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Chapter 1: Introduction

A country's tax regime is always a key factor for any business considering moving into new
markets. A tax system must be economically efficient, inflicting as little damage as possible on
the economy. But there are huge challenges in regard to achieve progressive tax system and
ensure tax justice.
Bangladesh, as an emerging developing country, is committed to augmenting revenue and
achieving fiscal discipline with a view to increasing self-reliance. The external environment
influencing the tax performance of Bangladesh has changed remarkably as the country became
increasingly integrated with the global economy during the 1990s. In recent years, the
Government of Bangladesh has initiated some administrative and policy reforms in the tax
system. An improved tax administration in association with some pragmatic policy initiatives has
resulted in a modest improvement in the tax-GDP ratio of late. However, the performance is still
unsatisfactory as compared to other countries at a similar stage of economic development.
The taxation system existing in Bangladesh is multiple taxation system with different type of tax
imposed on different sources. Direct tax or personal tax significantly contributes to our total
national revenue although the contribution of indirect tax is not negligible. The principle source
of Govt. revenue in Bangladesh is tax which accounts for about 86% to 87% of the revenue
receipts and remaining 13% to 14% comes from rest other sources. But our tax system yields low
revenue at around 11% to 12% compared to developed and developing countries which have
high ratio to support her development activities.
Tax evasion and tax avoidance are quite high in Bangladesh. There are only about 21 lakh
assesses of whom about 50% pay the tax. Other have TIN but don’t pay tax. Among them
salaried Govt., Semi Govt. and autonomous body’s employees are in a significant share.
Bangladesh is increasingly focusing on internal resources mobilization in order to enhance socio-
economic development and to cover budgetary expenditures. Like many other developing
countries, Bangladesh struggles to meet its potential in mobilizing domestic resources, due to
poor tax administration, outdated tax and fiscal policies and weak tax collection practices.
So, in this assignment, our main motive is to discuss the tax collection procedures in Bangladesh,
the reasons behind weak tax collection practices and to recommend how to prevent tax evasion
and reduces tax avoidance at the individual and corporate levels (including national and
multinational companies).
1.1 Objectives of The Study
We can gain knowledge about the tax system of Bangladesh by studying this topic. Effective tax
collection of any country ensures the development of that country.
So, this study is prepared with some objectives:
 To present some Important concepts related to Tax Collection
 To know about the Tax Administration in Bangladesh

1.2 Methodology of the study


This study is mainly based on secondary data related to taxation system in Bangladesh.
Secondary data and information have gathered from Internet browsing, Books, Journals, etc.
Primary data and information also have collected through using taking others opinion.

1.3 Limitation of The Study


 The major limitation factor for this report is that information from different sources were
quite inconsistent which created some problems in making the assignment & compelled
us to verify the information diligently.
 The limit was also a fact because at the same time we are doing our classes, other
assignments. So, it was quite hard to keep everything at a run.
Chapter 2: Tax Collection Procedures in Bangladesh

2.1 Important concepts related to Tax Collection


Person: Person includes an individual, a firm, an association of persons, a Hindu undivided
family, a trust, a fund, a local authority, a company, an entity and every other artificial juridical
person.

Assessee : Assessee means a person by whom any tax or other sum of money is payable under
ITO, 1984.
Income: Income means any income, receipts, profits or gains derived from whatsoever source;
any loss of such income, profits or gains; profits or gains from insurance business; any amount
which is subject to collection or deduction of tax at source; deemed income; income accruing or
arising or received or deemed to accrue or arise or to be received in Bangladesh; any amount
which is treated as income or and any amount on which tax is imposed under any provision of
ITO, 1984.

Income Year: Income year means –

• For a newly set up business: From the date of setting up the business to following 30 June
• For a new source of income: From the date of existence to following 30 June
• For a discontinued business, dissolved unincorporated body, liquidated company: From
1 July to the date of such discontinuation or dissolution or liquidation
• For an unincorporated body: From 1 July to the date of retirement or death of a participant
• For an unincorporated body: From the date of retirement or death of a participant to the
date of retirement or death of another participant or following 30 June
• Bank, insurance or financial institution: From 1 January to 31 December Other cases:
From 1 July to 30 June
Assessment Year; Assessment year means the period of twelve months commencing on the 1 July every
year. This is the financial year immediately following the income year.
The income year for all assessee (except for bank, insurance and financial institutions) is 1 July to 30 June
and the assessment year is following July – June. The income year for all bank, insurance, financial
institutions and their subsidiaries is 1 January to 31 December and the assessment year is following July –
June.

Tax: Tax means the income tax payable under the ITO, 1984 and includes any additional tax, excess
profit tax, penalty, interest, fee or other charges leviable or payable under the Ordinance. Tax is the
revenue collected by the Government from persons and organizations under different taxing
Acts. In other word, it is a liability imposed upon the assesses who may be individuals, groups of
individuals, and other legal entities. So, tax means compulsory payment imposed by Govt. on
persons, products/services and the like under respective Acts, payable by the assessee as per
provisions of concerned Acts.
Tax Day:

Residential status:
Individual – An individual will be a resident in any income year if he / she fulfills any of the
following two conditions -
1. If he / she stays in Bangladesh for a period of / periods amounting in all to 182 days or
more in the income year, or
2. If he / she stays in Bangladesh for a period of / periods amounting in all to 90 days or
more in the income year as well as for a period of / periods amounting in all to 365 days
or more during four years preceding the income year
Hindu Undivided Family, Firm, Other Association of Persons – Such persons will be resident
if their control and management of affairs is situated wholly or partly in Bangladesh in the
income year.
Company - A company will be resident if the management of its affairs is situated wholly in
Bangladesh in the income year.
For non-resident assessee tax rate has been fixed at highest rate slab( Now its 30%).
The calculation of total income of a person for an income year depends on the residential status.
Resident assessee Non-resident assessee
Total income = Global income Total income = Bangladeshi income
(income received, accrued, arising or (income received, accrued, arising or
deemed to be received, accrued, arising in deemed to be received, accrued,
Bangladesh + income accrued or arising arising in Bangladesh)
outside Bangladesh)

2.2 Tax Administration in Bangladesh


• The National Board of Revenue;
• Chief Commissioner of Taxes;
• Directors-General of Inspection (Taxes);
• Commissioner of Taxes (Appeals);
• Commissioner of Taxes (Large Taxpayer Unit);
• Director General (Training);
• Director General, Central Intelligence Cell;
• Commissioners of Taxes;
• Additional Commissioners of Taxes (Appeal/Inspecting);
• Joint Commissioners of Taxes (Appeal/Inspecting );
• Deputy Commissioners of Taxes;
• Tax recovery officers;
• Assistant Commissioners of Taxes;
• Extra Assistant Commissioners of Taxes; and
• Inspectors of Taxes.

National Board of Revenue (NBR) is the central authority for tax administration in Bangladesh
and collects almost 75.37 percent of total revenue for the country, non tax revenue 20.88%,
revenue beyond NBR 3.76%. It was 78% in 2000. Tax revenue constitutes around 80 percent of
total internal resources in the country. The NBR under the Internal Resources Division of the
Ministry of Finance is the apex tax authority of Bangladesh and collects about 95 percent of the
country’s total tax revenue. The non-NBR portion of tax mainly includes narcotics duty, land
revenue, non-judicial stamp, registration fee and motor vehicles tax.

2.3 Tax System in Bangladesh: An overview


Tax system of Bangladesh is based on multiple tax system. A good number of taxes are in
existence. Among these taxes, contribution of indirect taxes to the is quite significant. Following
shows the share of contribution of tax to the total revenue in one hand and share of direct and
indirect taxes thereof on the other:

Table 1: Total Revenue, Total Tax, Direct and Indirect Tax


(In crore Taka)
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Total revenue 1,39,67 1,56,671 1,63,371 1,77,40 2,42,75 2,87,99
0 0 2 1
Tax revenue 1,16,82 1,30,175 1,40,677 1,55,40 2,10,40 2,48.19
4 0 2 0
% of tax to Rev. 83.65% 83.09% 86.107% 87.60% 86.67% 86.18%

Direct tax 35,320 47.047 50,826 52,796 72,940 86,176


%
% of Direct Tax 30.245 36.14% 36.135% 33.97% 34.67% 34.72%
to Total Tax

Indirect tax 81,504 83,28 89,851 99,604 1,37,46 1,62,01


2 4
% of Indirect Tax 69,76 63.86% 63.87% 66.03% 65.33% 65.28%
to Total Tax

(Source: Economic survey, 2017, page 278 and Budget Speech of 2017)

Table 2: Quantam of different Taxes vis-à-vis Total Tax revenue


(In Crore Taka)
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

1. Income tax 35,300 44,370 48,614 51,796 71,940 85,176


2. Import-Export 14,567 13,474 15,134 17,153 22,450 30,023
Duty

3. Excise Duty 997 1,203 935 1,035 2,495 1,100

4. Value Added 40,456 45,877 49,576 53,913 72,764 91,123


Tax
5. Supplementar 19,976 19,157 19,657 25,083 30,075 38,401
y duty

6. Other Taxes 5,524 6,280 6,234 6,441 10,979 2,367


(Land Rev., Motor
vehicle tax, Non-
judicial Stamps, etc.)

Total Taxes 1,16,825 1,30,178 1,40,667 1,55,400 2,10,402 2,48.190

(Source: Economic survey, 2017, page 278 and Budget Speech of 2017)

From the table it is evident that Income tax and Value added tax contributes lion’s share to the
total tax revenue followed by Import duty and Supplementary tax.

It has earlier been pointed out that tax system of Bangladesh is based on multiple taxes. In such a
context, a brief description of the important taxes that are in existence in Bangladesh now
follows:
• Income tax: It is a tax on the income of a person based on Income Tax Ordinance,
1984. It is a direct tax and the tax rate is progressive based on slab system for
individual, H.U.F and Firm and rate is static on company which, however, vary with
the classification of company as has been made under I. T. Ordinance , 1984. At
present minimum taxable limit is Tk. 2 lakh 50 thousand for induvial, Tk. 3,00,000
for in women & person above 65 years & Tk. 4,23,000 for disabled persons. For
company there is no maximum taxable income limit.
• Wealth Tax: It is a direct tax based on the wealth of an assessee and charged under
Wealth tax act, 1963. Person whose wealth exceeds Tk. 25 lakh was subject to tax
under this Act. As the revenue from this act was negligible, it has been suspended
from the year 1999. However, Government has introduced wealth surcharge in 2011-
12 as an alternative to wealth tax which is payable as a percentage on income tax over
the wealth of an assessee where his wealth exceeds certain amount.
• Gift Tax: A person making gift to another over Tk. 20.000 is considered under Gift
tax act, 1963 & chargeable for gift tax. It is also a direct tax.
• Estate Duty: If a deceased at the time of his wealth leaves property over Tk. 2 lakh,
his inhabitants are subject to pay this estate duty. In some countries also called Death
tax.
• Import-Export Duty: It is a commercial duty charged on the import and export of
commodities. It is an indirect tax the ultimate burden of which is shifted to
consumers. Govt. of Bangladesh earns a significant portion of its tax revenue from
this. It is also called custom duty.
• Value added Tax: It is a tax imposed on the added value of product at different stages
in the marketing chain. Added value is the difference between production/purchase
cost over sale value at a point. Value added tax is charged at a static rate of 15%. This
is also an indirect tax and the Govt. of Bangladesh currently earns huge amount of tax
revenue from it.
• Excise Duty: It is a tax imposed on harmful goods and services produced in a
country. It is also called sin tax. Excise duty is imposed on such products-such as
tobacco, alcohol, and fuel oil harmful to environment.
• Land Revenue: This is a direct tax imposed on the land property of the assessee.
Though the earning from it is not significant yet it is considered an important source
of tax revenue.
• Motor Vehicle Tax: This tax is imposed on the capacity on the capacity of motor
vehicle and permission for ply in the country road. Though the revenue from this
source is small yet it is considered a potential source and earning from this head is
increasing.
• Supplimentary Duty: This is an extra tax/duty imposed with reference to any tax
like custom duty, Income tax, VAT, Excise duty etc. to augment tax revenue.
• Non-judicial stamp Duty: This is stamp duty which a person needs to pay at times
of land registration, contract documents etc.
• Others: Besides, there are some other taxes & duties like Narcoties & liquor
duty, duty on route permit for vehicles and the like.
In fact, there are many direct & indirect taxes which constitute tax orbit of one country.

3. Tax structure in Bangladesh-ratio of direct and indirect tax

One of the basic concepts of designing and implementing an equitable taxation


regime is ‘Broad Basing’, meaning that the taxes should be spread over as wide as
possible a section of the population, or sectors of the economy, to minimize the
individual tax burden. While indirect taxes (e.g. VAT) levied on goods or services
affect the rich and the poor alike, direct taxes may create burdens on a certain
income group. Indirect taxation is commonly used to generate tax revenue paid
indirectly by the final consumer of goods and services. It is paid by everyone in
society, regardless their financial situation. Hence, indirect taxation can be viewed
as regressive as it imposes a greater burden (relative to resources) on the poor than
on the rich. In contrast to direct tax, the taxpayer and the tax-bearer are not the
same person. Hence, to reduce an individual’s tax burden, the taxation regime
should be diverse and broad-based with an equitable balance of both direct and
indirect sources.
On the other hand, the term "progressive" refers to the way the tax rate progresses
from low to high, with the result that an individual on average pays less than the
person's marginal tax rate. This also means that people with lower income pay a
lower percentage of that income in tax than those with a higher income. Unlike
indirect taxes, direct taxes are linked to the taxpayer’s ability to pay, and hence are
considered to be progressive.
In Bangladesh, direct taxes consist of taxes from income tax and other taxes. Direct
tax is one whose incidence rests upon the person who bears its impacts also.
Among direct taxes, income tax is the main source of revenue. It is a progressive
tax system. Income tax is imposed on the basis of ability to pay. "The more a
taxpayer earns the more he should pay''- is the basic principle of charging income
tax. It aims at ensuring equity and social justice. In Bangladesh income tax is being
administered under the tax legislations named as “THE INCOME TAX
ORDINANCE, 1984 (XXXVI OF 1984) and INCOME TAX RULES, 1984.”
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:
a) Salaries.
b) Interest on securities.
c) Income from house property.
d) Agricultural Income.
e) Income from business or profession.
f) Capital gains.
g) Income from other sources.

Indirect taxes are collected by intermediaries from the person who bears the
ultimate economic burden of the tax. The intermediary later files a tax return and
forwards the tax proceeds to the government with the return. The major indirect
taxes in Bangladesh include: value added tax (VAT), excise duty, trade tax and
turnover tax. Nevertheless, the tax structure of Bangladesh is perceived to be
regressive as it is heavily dependent on indirect taxes (about 65.28% in 2018).
4. Tax Rate Structure
Tax liability of an assessee is determined at the rate or rates applicable on the total income of the
assessee. The rate of tax is not uniform for all types of assesses and for any level of income. So it
is important to know the rate of or rates applicable for different types of assesses in different
assessment year.
Tax liability of an assessee is determined at the rate or rates applicable on the tatal
income of the assessee. The rate of tax is not uniform for all types of assessee and
for any level of income. So it is important to know the rate or rates applicablke of
differtent ypes of assessee in different assessement year.

For individuals Tax payers:

a) General Tax rate for male:

Assessment Year (2015-16 & 2016-2017 Assessment Year (2014-2015)


& 2017-2018)
On first Tk. 2,50,000 Nil On first Tk. 2,20,000 Nil
On Next Tk. 4,00,000 10% On Next Tk. 4,00,000 10%
On Next Tk. 5,00,000 15% On Next Tk. 5,00,000 15%
On Next Tk. 6,00,000 20% On Next Tk. 6,00,000 20%
On Next Tk. 30,00,000 25% On Next Tk. 30,00,000 25%
On the Balance 30% On the Balance 30%

b) General Tax rate for female & senior citizen (65 years and above):

Assessment Year (2016-2017) Assessment Year (2014-2015)


On first Tk. 3,00,000 Nil On first Tk. 2,75,000 Nil
On Next Tk. 4,00,000 10% On Next Tk. 4,00,000 10%
On Next Tk. 5,00,000 15% On Next Tk. 5,00,000 15%
On Next Tk. 6,00,000 20% On Next Tk. 6,00,000 20%
On Next Tk. 30,00,000 25% On Next Tk. 30,00,000 25%
On the Balance 30% On the Balance 30%

c) Tax rate for disabled persons:

Here minimum taxable limit 1st ceiling will be Tk. 4,00,000 and all ceiling will be
general tax rate mention above.

d) Tax rate for war disabled freedom fighters:

Here minimum taxable limit will be Tk. 4,25,000 and all other ceiling will be as
genaral tare mentioned above.

e) Tax rate for Non-resident Individual:

i) Non-resident & Non Bangladeshi Tax rate 30%


ii) Non-resident but Bangladeshi Tax rate is applicable for
Bangladeshi redident assessee.

f) Tax rate for Company:

Types of Tax Rate


i) Publicly Traded Company 25%
ii) Non-Publicly Limited Company 35%
(Local Govt. or other companies U/S
2(20) clause a.b.bb & bbb)
iii) Bank, Insurance and Finance Company,
if it is publicly Ltd. 40%
If not public;y Ltd. 42.5%
iv) Merchant Bank 37.5%
v) Cigaret Manufacturing Company 45%
vi) Mobile phone operating Company 45%
vii) Tax on dividend received 20%
viii) Tax on Capital Gain 15%
ix) Co-operative society registered under 15%
ao-opeartive Act.
x) Non-resident non-Bangladeshi 30%

B) Minimum Tax payable:

The minimum tax is the amount of tax which an assessee must pay at minimum
after allowing rebate & allownaces. If after allowing rebate & allowance tax
payable is seen to be negative too, he must pay miminum prescribed tax Finance
Act, 2016 provides minimum tax as follows:

Location of Assessee Mimimum tax in Tk.


i) Residing in Dhaka north and south cityu corporation 5000
area and Chittagong city corporation area
ii) Residing in other city corporations 4000
iii) Residing in other areas 3000

5. Tax Rebate for investment: [only allowable for Resident/Nonresident


Bangladeshi]
Rate of Tax Rebate: 15% of allowance of lowest of the following three;

a) Amount of allowable investment is either actual investment in a year


b) 25% of total income
c) Tk. 1,50,00,000

Types of investment qualified for the tax rebate are:

• Life insurance premium.


• Life insurance premium paid by Hindu Undivided Family.
• Contribution to deferred annuity,
• Contribution to Provident Fund to which Provident Fund Act, 1925 applies,
• Self-contribution and employer's contribution to Recognized Provident Fund
• Contribution to Superannuation Fund,
• Investment in approved debenture or debenture stock, Stocks or Shares,
• Contribution to deposit pension scheme approved by the government,
• Contribution to Benevolent Fund and Group Insurance premium,
• Contribution to Zakat Fund,
• Donation to charitable hospital approved by National Board of Revenue,
• Donation to philanthropic or educational institution approved by the
Government,
• Donation to socio-economic or cultural development institution established
in
Bangladesh by Aga Khan Development Network,
• Donation to ICDDR.B, Dhaka Community Hospital,
• Donation to philanthropic institution- CRP, Savar, Dhaka,  Donation upto
five lakh to
(1) Shishu Swasthya Foundation Hospital Mirpur, Shishu Hospital, Jessore
and Hospital for Sick Children, Satkhira run by Shishu Swasthya
Foundation, Dhaka,
(2) Diganta Memorial Cancer Hospital, Dhaka,
(3) The ENT and Head-Neck Cancer Foundation of Bangladesh, Dhaka;
and
(4) Jatiya Protibandhi Unnayan Foundation, Mirpur, Dhaka;
• Asiatic Society of Bangladesh;
• Muktijudha Jadughar;
• Purchase of one Computer/One Laptop/ One Desktop (Minimum 50,000 for
Desktop & in total these Tk. 1 Lakh)

6. Tax Withholding functions: 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
Heads of Income Subject to deduction or collection of income tax at source
with specified rates of deduction:

Sl Head of Withholding Withholding rate/ Limitation


withholding authority rates of tax
1. Salaries Any perso Average of the
[section-50] responsibl n for rates applicable to
e making such the estimated total
payment. income of the
payee under this
head.
2. Discount on Any perso Maximum rate
the real value responsibl n for
of Bangladesh e making such
Bank bills. payment.
[section-50A]
3. Interest on Any perso 10% This shall not
securities responsibl n for apply to the
[section-51] e issuing any Treasury
security bond or
Treasury bill
issued by the

Government
or to any
payment on
account of
interest
payable on
debentures
issued by or
on behalf of a
local
authority or a
company.
4. Payment to Any perso Upto Tk.
contractors & responsibl n for 2,00,000/--
sub- e making such Nil.
contractors payment.
[section-52]
[rule-16]
From 2,00,001 to
Tk
5,00,000/-
------------
1%

From 5,00,001 to
Tk. 15,00,000/- -----
-- 2..5%

From 15,00,001 to
Tk. 25,00,000/- -----
-- 3..5%

From 25,00,001 to
Tk. 3,00,00,000/- ---
---4%

where the payment


exceeds Tk.
3,00,00,000
----------
5%

in case of oil
supplied by
oil marketing
companies upto Tk
2,00,000 -- Nil

where the payment


exceeds Tk 2,00,000
-------- 0.75%
5. Payment on Any person on indenting
indenting responsible for commission
commission or making such ----------------------7.5
shipping agency payment. %
commission.
[section-52,
rule-17] on shipping agency
commission
--------5%
6. Fees for The principal 10%
Doctors officer of a
[section52A(1)] company or the
chief executive of
any NGO or trust
responsible for
making such
payment
7. Royalty or The government 10%
technical or any other
knowhow fee authority,
[section52A(2)] corporation or
body or any
company or any
banking company
or any insurance
company or any
co-operative bank
or any NGO
responsible for
making such
payment.
8. Fees for Do 10% Person
professional of certified by
technical NBR having
services non assessable
[section52A(3)] income or
person having

income
exempted from
tax
9. Payment of The government or 10%
certain services
any other
like stevedoring
authority,
agency, privatecorporation or
security service
body or any
company or any
[section-52AA]
banking company
or any insurance
company or any
co-operative bank
or any NGO
responsible for
paying any
commission to a
stevedoring
agency or making
any payment to a
private security
service.
Clearing and Commissioner of 10%
10. forwarding Customs.
agents [section
52AAA]
Cigarettes Any person 6% of the value of
11. manufacturing responsible for the banderols
[section 52B] selling banderols
to any
manufacturer of
cigarettes.
Compensation Any person (a). 2% of the
12. against responsible for amount of such
acquisition of payment of such compensation
property compensation against the
[section 52C] immovable property
situated within City
Corporation,
Paurashava or
Cantonment Board

(b). 1% of the
amount of such
compensation
against the

immovable
property situated
outside the
jurisdiction of City
Corporation,
Paurashava or
Cantonment Board
Interest on Any perso 10% No deduction
13. saving responsibl n for to be made if
instruments e making such the saving
[section 52D] payment instrument is
purchased by
any approved
superannuatio
n fund or
pension fund
of gratuity
fund or any
recognized
provident
fund or
any
workers'
profit
participation
fund.

No tax to be
deducted
from interest
of
Pensioner
Sanchayapatra
and Paribar
Sanchayapatra
.
Brick Any pe rso Tk.30,000/- for one
14. responsible n section brick field.
Manufacturer issuing fo
[section 52F] permission r Tk. 45,000/- for two
section brick field.
renewal an
permission y Tk. 60,000/- for
manufacture or three section brick
bricks. of field.
fo
r
of

Commission Any person 5%


15. of letter of responsible for
credit [section opening letter of
52T] credit.
Renewal of City Corporation Tk. 500/- for each
16. trade license by or Paurashava. trade license.
City

Corporation or
Paurashava
[section 52K]
Freight forward Any person 15%
17. agency responsible for
commission making such
[section 52M] payment.
18 Rental Bangladesh Power 4%
Power Development
Company Board during
payment to any
[section 52N] power generation
company against
power purchase
within three years
from its
commencement.
19 Foreign Employer. 5% This rate is for
technician 3 years from
serving in the
diamond cutting appointment of
industries such foreign
technician and
[section 52O] appointment to
be completed
by 30 June
2010.
Importer The 5% Tax at source
20. [section 53] Commissioner of will not be
Customs. withheld for
items
prescribed in
rule 17A.
House The Government Up to Tk. 20,000/- This does not
21. property or any authority, apply if the
[section corporation or per month [p. m] ---- owner of
body or any Nil house property
53A]
company or any is given a
[rule 17B] From Tk 20,001/- to certificate by
banking company
or any co- Tk. 40,000/- p.m. the DCT
operative bank or ------3% regarding not
any NGO run or having any
More than Tk assessable
supported by any
40,000/- p.m.--- 5% income during
foreign donation
the year or is
or any university
having income
or medical college

or dental college otherwise


or engineering exempted from
college as tenant. payment of
income tax.
Shipping Commissioner of 5% of total freight
22. business of a Customs or any received or
resident other authority receivable in or out
[section 53AA] duly authorised. of Bangladesh .

3% of total freight
received or
receivable from
services rendered
between two or
more foreign
countries.
Export of The Director 10%
23. manpower General, Bureau
[section of Manpower,
53B, rule- Employment and
17C] Training.
Export of Knit- Bank. 0.50% of the total No deduction
24. wear and export proceeds. or deduction at
woven a reduced rate
garments, terry to be made if an
towel, jute exporter
goods, frozen produces
food, certificate
vegetables, from NBR
leather goods, regarding
packed food having fully or
[section 53BB] partly exempted
income.

Member of The Chief 0.05%


25. Stock Executive Officer
Exchanges of stock exchange.
[section
53BBB]
26. Export or any Bank. 0.50% of the total No deduction
goods export proceeds. or deduction at
except a reduced rate
knit-wear to be made if an
and exporter
woven produces
garments, terry certificate
towel,
jute
goods , frozen

food, from NBR


vegetables, regarding
leather goods, having fully
packed food or
[section partly
53BBBB] exempted
income.
Goods or Any person 5% of sale price.
27 property sold making sale.
. by public
auction
[section53C]
[rule 17D]
Courier Any person 15% on the amount of
28 business of a being a company service accrued.
. non-resident working as local charge
[section agent of a
53CC] nonresident
courier
company.
Payment to The person 5% Payment
29 actors and producing the needs to
. actresses film. exceed thirty
[section six thousand
53D] taka in the
[rule 17E] aggregate in
any income
year.
Commission, Any person 7.5%
30 discount or being a
. fees [section corporation,
53E] body including a
company
making such
payment.
Commission Bank. 7.5%
31 or
. remuneration
paid to agent
of foreign
buyer

[section 53EE]
Interest on Any person 10% This shall
32 saving responsible for not apply on
. deposits and making such the amount of
fixed payment. interest or
deposits share of
profit arising
[section 53F]
out of any
deposit
pension
scheme
sponsored by
the
government
or by a
schedule bank
with prior
approval of
the
Government.
Real estate or Any person In case of
33. land responsible for Building/Apartment:
development registering any
business document for (i) Tk. 2,000 per
transfer of any square meter for
[section 53FF] building or
land or building
apartment situated
or apartment. at
Gulshan Model
Town, Banani,
Baridhara, Defense
Officers
Housing
Society
(DOHS),
Dhanmondi
Residential Area,
Lalmatia Housing
Society, Uttara
Model Town,
Bashundhara
Residential Area,
Dhaka Cantonment
Area, Motijeel
Commercial Area,
Dilkusha
Commercial Area,
Karwan Bazar
Commercial Area
of Dhaka and
Khulshi Residential
Area, Panchlaish
Residential Area and
Agrabad of
Chittagong;

(ii) Tk. 800 per


square meter where
the building or
apartment is
situated in areas
other than areas
mentioned in
sub-clause (i)

In case of Land:

2% of deed value in
case of property
situated in any city
corporation,
paurashava or
cantonment board.

1% of deed value in
case of property
situated in places
other than any city
corporation,
paurashava or
cantonment board.
Insurance Any person 5%
34. commission responsible for
[section 53G] paying such
commission to a
resident.
Fees of Any person 15%
35. surveyors of responsible for
general paying such fees
insurance to resident
company

[section 53GG]
Transfer of Any person 2% of deed value in This shall not
36. property responsible for case of property apply to sale
registering any situated in any city by a bank or a
[section 53H] document of a corporation, financial
person. paurashava or institution as a
cantonment board. mortgagee
empowered to
1% of deed value in sell;
case of property mortgagee of
situated in areas any property to
other than any city the BHBFC;
corporation, mortgagee to
paurashava or any bank of
cantonment board. any property;
transfer of any
agricultural
land in

Bangladesh
except land
situated in any
area
mentioned in
paragraph [i]
or [ii], of
subclause [c] or
clause [15] of
section 2;
Interest on Any person 10% This shall not
37. deposit of post responsible for apply if the
office & saving making such total amount of
bank account payment. interest is paid
[section 53I] to such payee
or class of
payees as
specified by
the Board.
Rental value of The Government Up to Tk. 15,000/-
38. vacant land or or any authority, per month
plant or corporation or --------------Nil.
machinery body including its
units, the activities From Tk 15,001/- to
[section 53J] or any NGO, any Tk 30,000/- per
[rule 17BB] university or month –3%
medical college,
dental college, More than Tk.
engineering 30,000/- per month
college ---------5%
responsible for
making such
payment.
Advertisement The Government 3%.
39. of newspaper or any other
or magazine or authority,
private corporation or
television body or any
channel company or any
banking company
[section 53K]
or any insurance
company or any
cooperative bank
or any NGO or
any university or
medical college or

dental colleg e or
engineering
college
responsible fo
r
making suc
payment. h
Collection of Securities & 3%
40. tax from sale Exchange
of share at a Commission
premium over
face value
[section 53L]
Collection of Securities & 5%
41. tax from Exchange
transfer of Commission/Stoc
shares by the k
sponsor Exchange
shareholders or
placement
holders of
a
company listed
on stock
exchange
[section 53M]
Dividends The principa Resident/ non- If the DCT
42. officer l of resident Bangladeshi certifies,
[section 54] company. a company ----- 20% deduction in
this regard
Resident/ non- may not be
resident Bangladeshi made or
person other than made at a
company -----10%
rate less
Non-resident (other than the
than Bangladeshi maximum
non-resident) person rate.
other than a
company---25%.
Income from Any perso 20%
43. lottery [section responsibl n for
55] e making such
payment
Income of non Any perso Non -resident
44. residents responsibl n for company at the rate
e making such applicable to a
[section 56] payment. company.
Non-resident non-
Bangladeshi person
other than a
company --- 25%

Non-resident
Bangladeshi person at
the rate applicable to a
resident.

7. Major areas for final settlement of tax liability:

Tax deducted at source for the following cases is treated as final discharge of tax
liabilities. No additional tax is charged or refund is allowed in the following cases:-
• Supply or contract work
• Band rolls of hand made cigarettes
• Import of goods
• Transfer of properties
• Export of manpower
• Real Estate Business
• Export value of certain items including knit and woven garments.
• Local shipping business
• Royalty, technical know-how fee
• Insurance agent commission
• Auction purchase
• Payment on account of survey by surveyor of a general insurance company
• Clearing & forwarding agency commission
• Transaction by a member of a Stock Exchange
• Courier business
• Compensation against acquisition of property
• Premium value over face value of a share
• Income from transfer of securities of a sponsor shareholder.
• Winning lotteries

7. Filing of return and payment of tax


7.1 Filing of return of income: The following persons are required file return
of income---
- If total income of any individual (other than female taxpayers, senior taxpayers of 65 years
and above and retarded taxpayers) during the income year exceeds Tk. 250,000/-.

- If total income of any female taxpayer, senior taxpayer of 65 years during the income year
exceeds Tk. 300000/-

- If total income of any retarded taxpayer during the income year exceeds Tk. 375000/-.

- If any person was assessed for tax during any of the 3 years immediately preceding the
income year.

- A person who lives in any city corporation/paurashava/divisional HQ/district HQ and owns a


building of more than one storied and having plinth area exceeding 1,600 sq. feet/owns
motor car/owns membership of a club registered under VAT Law.

- If any person subscribes a telephone.

- If any person runs a business or profession having trade license and operates a bank account.

- Any professional registered as doctor, lawyer, income tax practitioner, Chartered Accountant,
Cost & Management Accountant, Engineer, Architect and Surveyor etc.

- Member of a Chamber of Commerce and Industries or a trade Association.

- Any person who participates in a tender.

- A person who has a Taxpayer's Identification Number (TIN).

- Candidate for Union Parishad, Paurashava, City Corporation or Parliament elections.

- Any company registered under Companies Act, 1930 or 1994


The return of income will be filed using the forms prescribed in Rule

Individual assessees are required to furnish the following statements as accompanying the return
of income –

 Statement of assets, liabilities and expenses (including those of spouse, minor children
and dependents if they are not assessee)
 Statement of expenses relating to lifestyle

Companies are required to furnish the following documents accompanying the return of income

 Audited statement of accounts


 A reconciliation between profit or loss shown in the accounts and profit and loss shown
in the return of income

7.2 Schedules and documents to be submitted with return of income


The schedules, information, statements or documents required to be submitted along with return
of income is stated below –
Income from salary
 Particulars of income from salaries
 Salary statement
 Bank statement or bank certificate, if bank account is maintained or bank interest is
earned
 Particulars of tax credit / rebate, if tax rebate is claimed
 Proof of investment eligible for tax rebate. For example, proof of premium payment in
case of life insurance policy
Interest on securities
 Photocopy of bond or debenture purchased during the year
 Certificate from interest providing authority in case of interest income
 Certificate from bank or bank statement in support of loan interest, if loan is taken for
purchase of bond or debenture
Income from house property
 Particulars of income from house property
 Deed of rent, copy of rent receipt, monthly statement of house property income, bank
statement showing deposit of rent
 Copy of payment receipt of municipal tax, city corporation tax, land development tax
 Certificate from bank and bank statement in support of loan interest, if loan is taken for
purchase or construction of house property
 Copy of payment receipt of insurance premium, if house property is insured

Income from business or profession


 Summary of income from business or profession
 Income statement and balance sheet of business or profession

Income of partnership firm


 Income statement and balance sheet of partnership firm

Capital gains
 Copy of deed for sale or transfer of property
 Photocopy of challan or pay-order, if tax is deducted at source
 Certificate if capital gain arises from transaction of shares of listed companies

Income from other sources


 Bank statement, certificate of / copy of dividend warrant, in case of dividend income
 Copy of certificate obtained during encashment of / interest received from savings
certificate
 Certificate from bank or bank statement in support of interest income
 Relevant document for income from other sources

Payment of tax
 Copy of treasury challan / pay-order / bank draft / account payee check
 Certificate of deduction from deducting authority, if tax is paid at source

7.2 Time to submit Income Tax Return


Every return has to be filed on or before the Tax Day. Thus, the last date of filing return for all
assessee (except for a company) is 30 November following the end of income year. The last date
of filing return for a company is 15th day of the 7 th month following the end of income year or
15th day of September following the end of income year whichever is later.

7.3 Filing of revised return


The following persons can file a revised return at any time before the assessment is made:
 A person who has not filed a return
 A person who has not filed a return as required by a notice issued by the DCT under
 A person who has filed a return but discovered any omission or incorrect statement in
such return

7.4 Submission of withholding tax return and time to submit:


Person who makes any TDS (Tax deduction at source) on payment, must file a separate return of
withholding tax under section 75A of the Ordinance.
15th day of October, January, April and July.
Or extended date up to 15 days by DCT. Statement of TDS, Copy of Treasury challan
/pay-orders should be submitted with the return.
7.5 Payment of tax on the basis of return
Every person who is required to file a return has to pay tax on or before the date on which he /
she files the return. The amount of tax to be payable by him / her will be higher of (a) tax on the
basis of such return and (b) minimum tax liability, reduced by the amount of any tax deducted
or collected from his / her income and any advance tax paid by him / her.

7.6 Payment of tax deducted at source


All taxes deducted or collected in accordance with the Ordinance is required to be paid to the
credit of the Government by electronic payment or income tax challan to Bangladesh Bank or
Sonali Bank. The timeline for payment of such tax deducted or collected is stated below:

7.7 Tax Recovery System :

In case of non-payment of income tax demand, the following measures can be taken against a taxpayer
for realization of tax:-

• Imposition of penalty.
• Attachment of bank accounts, salary or any other payment.  Filing of Certificate case
to the Special Magistrate/Collector of District.

7.8 Advance Payment of Tax:


Every taxpayer is required to pay advance tax in four equal installments falling on 15th
September; 15th December; 15th March and 15th June of each year if the latest assessed income
exceeds Taka four lakh. Penalty is imposable for default in payment of any installment of
advance tax.

7.9 Mode of payment

All payments of tax and any other payments under the Ordinance is required to be made by pay
order or demand draft or account payee cheque of any scheduled bank in favor of concerned
DCT
or electronic payment. However, if the payment does not exceed Tk. 10,000, then it can be made
through treasury challan

7.10 Consequences of Non-Submission of Return and Return of withholding tax.


 Imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of
Tk. 1,000/-
 In case of an individual assessee whose income was not assessed previously Tk. 5,000/-.
 In case of an individual assessee whose income was assessed previously, fifty per cent (50%) of
the tax payable on the last assessed income or Tk. 1,000/-, whichever is higher.
 In case of a continuing default by any type of assessee, a further penalty of Tk. 50/- for every day
of delay.

7.11 Consequences of using fake TIN:

DCT can impose a penalty not exceeding TK.20,000/- For continuous use of fake TIN
deliberately- 3 years imprisonment, up to TK. 50,000/- fine or both.

7.12 Assessment Procedures:


 For a return submitted under normal scheme, assessment is made after giving an
opportunity of hearing.
 For returns submitted under Universal Self Assessment Scheme, the
acknowledgement slip is considered to be an assessment order of the Deputy
Commissioner of Taxes. Universal Self Assessment may be subject to “process and
audit”.

Provided that a return of income filed under universal self assessment scheme, shall not be
selected for audit where such return shows at least twenty per cent higher income than the
income assessed or shown in the return of the immediately preceding assessment year and
such return-
(a) is accompanied by corroborative evidence in support of income exempted from tax;
(b) does not show receipt of gift during the year;
(c) does not show any income chargeable to tax at a rate reduced under section 44; or
(d) does not show or result any refund.

7.13 Appeal against the order of DCT


A taxpayer can file an appeal against DCT's order to the Commissioner (Appeals)/Additional or
Joint Commissioner of Taxes (Appeals), to the Taxes Appellate Tribunal against an Appeal order
and to Commissioner of Taxes of the respective taxes Zone for the revision of DCT’s order.

8. Fiscal incentives:
Following are fiscal incentives available to a taxpayer:

I) Tax holiday : Tax holiday is allowed for industrial undertaking and physical infrastructure facility
established between 1st July 2011 to 30th June 2019 in fulfillment of certain conditions.

(a) Industrial Undertaking eligible for Tax holiday : (section 46B)

 active pharmaceuticals ingredient industry and radio pharmaceuticals industry;


 automobile manufacturing industry;
 barrier contraceptive and rubber latex;
 basic chemicals or dyes and chemicals;
 basic ingredients of electronic industry (e.g resistance, capacitor, transistor, integrator
circuit);
 bi-cycle manufacturing industry;
 bio-fertilizer; (will get tax holiday even it is set up in distict of Dhaka, Narayanganj, Gazipur,
Chittagong, introduced in FA 2012)
 biotechnology;
 boilers;
 brick made of automatic hybrid Hoffmann kiln or Tunnel Kiln technology;
 compressors;
 computer hardware;
 energy efficient appliances;
 insecticide or pesticide;
 Petro-chemicals;
 pharmaceuticals;
 processing of locally produced fruits and vegetables;
 radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or
preservation of food or disinfecting medicinal equipment);
 textile machinery;
 tissue grafting;
 tire manufacturing industry; or
 any other category of industrial undertaking as the Government may, by notification in the
official Gazette, specify.

(b) Physical Infrastructure eligible for Tax holiday:

(a) deep sea port;


(b) elevated expressway;
(c) export processing zone;
(d) flyover;
(e) gas pipe line,
(f) Hi-tech park;
(g) Information and Communication Technology (ICT) village or software
technology zone;
(h) Information Technology (IT) park;
(i) large water treatment plant and supply through pipe line;
(j) Liquefied Natural Gas (LNG) terminal and transmission line;
(k) mono-rail;
(l) rapid transit;
(m) renewable energy (e.g. energy saving bulb, solar energy plant, windmill);
(n) sea or river port;
(o) toll road or bridge;
(p) underground rail;
(q) waste treatment plant; or
(r) any other category of physical infrastructure facility as the Government may, by
notification in the official Gazette, specify.

II) Other Exemptions:

(a) Any service charge derived from operation of micro credit by a non-government organization
registered with NGO Affairs Bureau.
(b) Any voluntary contributions received by a religious or charitable institution and applicable solely to
religious and charitable purposes;
(c) Any income accruing to, or derived by, a provident fund to which the Provident Fund Act, 1925
(XIX of 1925), applies;
(d) Any income received by the trustees on behalf of a recognized provident fund, an approved
superannuation fund or pension fund and an approved gratuity fund;
(e) Any amount of income received as pension;
(f) Gratuity received up to Tk. 2.5 crore;
(g) Income from dividend amounting to Tk. 25,000 received from a publicly traded company;
(h) Income from dividend of a mutual fund or a unit fund up to taka 25000;
(i) An amount equal to 50% of the income derived from export business is exempted from tax;
(j) Any income, not exceeding two lakh taka chargeable under the head "agricultural income" of an
assessee, being an individual, whose only source of income is agriculture;
(k) Income from Information Technology Enabled Services (ITES) or Nationwide Telecommunication
Transmission Network (NTTN) business is exempted up to 30th June, 2024;
(l) Income derived from export of handicrafts is exempted from tax up to 30th June, 2019;
(m) Income of any private Agricultural College or private Agricultural University derived from
agricultural educational activities;
(n) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods
and having an annual turnover of not more than taka thirty lakh is exempt from tax;
(o) An amount equal to fifty percent of the income of an assessee derived from the production of
corn/maize or sugar beet;
(p) Income of an assessee donated in an income year by a crossed cheque to any girls' school or girls'
college approved by the Ministry of Education of the government;
(q) Income of an assessee donated in an income year by a crossed cheque to any Technical and
Vocational Training Institute approved by the Ministry of Education of the government;
(r) Income of an assessee donated in an income year by a crossed cheque to any national level
institution engaged in the Research & Development (R&D) of agriculture, science, technology and
industrial development;
(III) Exemptions available for Power Sector
Following income from Power Sector is fully/substantially exempted from tax:

(i) Coal based private power generation companies will enjoy full tax exemption for fifteen
years, if the company sign a contract with the Government in accordance with private
sector power generation policy of Bangladesh within 30 June, 2020 and started
commercial production within 30 June 2023;
(ii) Private power generation company will enjoy full tax exemption for fifteen years
beginning with the month of commencement of commercial production if the company
starts its commercial production within 30 June, 2016;
(iii) Private power generation company that starts its commercial production after 30 June,
2016 will enjoy the following tax exemption:

Period of Tax exemption Rate of Tax


exemption
Five years beginning from 100%
commencement of commercial production
Next three years 50%
Next two years 25%

(IV) Tax Rebate for Manufacturing Companies:


To ensure sustainable industrialization without disturbing the civic amenities; the following tax rebate
facilities for the manufacturing industries set up in places other than city corporation areas is given
through S.R.O No. 185-Law/Income Tax/2014, Date: 01 July, 2014 as follows:
Industries Proposed Period of Proposed Tax Rebate
Tax
Rebate
Tax rebate for the manufacturing industries 20% Up to 10 years next from the
commencing commercial operation date of commencing commercial
between 1 July, 2014 and 30 June, 2019 operation
located outside any city corporation area
Tax rebate for the manufacturing industries 20% Up to 10 years next from the
shifted/relocated to areas located outside date of commencing commercial
any city corporation area and commencing operation after shifting
commercial operation between 1 July,
2014 and 30 June, 2019

Tax rebate for the manufacturing industries 10% Up to 30 June, 2019


already started commercial production
located outside any city corporation area

(V) Tax Holiday for industrial undertaking established in EPZ:


According to S.R.O No. 219-law/Income Tax/2012, Date: 27 June, 2012, any industrial
undertakings set up in EPZ on or after 1 January, 2012, the following Tax benefit will be
provided:

(a) Industry set up within Dhaka and Chittagong Division (except Bandarban,
Rangamati and Khagrachari hill districts)-

Duration of Tax Rebate Rate ofTax rebate


First two years (first and second year) 100%
Next two years (third and fourth year) 50%
Next one year (fifth year) 25%
(b) Industry set up within all other divisions of the country and Bandarban, Rangamati and
Khagrachari hill districts-

Duration of Tax Rebate Rate of Tax rebate


First three years (first, second and third year) 100%

Next three years ( fourth, fifth and sixth year) 50%

Next one year (seventh year) 25%

(VI) Tax Exemption for Developers of Economic Zone (BEZA) and Hi-Tech
Park and industrial undertaking established thereon:
(a) According to S.R.O No. 227-law/Income Tax/2015, date: 08 July, 2015 and S.R.O No.
229law/Income Tax/2015, Date: 08 July, 2015 developers of Bangladesh Economic Zone (BEZA)
and Hi-Tech Park shall enjoy following tax exemption:

Duration of Tax Exemption Rate of Tax


Exemption
First ten (10 ) years 100%
Eleventh (11) year 70%
Twelfth (12) year 30%

(b) According to S.R.O No. 226-law/Income Tax/2015, date: 08 July, 2015 and S.R.O No.
228law/Income Tax/2015, Date: 08 July, 2015 industrial undertakings established within BEZA
and HiTech park areas shall enjoy following tax exemption :

Duration of Tax Exemption Rate of Tax


Exemption
First three years (first, second and third year) 100%
Fourth year 80%
Fifth year 70%
Sixth year 60%
Seventh year 50%
Eighth year 40%
Ninth year 30%
Tenth year 20%
9. Avoidance of Double Taxation Agreement
There are agreements on avoidance of double taxation between Bangladesh and 32 countries which are:-

Date of effect in
SRO
Sl. Name of the Date of Bangladesh
No. Country Signing No. Date [assessment year
commencing on or after]
1. UK 08/08/1979 227-L/80 08/07/1980 01/07/1978
2. Singapore 01/01/1980 124-L/82 21/04/1982 01/01/1980
3. Sweden 03/05/1982 382-L/83 19/10/1983 01/07/1984
4. South Korea 10/05/1983 433-L/84 02/10/1984 01/07/1984
5. Canada 15/02/1982 247-L/85 06/06/1985 01/07/1982
6. Pakistan 15/10/1981 221-L/88 11/07/1988 01/01/1980
7. Romania 13/03/1987 348-L/88 23/11/1988 01/07/1989
8. Sri Lanka 24/07/1986 365-L/88 10/12/1988 01/07/1989
9. France 09/03/1987 2-L/89 04/01/1989 01/07/1989
10. Malaysia 19/04/1983 67-L/90 15/02/1990 01/01/1982
11. Japan 28/02/1991 235-L/91 06/08/1991 01/07/1992
12. India 27/08/1991 45-L/93 27/02/1993 01/07/1993
13. Germany 29/05/1990 1-L/94 01/01/1994 01/01/1990
14. The Netherlands 13/07/1993 267-L/94 14/09/1994 01/07/1995
15. Italy 20/03/1990 63-L/97 12/03/1997 01/07/1980
16. Denmark 16/07/1996 72-L/97 17/03/1997 01/07/1997
17. China 12/09/1996 114-L/97 13/05/1997 01/07/1998
18. Belgium 18/10/1990 11-L/98 14/01/1998 01/07/1998
19. Thailand 20/04/1997 222-L/98 07/09/1998 01/07/1999
20. Poland 08/06/1997 39/L/99 03/03/1999 01/07/2000
21. Philippines 08/09/1997 56-AvBb/2004 04/03/2004 01/07/2004
22. Vietnam 22/03/2004 301-AvBb/2004 18/10/2004 01/07/2005
23. Turkey 31/10/1999 308-AvBb/2005 31/10/2005 07/07/2004
24. Norway 15/08/2004 20-AvBb/2006 12/02/2006 01/07/2006
25. USA 26/09/2004 71-AvBb/2007 10/05/2007 07/08/2006
26. Indonesia 19/06/2003 60-AvBb/2007 26/04/2007 01/07/2007
Date of effect
SR O
Sl. Name of the Date of in Bangladesh
No. Country Signing No. Date [assessment year
commencing on or after]
27 Switzerland 10/12/2007 52- আইন/2010 23/02/2010 01/07/2008
.
28 Saudi Arabia 04/01/2011 103- আইন/2012 15/04/2012 01/10/2011
.
29 Mauritius 21/12/2009 122- আইন/2012 09/05/2012 01/07/2012
.
30 UAE 17/01/2011 313- আইন/2012 11/09/2012 01/07/2012
.
31 Myanmar 07/10/2008 358-AvBb/2012 18/10/2012 01/07/2012
.
32 Belarus 09.07.2013 189-Law-2014 08.07.2014 01.07.2014
.
10. Steps for collecting Income Tax in Bangladesh

Submission of income tax returns is generally due by:

► 30th September in case of non-companies


and ► 31st December in case of companies.

Assessment is made in several procedures. They are:

 Self-assessment
 Presumptive assessment
 Spot assessment
 Pre-audit based assessment.

However, certain percent of self-assessment cases are selected for audit.

Assesses can prefer appeal if aggrieved by his assessment. There are three
primaryforums 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 bechallenged to the next Appellate Court named as Appellate
Tribunal.

Withholding tax is levy able on a number of items including contractors,


imports,transfer of urban land/building, bank deposits etc.

11 Procedure of Assessment

Generally the followings steps are followed in case of Assessment of the Company
and the Corporation:

 Step-1 Computation of Business Income


 Step-2 Computation of Total Income Step
 Step-3 Determination of Total Tax Liabilities
 Step-4 Determination of Net Tax Liabilities

According to Sections 28, 29 and 30 of ITO, 1984 Income from business is to be


calculated after considering admissible and inadmissible expenses to this end.

Total Income of the Company is to be calculated by adding other income with


incomefrom business.

Total Tax liabilities are to be determining by applying prescribed tax rate.

Net Tax liability is to be ascertained by deducting the following tax rebate from
TotalTax liabilities:

►10% Tax rebate on foreign income


►Tax rebate on increased production in case of industrial company, if
applicable.
►Tax rebate on export income (at rate applicable)
►Tax rebate and average rate on tax free income.

12. OFFENCES, PENALTIES & PUNISHMENTS


The following table summarizes the various offences and related penalties
and punishments under ITO, 1984

Sl. Offences Penalties & punishments Reference


1. Failure to deduct / collect tax 2% per month of the amount Sec - 57
at source of tax required to be
deducted or collected
Maximum period of penalty:
24 months
2. Deduction or collection of tax 2% per month of the amount Sec - 57
at source at a lesser rate or in of shortfall
lesser amount Maximum period of penalty:
24 months
3. Failure to pay deducted or 2% per month of the amount Sec - 57
collected amount of tax at or part of it which has not
source or part of it to the been paid to the credit of the
Government
credit of the Government
Maximum period of penalty:
24 months
4. Issuance of certificate of tax The required amount of Sec-57A
deduction or collection deduction or collection
without actual deduction or
collection or payment to the
Government
5. Sum of advance tax paid and 10% simple interest on the Sec – 73
tax deducted or collected at such shortfall
source is less than 75% of 15% simple interest on the
tax determined on regular such shortfall, if return is
assessment submitted after the tax day
Maximum period of penalty:
24 months
Sl. Offences Penalties & punishments Reference
14. Failure to file return under Higher of (a) 10% of last Sec – 124
Section - 75,77, 89(2), assessed tax or (b) Tk.
91(3), 1,000
93(1), 75A For continuing default: Tk.
50 per day
Provided that maximum
penalty for an individual
assessee not previously
assessed: Tk. 5,000
Maximum penalty for
an individual assessee
previously assessed:
Higher of (a) 50% of last
assessed tax or (b) Tk.
1,000
15. Failure to furnish Tk. 500 Sec – 124
certificate, statement,
For continuing default: Tk.
accounts, information or
250 per month
TIN certificate required
under Section - 58, 108,
109, 110 and 184C
16. Failure to furnish Tk. 25,000 Sec – 124
information required
For continuing default: Tk.
under Section – 113
500 per day
17. Use of fake TIN or TIN of Maximum: Tk.20,000 Sec –
another person 124A
12 SUMMARIES OF VALUE ADDED TAX
Three different types of taxes are imposed under the provisions of the Value
Added Tax Act, 1991.
 Value Added Tax at 15% on value addition, to be paid by importers,
manufacturers, and service providers having turnover of more than Tk. 80
lakh. [Section – 3]
 Turnover Tax at 3% to be paid by persons and organizations having turnover
amount not exceeding Tk. 80 lakh and who is not required to be registered
for VAT under Section - 15. [Section – 8; Rule – 4]
 Supplementary Duty at different rates ranging from 10% to 500% per cent
on luxurious, non-essential and socially undesirable goods.
Goods and services chargeable to VAT
According to of the Value Added Tax Act, 1991, 15% VAT is imposed on following goods and
services –
 All goods imported or supplied in Bangladesh, except for those stated in
the First Schedule of the VAT Act, 1991
 All services provided or imported in Bangladesh, except for those stated in the Second
Schedule of the VAT Act, 1991
However, zero rate tax will be imposed on following goods and services –
 Any goods or services exported or deemed to have been exported from
Bangladesh
 Food and other things supplied in accordance with Section - 24 of the
Customs Act, 1969 to any transport leaving Bangladesh, for consumption in
the transport outside Bangladesh
Provided that provisions of zero rate tax will not be applicable in the following cases –
 Any goods intended to be re-imported into Bangladesh
 Goods that have been presented for export in accordance with Section - 131
of the Customs Act, 1969 but have not been exported within 30 days of
submission of the bill of export or such extended time(if any) allowed by the
Commissioner
Persons responsible to pay VAT
According to Section - 3(3) of the Value Added Tax Act, 1991, the following
persons / entities are responsible to pay VAT –
 In the case of imported goods, the importer of the goods imported at import
stage
 In the case of goods manufactured or produced in Bangladesh, the supplier
at production or manufacturing stage
 In the case of services, the provider of services
 In the case of service provided from outside the territory of Bangladesh,
service receiver
 In other cases, the supplier and the receiver of service

13. SUMMARY OF GIFT TAX


Gift tax
As per Section – 3 of the Gift Tax Act, 1990, gift tax is leviable on gifts made in
any financial year on and from 1 July 1990 at the rates prescribed in the schedule.
As per Section – 2(f), Gift means the transfer of any existing immovable or
moveable property by one person to another, made voluntarily and without
consideration of any money or money’s worth.
The value of property under gift (other than cash) will be the value which, in the
opinion of the Deputy Commissioner of Taxes, the property would fetch if sold
in the open market on the date of gift. When a property is not saleable in the
open market and such value cannot be determined, its value will be determined
according to the rules prescribed for the purpose. Methods of valuation of gift
have been provided in the Section - 5 of the Gift Tax Act, 1990.
As per Section – 20, provisions of the Gift Tax Act, 1990 will not be applicable for
gifts made by following persons –
 A body corporate established or constituted by or under any law
 Any institution or fund whose income is exempt from income tax

Exemption from gift tax


As per Section – 4 of the Gift Tax Act, 1990, gift tax will not be charged in respect
of the following gifts made by any person –
 Gift of property situated outside Bangladesh
 Gift to the Government or any local authority
 Gift to the following funds or institutions for charitable purpose –
 Any university established under the law in force in Bangladesh or
any educational institution including polytechnic institute recognized by the
Education Board or recognized or run by the Government
 Any hospital recognized or run by the Government or any local authority or
any hospital aided by the Government or any local authority
 Any flood or disaster management fund established or approved by the
Government
 Such institutions or funds for religious or charitable purposes (except for
private religious institution or fund which does not ensure benefit of the
public) which are established in Bangladesh and approved by the
Government for such purposes, or any institution established for religious or
charitable purposes and registered under any law for the time being in force:
up to 20% of the total income determined for the concerned year or Tk.
100,000 whichever is less
 Gift to the dependent relative up to Tk. 20,000 on the occasion of his /her
marriage
 Gift by way of payment for insurance policy or annuity for any person (other
than spouse) dependent upon him / her for support and maintenance up to
Tk. 20,000
 Gift under a will
 Gift under contemplation of death
 Gift to sons, daughters, father, mother, spouse, brothers and sisters
 In addition to the above exemptions, gifts made in any financial year up to
the value of Tk. 20,000 are exempt from gift tax. The Government may by
notification
 exempt any class of gift or any class of person from gift tax.

Rates of gift tax


Gift tax is imposed at a 4-tier progressive rate. The values of taxable gift with corresponding gift
tax rates are quoted below –
13. REASONS FOR AVOIDING TAX IN BANGLADESH
Tax avoidance is one of the main problems for collecting Income Tax by the Income Tax
Authority in Bangladesh. It is the legal utilization of the tax regime to one's own advantage, in
order to reduce the amount of tax that is payable by means that are within the law. By contrast
tax evasion is the general term for efforts to not pay taxes by illegal means. The term tax
mitigation is a synonym for tax avoidance. Its original use was by tax advisors as an alternative
to the pejorative term of tax avoidance. Latterly the term has also been used in the tax regulations
of some jurisdictions to distinguish tax avoidance foreseen by the lawmakers from tax avoidance
which exploits loopholes in the law.
Tax is the main source of Bangladesh. So, it is base point for Bangladesh economy to improve
the country’s infrastructure and other territory. After 1971 we receive many aids from foreign
country but after 40 years of liberation war our country doesn’t progress a lot through we have
more potentiality than any other country in this point a question arise:

Why we are lagging behind?

Where is the problem?

Revenue collection is not a problem these days. Revenue collection has always been a problem
in Bangladesh. People in Bangladesh want to get everything for free. So it is time to change that
mentality. The problem is with the attitude and mentality .Our country is mostly depended on
VAT rather than Tax though tax is the main source of revenue collection of any country. In
Bangladesh there are 20lac tax identification number (TIN) holders, though it is unfortunate that
most of the TIN holder don’t give the actual amount of Tax they have to pay to the government.
So why people don't pay Tax there are some obvious reasons behind this, those reasons are given
below:

Defective systems
The system is defective. It is defective because of two reasons. One is, we have
inconsistencies in our structure. Secondly, the system has given too much discretion to the
officers. As a result, many, not all. Of them take advantage and that leads to corruption.
Inconsistencies structural
There are lots of inconsistencies in the structure of the payment of tax. When san ordinary
person wants to go pay his tax in NBR it is quite impossible for him to identify to whom his
tax payment will concern.

Discretion among the amount


There are a lot of discrimination between the actual amount of money the people have and
the amount what they express. The people think that if they disclose their actual amount they
will suffer in the future by the government authorities and the others.

Like in United States, people submit their tax form; they receive whatever they have to. If
there is any discrepancy, people receive a letter. In our country, people have to appear. They
have to hire a tax lawyer, another burden.

Client-bureaucracy interface
Due to the interference there are a lot of complaints from the tax payers. In fact they are
afraid of tax collectors, tax officials. Nothing is happening. When a person want to give his
tax the Tax officer asked for bribe so the ordinary people they become afraid of it if they
don't give this they may suffer in the future for unavoidable situation.

Narrower the tax base


Thebaseoftaxismuchnarrowerbecausetherearemanycriticalf
a c t o r s i n t h e bureaucracy so the time has changed but the pattern does not change at all.
Listening to the powerful people
The tax officer pays more attention to the big corporation, because they take a higher amount
of money from the corporation. When a trader goes to pay his tax he makes a little attention
by the officer. It is a biggest problem of our burro racy.

Improvements in the system


The tax taken system is not improved this question raised several times in the NBR, the
system is so much critical that any new people go to the tax office he will not be able to give
the tax. He or she must take the help of the others or he or she kept a permanent lawyer for
himself, which is also costly.

Old structure of laws, rules, working procedures and overall tax structure
It is an unfortunate factor to the Bangladeshi people that the structure, rules working
procedure is not well developed, broader environment of hostility between the tax- payers
and the tax collectors’ conflict of interests in the NBR: The tax payers and the tax collectors
have a lot of conflict among them. The tax payers like a ordinary person it is quite difficult
for him to make a proper adjustment in the tax payment so the tax collectors take the
advantage and intentionally make a critical situation for the tax payer so that he can take
bribe from the particular person. Example, someone who has worked for income tax knows
the income tax ordinance and rules, so he can quickly refer to a rule of a section of the law
which obviously other can't. We have to open the book, ask someone. But decision making is
a totally different thing. We don't do assessment of income tax returns. We the people just
make the statement of our income.

Corruption of tax collectors


The tax collector take the bribe from the people, in our country a TIN holder first appoint
lawyer for calculating his tax then he gives his tax at the Bank then also pay bribe to the tax
collector for approving the payment so it is vary unfortunate for the people that they have to
pay the more money for the payment, sometimes it is much higher then the actual tax
payment. So the collectors also play a bigger role for the non payment of tax.

Poor amount of direct tax collection


The taxable annual income in Bangladesh starts at Taka 165,000. For women and those
above 70 it starts at Taka 180,000. In India it starts at Rupees 150,000. For women it starts at
Indian Rupees 180,000 and for those above 65 at Rupees 225,000. The higher tax rates in
Bangladesh show that the Bangladeshis pay more tax than the Indians. The gap in the tax
rates for men and women is also narrower than that of India.

Lack of respecters
The government officer doesn't respect to the citizen though they are paid by the citizen's
money but when they want to pay the tax the officer just treated them badly.
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 moreconcerned with not paying
for particular government policies that they oppose.

Responses to tax avoidance:


Avoidance also reduces government revenue and brings the tax system into disrepute, so
governments need to prevent tax avoidance or keep it within limits. The obvious way to do this is
to frame tax rules so that there is no scope for avoidance. In practice, this has not proved
achievable and has led to an ongoing battle between governments amending legislation and tax
advisors' finding new scope for tax avoidance in the amended rules.

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).

Illegal income and tax evasion:


Who earn income by illegal means (gambling, theft, drug trafficking etc.) is required to report
unlawful gains as income when filing annual tax returns. Suspected law breakers have therefore
been charged with tax evasion when there is insufficient evidence to try them for their non-tax
related crimes. Other times, tax evasion can be used as a "one more nail in the coffin" by
prosecutors by stating that if a person earns illegal income, S/he may also be guilty of tax
evasion. Those who attempt to report illegal income as coming from a legitimate source could be
charged with money laundering.

Cultural problem:
In our country prospective the people aren’t habituated to return of income tax. Another thing is
when an assessee want file return he/she face some problem by the tax officials. Sometime the
assessee give the money by his own pocket.

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.

Evasion of Value Added Tax (VAT):

During the latter half of the twentieth century, Value Added Tax (VAT) has emerged as a
modern form of consumption tax through the world. Producers who collect VAT from the
consumers may evade tax by under-reporting the amount of sales.

Public opinion on tax avoidance:

Tax avoidance may be considered to be the dodging of one's duties to society, or alternatively the
right of every citizen to structure one's affairs in a manner allowed by law, to pay no more tax
than what is required. Attitudes vary from approval through neutrality to outright hostility.
Attitudes may vary depending on the steps taken in the avoidance scheme, or the perceived
unfairness of the tax being avoided.

The distinction in various jurisdictions of Tax Evasion and Tax Avoidance:

The use of the terms tax avoidance and tax evasion can vary depending on the jurisdiction. In
general, the term "evasion" applies to illegal actions and "avoidance “to actions within the law.
The term "mitigation" is also used in some jurisdictions to further distinguish actions within the
original purpose of the relevant provision from those actions that are within the letter of the law,
but do not achieve its purpose.
Inequality in taxing Wages between Private and Public Sector:
In Bangladesh, income tax for government employees is deemed paid by their employer that is
government. However, if a private employer pays income tax for its employees, such payments
are considered income, which creates additional tax burden for the employee of the private firm.
This seems discriminatory, that encourages employees of private firms to avoid or evade taxes.
Such discriminations create social inequality and distortion in the tax system of the country with
negative23 impact on her tax-GDP ratio and hindering the expansion of tax base as well. Since
governments of the developing countries solely run the development activities, the bureaucrats
hold extra power that enhance abuse of power and lead them to corruption. The recent corruption
index published by the UNDP (2002) resembles the same for Bangladesh. When such public
servants are kept outside the purview of taxation it works as some sort of incentive for them to
become corrupted. The problem obviously lies unresolved due to the existing poor salary
structure of the government employees that usually not frequently adjusted with the current
higher inflation rate. Improving existing salary structure as a means to protect corruption has
been adopted by many other developing countries as China and India (The Economist, May
2002). Government of Bangladesh might have to coincide with the standard as to expect good
governance and transparency among civil servants. In that case rightsizing the government with
maximizing salary level is much desired.

Inequality of Taxing Urban and Rural Sectors:


There is a common belief that the tax structure in Bangladesh is biased against the
poorer class, especially in the rural areas. On the other hand, there is also the view
often expressed by a section of the community, particularly in the urban sector, that
the present tax structure weighs heavily against the business and entrepreneur
class. It is due to the fact that the effective tax rate is higher in the urban sector
than in the rural sector because of the difference in the nature of tax and the
intensity at which such tax is imposed on the two sectors, and the structure of
consumption and income between urban and rural sectors. The commission’s
report presented the relative tax burden of the two sectors from direct taxes. The
average burden of direct taxes on urban sector was 0.31percent as against 0.14
percent in the rural sector. It shows that the effective tax rate in the urban sector
was 2.21 times higher than that of the rural sector in 1979. Over the years the
situation remains the same and in fact still the extreme majority of taxpayers are
urban people. This happens because the urban sector is more monetized and the
government has more control over the urban sector. Such an inequality should be
resolved and taken into account in future tax reforms.

Chapter 3. Recommendation

3.2 Recommendations:
A modern tax system and its administration aspire to promote voluntary compliance through the
following desirable features:
 Clear and simple laws, better information and taxpayer services to minimize taxpayer
effort and compliance costs.
 Efficient collection systems and procedures by simple forms and straightforward
assessment, filing, and payment arrangements to ease administration and compliance.
 Adequate enforcement power of tax administration to ensure compliance with basic
obligations by taxpayers on record keeping, return filing, and voluntary payment.
 Risk analysis to cut unnecessary, unproductive audits, while the non-compliers are
targeted. This ensures efficiency in enforcement.
 Function-based organizational structure: Tax departments organized according to key
functions (registration, filing and payment, processing, enforced collection, and audit)
operate more efficiently than those structured by tax-type.
 Automation promotes risk-based management and fast and simple file returns,
declarations and payments. Web-based information and inquiry services are also highly
appreciated by taxpayers.
 Focus on taxpayers by their revenue potential paying particular attention to the large and
medium taxpayers who are the largest sources of revenue.
 Human resource management for integrity and professionalism: e.g. Competitive and
transparent process of recruitment, effective incentive mechanisms and training in ethics,
supported by a zero-tolerance approach to cases of dishonesty.
 Boarding the tax base so that everyone can makes some contribution to pay their tax
 keeping tax rate as low as possible so that all kinds of people can contribute
 In the past 2yars when the caretaker government is their so much initiative was taken to
involve people to pay tax. More or less those initiatives made some progress. We see that
from different part so many people contribute by paying tax, and those two years the
NBR generate most of the revenues in the history of Bangladesh.
 Minimizing the regulation and the paper work for taxpayers. The tax is simple and plain
so that everyone can easily understand it. The assessment of tax must system should be
simplified. To avoid corruption taxation should be simple
 Utilizing the best of the income tax. Contribute the most to the development of the
country
 Reducing the corruption in the government officer
 Take morale steps and introducing the new methodology for the development of the
officer
 Direct taxation on agricultural sector normally takes two forms; land revenue tax and tax
on agricultural income. This sector accounted for more than 50% of total direct tax
revenue in the early sixties. Agriculture, more specifically non-farm activity, still remains
an untapped source of revenue to the government. In most cases, income from agriculture
does not exceed the ceiling of non-taxable limit primarily due to subdivision and
fragmentation of holdings for which income is distributed to different hands.
 Take steps to collect the direct Tax.
 Up dare the Tariff system
 Every tax has a cost of collection. It is important that the cost of collection should be as
small as possible. It will be useless to imposed tax which is too wide spread and difficult
to administer. So through mobilizing the rules and regulation it should control the cost of
tax collection.
 Reducing the system of tax payment , making such a way that any person can gives his
tax by one day
 Train the employee and improve them morally and motivate them for doing good thing to
the people
 It should be possible for the authorities, without undue delay, to revise the tax structure.
 Lastly but not the least, Tax is a question of ethics it is quite impossible for the tax
authorities to go door to door and inquiry about the tax payment of people. So, the people
should be ethical and they should pay their tax correctly from their earnings.
 From the above we come to learn that there are lot of problems in NBR that's why people
are discourages to give their tax. Again, to some extent there are also people false. Our
country's big giant corporation they also evade tax, it is a cumulative problem so we
should improve our ethics and moral, and we should learn that “if there is any rule
imposed on us we have to obtain it, whether we like it or not”.

Chapter 3: Conclusions
Though the rate of tax revenue is to GDP is very negligible, despite the government is trying to
maximize its tax revenue through different method. But the government should also remind the
cannon of convenience while collecting tax from assesses. As we are living in a civilized society
- should come forward to pay taxes to government in order to conduct the administrative, defense
and development activities of the country. Otherwise we would not be able to prove ourselves as
civilized people.
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.
As taxes are the most important source of revenue of the Government so it is clear that attaining
an optimal tax structure is one of the most important issues for the government to increase the
revenue generation from taxes for accelerating growth and to improve the quality of life of the
citizens. A long-term sustainable solution to enhance transparency, promote growth, improve tax
compliance and thus to increase tax to GDP ratio is a much desirable issue in the context of
Bangladesh.
This study has tried to analyze the existing situation of tax collection procedures in Bangladesh.
Like many other developing countries, the administration of income taxation in Bangladesh is
very poor. There is rampant evasion and allegation of corruption is widespread. We should
understand the fact that any tax reform must go hand in hand with cutting wasteful government
consumption; so that taxpayers do not feel they are sitting ducks for the exchequer to rip them
off. Thus, the government must be very cautious in taxing people so that the burden of taxes
could be justified.

References
 http://www.nbr-bd.org
 http://www.financialinfobd.com/
 http://www.nbr.gov.bd/Publications_page.php?
lan=eng&id=161
 http://www.icmab.org.bd/images/stories/journal/2015/M
ay-Jun/1Amendments%20to%20Income%20Tax.pdf

 https://en.wikipedia.org/wiki/Taxation_in_Bangladesh

 http://www.lightcastlebd.com/blog/2017/06/finance-bill-
2015-major-changes-to-income-tax

 http://www.taxrates.cc

Bibliography
1. Taxation in Bangladesh (15th edition ) by
 Dr. Monjur Morshed Mahmud
 Dr. Kanchan Kumar Purohit
 Dr. Milan Kumar Battacharjee
 Dr. Md. Abdur Rahman