake invoices.
Black money remains a significant concern in Bangladesh’s financial and legal landscape. While the government occasionally offers policy windows to legalize undisclosed income, continued possession of such wealth without declaration exposes individuals to serious legal consequences.
0 Comments