Finance Minister AMA Muhith yesterday suggested imposing an advance tax system on each katha of land, irrespective of the price of land, to stop undervaluation at the time of registration.

"Undervaluation at the time of registration for a transfer of ownership is causing significant revenue pilferage every year. It is essential to impose an advance tax system on land," he said in his budget speech for the next fiscal year.

He proposed a katha-based advance tax scheme, replacing the existing 3 percent tax incidence at source on land registration value in the posh residential and commercially important areas of Dhaka and Chittagong.

He also imposed specific taxes in the same manner, based on square-footage, in transferring ownership of residential/commercial and other structures in Dhaka, Chittagong and Narayanganj city corporations.

The minister proposed to increase the rate of tax at source from 3 percent to 4 percent on the deed value of land in areas other than the important commercial and posh areas within the jurisdiction of Rajuk and Chittagong Development Authority. Besides, Muhith proposed to impose 3 percent tax at source on registration value in other city corporations and municipalities at district headquarters and 2 percent in other municipalities and 1 percent in all other areas outside municipalities.