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Income Tax Authorities in Bangladesh
Submitted to : Submitted by :
Shantanu Das (Leader) Eftekhar Anam Rasel
BBA, 29th Batch (MKT) BBA, 29th Batch (MKT)
ID: 200712883 ID: 200712029
Md. Shakhawat Hossain Selim
AUB, Dhanmondi Campus AUB, Dhanmondi Campus
Faculty, School of Business
Dhaka, Bangladesh. Dhaka, Bangladesh.
Course: Taxation [BBA-2603]
Sk. Saiful Islam Md. Zahangir Alam
AUB, Dhanmondi Campus
BBA, 29th Batch (MKT) BBA, 29th Batch (FIN)
Dhaka, Bangladesh.
ID: 200710522 ID: 200710521
AUB, Dhanmondi Campus AUB, Dhanmondi Campus
Dhaka, Bangladesh. Dhaka, Bangladesh.
Rajashwa Bhaban
Segunbagicha, Dhaka
Telephone: +88 02 933-3444.
http://www.nbr-bd.org
To
Dear Sir
We honestly believe that this report will fulfill the requirements of the project report
for BBA, which will help us a lot to gain sufficient knowledge about the “Income Tax
authority in Bangladesh”
We appreciate having this assignment. If you need any assistance in interpreting this
report or in implementing our recommendations, please feel free to contact us:
shantanudas@live.com, Contact No.: +8801717012777.
We also like to express our gratitude to the honorable Campus Coordinator of AUB
Dhanmondi Campus, Professor (Adv.) Abul Kalam Azad- without whose
inspiration and company, this mission was not able to be accomplished.
At last but not the least, we are grateful to our ever-respected parents those who
always give us mental support and well wishes.
Bangladesh inherited a system of taxation from its past British and Pakistani rulers.
The system, however, developed based on generally accepted canons and there had
been efforts towards rationalizing the tax administration for optimizing revenue
collection, reducing tax evasion and preventing revenue leakage through system
loss. Taxes include narcotics duty (collected by the Department of Narcotics Control,
Ministry of Home Affairs), land revenue (administered by the Ministry of Land and
collected at local Tahsil offices numbered on average, one in every two Union
Parishads), non-judicial stamp (collected under the Ministry of Finance), registration
fee (collected by the Registration Directorate of the Ministry of Law, Justice and
Parliamentary Affairs) and motor vehicle tax (collected under the Ministry of
Communication).
The most important tax on the value of transferred property is the non-judicial
stamp tax (levied under the Stamp Act 1899), which has been in existence since
January 1899. Current rates of non-judicial stamp duty are provided in the First
Schedule of the Finance Act 1998, ranging from Tk. 4 to Tk. 10,000 in case of
absolute rate, or from 0.07% to 1.5% of the value of consideration in case of ad
valorem rate. The judicial stamp tax is being levied under the Court Fees Act 1870,
although the levy of court fees originated in the introduction of the Bengal Regulation
No. 38 of 1795.
The first sales tax was introduced in the former Central Provinces of India in 1938. In
Bengal, sales tax was adopted in 1941. In 1948, sales tax was transferred as a
central tax under the General Sales Tax Act of 1948. The Sales Tax Act 1951 came
into force on 1 July 1951 by repealing the Pakistan General Sales Tax Act of 1948.
Until 1982, sales tax was being collected under the 1951 Act, which was replaced by
the Sales Tax Ordinance 1982. The VAT law was promulgated by repealing the
Business.
Income tax was first introduced in the subcontinent by the British in 1860 to make
up the revenue deficit caused by the sepoy revolt, 1857. After independence of
Bangladesh, income tax was made effective under the Income Tax Act 1922 passed
on the basis of the recommendations of the All-India Income Tax Committee
appointed in 1921. Currently, income tax has been imposed under the Income Tax
Ordinance 1984 (ITO) promulgated on the basis of recommendations of the Final
Report of the Taxation Enquiry Commission submitted in April 1979. Income
taxpayers (assesses) are classified as individuals, partnership firms, Hindu undivided
From fiscal or assessment year, (AY) 2000-01, there is a filing threshold of annual
total income of Tk. 100,000 applicable for individuals (including non-resident
Bangladeshis), partnership firms, HUF, AOP and assesses other than companies and
local authorities. In case an identity of this group has a total annual income less than
this level, he is not required to submit tax return but if someone's income is higher,
he is to pay a minimum tax of Tk. 1,000.
Bangladesh inherited a system of taxation from its past British and Pakistani rulers.
Under the NBR, a Commissioner of Taxes is the head of the department and
he is in charge of a taxes Zone. There are 8-Zones in Bangladesh.
Income
Taxable Income
Non-taxable Income
Classification of Tax
System
1. Single Tax: Only one tax for everybody. Single tax is the poll tax or the head
tax or adolescent tax, which is imposed on a person simply because he is
there in the society.
Types of Taxation
a) Progressive Tax
a) Direct Tax b) Regressive Tax
b) Indirect Tax c) Proportional Tax
a) Direct Tax: Direct tax is a sort of tax the impact of effect incidents and which fall
back on the person on whom it is imposed. i.e.: Income Tax, Marriage Tax etc.
b) Indirect Tax: Indirect taxes are those burden of which can be passed on others
through price vehicles.
d) Regressive tax: The opposite of a progressive tax is a regressive tax where the
tax rate decreases as the taxable income/amount increases.
Sources of Income:
For the purpose of computation of total income and charging tax thereon, sources of
income can be classified into 7 categories, which are as follows:
Salaries
Interest on securities
Income from house property
Income from agriculture
Income from business or profession
Capital gains
Income from other sources.
For individuals other than female taxpayers, senior taxpayers of 70 years and above
and retarded taxpayers, tax payable for the
For female taxpayers, senior taxpayers of age 70 years and above and retarded
taxpayers, tax payable for the
For Companies
If any publicly traded company declares more than 20% dividend, 10% rebate on
total tax is allowed.
Rate of Rebate:
For Company
By fifteenth day of July next following the income year or, where the fifteenth day of
July falls before the expiry of six months from the end of the income year, before the
expiry of such six months.
In Bangladesh withholding taxes are usually termed as Tax deduction and collected
at source. Under this system both private and public limited companies or any other
organization specified by law are legally authorized and bound to withhold taxes at
some point of making payment and deposit the same to the Government Exchequer.
The taxpayer receives a certificate from the withholding authority and gets credits of
tax against assessed tax on the basis of such certificate.
Imposition of penalty
Attachment of bank accounts, salary or any other payment.
Filing of Certificate case to the Special Magistrate.
Fiscal incentives :
However, certain percent of self assessment cases are selected for audit.
Assesses can prefer appeal if aggrieved by his assessment. There are three primary
forums for appeal. They are to the Appellate Commissioner/Additional
Commissioner/Joint Commissioner or to the Commission for reviews. The decisions
of Appellate Commissioner/Additional Commissioner/Joint Commissioner can be
challenged to the next Appellate Court named as Appellate Tribunal.
Total Income of the Company is to be calculated by adding other income with income
from business.
Net Tax liability is to be ascertained by deducting the following tax rebate from Total
Tax liabilities:
Based on these concepts arises the pillars of Tax Protesters as well as Tax
Resistance:
Some of those attempting not to pay tax believe that they have uncovered
interpretations of the law that show that they are not subject to being taxed: these
individuals and groups are sometimes called tax protesters. An unsuccessful tax
protestor has been attempting openly to evade tax, while a successful one avoids
tax. Tax resistance is the declared refusal to pay a tax for conscientious reasons
(because the resister does not want to support the government or some of its
activities). Tax resistors typically do not take the position that the tax laws are
themselves illegal or do not apply to them (as tax protesters do) and they are more
concerned with not paying for particular government policies that they oppose.
Tax evasion:
By contrast, tax evasion is the general term for efforts by individuals, firms, trusts
and other entities to evade taxes by illegal means. Tax evasion usually entails
taxpayers deliberately misrepresenting or concealing the true state of their affairs to
the tax authorities to reduce their tax liability, and includes, in particular, dishonest
tax reporting (such as declaring less income, profits or gains than actually earned; or
overstating deductions).
Control of evasion:
Level of evasion depends on a number of factors one of them being fiscal equation.
People's tendency to evade income tax declines when the return for due payment of
taxes is not obvious. Evasion also depends on the efficiency of the tax
administration. Corruption by the tax officials often render control of evasion difficult.
Tax administrations resort to various means for plugging in scope of evasion and
increasing the level of enforcement.
Tax is the most important in the hand of the government to control the economy as
well as the inflection. It also helps in push money to the economy, develop certain
source of the economy and control some other activities of the economy. No
Government can run it’s and perform administration works without collecting tax as a
source of revenue. So, the Government imposes tax over the company and the
corporations. On the other hand Government can also intensive to the infant and
certain basic industry for protection through its tax policy.