Bangladesh Tax Handbook 2013-2014 1€¦ · 8 Bangladesh Tax Handbook 2013-2014 Bangladesh Tax Handbook 2013-2014 9 1. Tax Exemption Limit The ceiling of tax exempted income for the

Bangladesh Tax Handbook 2013-2014 1

Bangladesh Tax Handbook 2013-20142 Bangladesh Tax Handbook 2013-2014 3

Page

Major Changes in Bangladesh Taxation Laws 2013-2014

1. Tax Exemption Limit 9

2. Personal Tax Rate Structure 9

3. Minimum Tax (Individual) 10

4. Changes regarding Surcharge on individual 10

5. Minimum tax for firm subject to gross receipts 10

6. Withdrawal of tax on share premium 10

7. Changes in Company Tax Rates 10

8. Special tax treatment in respect of investment in residential building and apartment

10

9. Amortization of license fees 11

10. House Rent allowance receivable in cash 12

11. Conveyance allowance receivable in cash with no conveyance facility 12

12. Changes regarding the extent of admissible allowance 12

13. Tax holiday of newly established industrial undertakings 12

14. Amendments in Tax Holiday Scheme 13

15. Extension of areas for TDS from certain services 13

16. Changes of rate of Withholding Tax at source 14

17. Return of income-in simplified return form 16

18. Power of giving order for not removing property 16

19. Reference to High Court Division 17

20. Amendment in Sixth Schedule, Part-A 17

21. Extension of time to avail reduced tax rate for certain industrial companies 17

22. Tax exempted income as per different SROs 18

23. Amendment of Alternative Dispute Resolution (ADR) 18

24. Procedure for spot assessment 18

25. Amendment of Tax-payers Identification Number 19

26. Summary of VAT Changes in FY: 2012-2013 20

Various Tax Incentives allowed as per Tax Laws

1. Tax incentives for Expatriate 23

2. Tax Incentives on Jute Industry, RMG & Textile Industry 23

IndexIndexPage


Page

24. Capital Gains 45

25. Exemption of Capital Gains from tax 46

26. Capital Gain Tax 47

27. Income from Other Sources 47

28. Set-Off of Losses 48

29. Carry forward of loss 48

30. Carry forward of Depreciation Allowance 48

31. Income fully exempted from Tax subject to fulfillment of prescribed conditions and limitations

48

32. Tax Holiday for newly established industrial undertaking, Tourist Industry and Physical Infrastructure facility set-up between the period of July 2011 to June 2015 etc. in certain cases

50

33. List of eligible sectors for Tax Holiday 53

34. Tax Holiday for Hospitals 54

35. Exemption from tax of newly established physical infrastructure facility set up between the period July 2011 and June 2015, etc. in certain cases

54

36. Exemption of income of cooperative societies 56

37. Investment Allowance for Tax Rebate 56

38. Rates of Corporate Tax 57

39. Normal Depreciation Allowance and Amortization 60

40. Amortization of License fees 62

41. Initial depreciation 62

42. Accelerated Depreciation 62

43. Withholding Tax / Tax Deducted at Source (TDS) 63

44. Rates of tax at source 64

45. Form of Return of Withholding Tax 70

46. Advance Payment of Tax 76

47. Payment on the Basis of Return 76

48. Mode of payment of Tax by assessee 76

49. Return of statement of lifestyle 76

50. Filing of Return of Income and Statement 77

51. Return of withholding tax 78

52. Obligation to furnish Annual Information Return 78

Page

3. Tax Incentives on Fisheries, Poultry, Dairy Farming etc. 23

4. Tax Incentives on Real Estate and Land development Industry 23

5. Tax Incentives on Information & Technological Industry 23

6. Tax Incentives on investment in Stock Exchange 24

7. Tax Incentive on money borrowed from abroad 26

8. Incentive for investment in residential building and apartment 26

Summary of Taxation Laws 2013-2014Income Tax

1. Definitions 29

2. Charge of Income Tax 30

3. Charge of Surcharge 31

4. Charge of Additional Tax 31

5. Charge of Excess Profit Tax 31

6. Charge of Minimum Tax 31

7. Income Exemption Limit 32

8. Personal Tax Rate Structure 32

9. Minimum Tax (Individual) 33

10 Incidence of Tax on Non-Resident 33

11. Scope of Total Income 33

12. Income Deemed to Accrue or Arise in Bangladesh 34

13. Deemed Income 34

14. Special tax treatment in respect of investment in residential building and apartment 36

15. Special tax treatment in respect of investment in the purchase of bond under Bangladesh Infrastructure Finance Fund (BIFF)

37

16. Special tax treatment in respect of investment in the purchase of Bangladesh Government Treasury Bond

37

17. Voluntary disclosure of income 37

18. Income from Salary 38

19. Income from Interest on Securities 40

20. Income from House Property 40

21. Income from Business or Profession 41

22. Allowable Deductions on income from Business or Profession 41

23. Deductions are not admissible in certain circumstances 44

Index Index


Page

53. Concurrent jurisdiction 78

54. Assessments 79

55. Some final settlement of tax liability 80

56. Assessment on the basis of Report of a Chartered Accountant 81

57. Assessment and computation of Income of Contractor of an Oil Company 81

58. Assessments under other sections 82

59. Transfer Pricing 82

60. Determination of income from international transaction having regard to arm’s length price

83

61. Transfer Pricing Officer 83

62. Maintenance and keeping of information, documents and records 83

63. Report from an accountant to be furnished 83

64. Provision of penalty on transfer pricing 84

65. Determination of arm’s length price under section 107C 84

66. Factors to be considered in judging comparability 84

67. Most appropriate method 85

68. Information and documents to be kept and maintained under section l07E 85

69. Additional powers of enquiry and production of documents 85

70. Power of giving order for not removing property 85

71. Avoidance of Double Taxation 86

72. Relief in respect of Foreign Income 86

Value Added Tax

73. Who will deduct VAT 89

74. Where to deposit the deducted VAT? 89

75. Scope of VAT and its specified rates 89

Gift Tax

76. Gift Tax 99

77. Exemption from Gift Tax 99

78. Provisions of the Gift Act shall NOT apply in certain cases 100

79. Return of Gift Tax 100

80. Rates of Gift Tax 100

Income TaxIndex


1. Tax Exemption Limit

The ceiling of tax exempted income for the individual assessee has been enhanced from Taka 200,000 to Taka 220,000, while this limit for the individual female, persons aged 65 years & more has been enhanced from Taka 225,000 to Taka 250,000 and limit for physically challenged assessee has also been enhanced from Taka 275,000 to 300,000 with effect from 01 July 2013.

2. Personal Tax Rate Structure

The person defined under section 2(46) of Income Tax Ordinance (ITO) 1984, every individual assessee (including Non-resident Bangladeshi), firm (partnership or single), association of persons (AOP), Hindu undivided family (HUF), artificial juridical persons and Non-Government Organization (NGO) shall have to pay income tax on their total income according to 5 tier income slabs and tax rates for the Financial Year 2012-2013 and Assessment Year 2013-2014.

The following table entails comparable scenario of 5 tier income slabs and tax rates for the two consecutive Financial Years 2012-2013 and 2011-2012:

Financial Year 2012-2013(Assessment Year 2013-2014)


Income SlabsTax

RatesIncome Slabs

Tax Rates

i. On the first Taka 220,000 of total income of assessee

Nil i. On the first Taka 200,000 of total income of assessee

Nil

On the first Taka 250,000 of total income for Female, persons aged 65 years & above assessee

Nil On the first Taka 225,000 of total income for Female, persons aged 65 years & above assessee

Nil

On the first Taka 300,000 of total income of physically challenged assessee

Nil On the first Taka 275,000 of total income of physically challenged assessee

Nil

ii. On the next Taka 300,000 of total income

10% ii. On the next Taka 300,000 of total income

10%

iii. On the next Taka 400,000 of total income

15% iii. On the next Taka 400,000 of total income

15%

iv. On the next Taka 300,000 of total income

20% iv. On the next Taka 300,000 of total income

20%

v. On the balance of total income

25% v. On the balance of total income

25%

Non-resident (Foreign) assessee

25% Non-resident (Foreign) assessee

25%

Income Tax Income Tax


building or apartment for residential purpose and pays tax on the basis of measurement before the assessment for the relevant assessment year in which the investment is completed, then tax authority will not raise question on the source of investment. Area, measurement and tax rates of such residential building or apartment are as follows:

SL.NO.

Areas of residential building or apartment

Plinth area up to 200 square meters,

Tax amount per square meter (Taka)

Plinth area more than 200 square meters,

Tax amount per square meter (Taka)

1 Gulshan Model Town, Banani, Baridhara, Motijheel Commercial Area and Dilkusha Commercial Area of Dhaka

5,000/- 7,000/-

2 Dhanmandi Residential Area, De-fence Officers Housing Society (DOHS), Mahakhali, Lalmatia Hous-ing Society, Uttara Model Town, Bashundhara Residential Area, Dhaka Cantonment, Kawran Bazar, Bijaynagar, Segunbagicha, Nikunja of Dhaka, and Panchlaish, Khulshi, Agrabad and Nasirabad Area of Chit-tagong

4,000/- 5,000/-

3 Other areas of City Corporations except serial nos. 1 & 2 above

2,000/- 3,000/-

4 Areas of Paurasabhas of any district headquarters

1,000/- 1,500/-

5 Upazilla and Others 700/- 1,000/-

6 If already owned a building or apartment in any City Corporation before such investment is completed or the assessee invests in two or more Buildings or Apartments

As per above tax Plus extra 20% of

above calculated tax

As per above tax Plus extra 20% of above

calculated tax

9. Amortization of license fees is allowable business expenditure [Section#29 (1) (viiia) & Third Schedule, Para 10A]

License fees shall be amortized proportionately for two or more years. License fees mean Spectrum Assignment Fee paid by a cellular mobile phone operator. It is applicable for the license fee paid on or after 01 July 2012.

3. Minimum Tax (Individual)

Minimum tax for individual assessee has been changed on the basis of location. If tax payable becomes less than Taka 3,000 or Taka 2,000 or Taka 1,000 or negative after adjusting Investment Tax Credit, individual assessee has to pay minimum tax as follows:

¾ Minimum tax is Taka 3,000 for resident of City Corporations

¾ Minimum tax is Taka 2,000 for resident of District Head Quarters and Paurashavas

¾ Minimum tax is Taka 1,000 for resident of Upazillas and others

Minimum tax exempted income for female, persons aged 65 years & more and physically challenged assessee having only agricultural income are Taka 300,000 and 350,000 respectively while for other assessee, this limit is Taka 270,000.

4. Changes regarding Surcharge on individual [sec: 16A]

Surcharge @ 10% will be levied on income tax payable in case of having net assets of more than Tk. 2 crore to Tk. 10 crore in his statement of assets and liabilities, whereas the rate of surcharge is 15% for assets more than value of Tk. 10 crore. Surcharge is applicable only for individual assessee.

5. Minimum tax for firm subject to gross receipts more than Tk. 50 Lac [Sec: 16CCC]

Every firm is liable to pay minimum tax @ 0.50% on gross receipts if gross receipts exceed Tk. 50 Lac. This will be applicable for the Assessment Year 2013-2014.

6. Withdrawal of tax on share premium [Sec: 16E]

Tax @ 3% has been withdrawn on the sale of share premium over face value.

7. Changes in Company Tax Rates

Types of CompaniesTax Rates as per

AY 2013-2014Tax Rates as per

AY 2012-2013

Cigarettes Manufacturing Company (Publicly traded) 40% 35%

Cigarettes Manufacturing Company (Not-Publicly traded)

45% 42.5%

Mobile phone operator company (Publicly traded) 40% 35%

8. Special tax treatment in respect of investment in residential building and apartment [section # 19BBBBB]

Source of any sum invested by any person in the construction or purchase of any residential



Period of Exemption Rate of Exemption

For the first and second years 100% of income

For the third year 70% of income

For the fourth year 55% of income

For the fifth year 40% of income

For the sixth year 25% of income

For the seventh year 10% of income

Provided that an industry engaged in the production of bio-fertilizer and petro-chemicals shall be entitled for exemption from tax under the provisions of this section even if it is set up in the districts of Dhaka, Gazipur, Narayanganj or Chittagong.

14. Amendments in Tax Holiday Scheme [Section#46C]

Subject to the provisions of this Ordinance, income, profits and gains under section 28 from physical infrastructure facility, set up in Bangladesh between the first day of July, 2011 and the thirtieth day of June, 2015 (both days inclusive) shall be exempted from the tax payable under this Ordinance for ten years beginning with the month of commencement of commercial operation at the rates, below:








For the eighth year 30% of income

For the ninth year 20% of income

For the tenth year 10% of income

15. Extension of areas for TDS from certain services:

15.1 Deduction of tax from fees for professional and technical services [section # 52A (3)] On account of fees for professional or technical services shall be deducted or collected

as per following way:

¾ ten per cent (10%) of such fees where the person receiving such fees furnishes his taxpayer’s Identification Number (TIN) to the payer; or

¾ fifteen per cent (15%) of such fees where the person receiving such fees fails to furnish his Taxpayer’s Identification Number (TIN) to the payer.

10. House Rent allowance receivable in cash [Rule-33A]

Tax exempted house rent allowance has been increased from Tk. 180,000 to Tk. 240,000.

11. Conveyance allowance receivable in cash with no conveyance facility [Rule-33C]

Tax exempted conveyance allowance has been increased from Tk. 24,000 to Tk. 30,000.

12. Changes regarding the extent of admissible allowance [Section#44, sixth schedule part-B]

Sl. ParticularsAssessment Year

2013-2014Assessment Year

2012-2013

1 Maximum Allowable investment 1.5 Crore Taka 1 Crore Taka

2 % of Investment for tax rebate on total income excluding employer’s PF contribution

30% 20%

3 Actual investment Tk. 1.50 Crore or 30% of total income or actual investment, whichever

is less

Tk. 1.00 Crore or 20% of total income or actual investment, whichever is less

34 % of allowable tax rebate 15% 10%

13. Tax holiday of newly established industrial undertakings [Section#46B]

Tax holiday of newly established industrial undertakings has been extended upto 30 June 2015 (previously it was 30 June 2013) with the following:-

Industry undertaking in Dhaka and Chittagong divisions, excluding Dhaka, Narayanganj, Gazipur, Chittagong, Rangamati, Bandarban and Khagrachari Districts will avail tax holiday benefit for a period of five years from the date of commercial production of the said undertaking:






Industry undertaking in Rajshahi, Khulna, Sylhet and Barisal divisions and Rangamati, Bandarban and Khagrachari districts will avail tax holiday benefit for a period of seven years from the date of commercial production of the said undertaking:



Sl. No

Sections & Rules

Heads of Withholding tax

Rates of withholding (AY: 2013-2014)


2 53FF Real estate or land development business at the time of registering any document for transfer of any land or building or apartment

(i) Tk. 1,600 per square meter for building or apartment for residential purpose situated at Model Town, Banani, Baridhara, Motijheel Commercial Area and Dilkusha Commercial Area of Dhaka

(ii) Tk. 6,500 per sq meter building for commercial purpose for the areas mentioned in (i).

(iii) Tk. 1,500 per square meter for building or apartment situated at Dhanmandi Residential Area, Defence Officers Housing Society (DOHS), Mahakhali, Lalmatia Housing Society, Uttara Model Town, Bashundhara Residential Area, Dhaka Cantonment, Kawran Bazar Commercial Area of Dhaka, and Panchlaish R/A, Khulshi R/A, Agrabad and Nasirabad Area of Chittagong;

(iv) Tk. 5,000 per sq meter building used for commercial purpose for the areas mentioned in (iii).

(i) Tk. 2,000 per square meter for building or apartment for residential purpose situated at Model Town, Banani, Baridhara, Motijheel Commercial Area and Dilkusha Commercial Area of Dhaka

(ii) Tk. 8,000 per sq meter building for commercial purpose for the areas mentioned in (i).

( iii) Tk. 1,800 per square meter for building or apartment situated at Dhanmandi Residential Area, Defence Officers Housing Society (DOHS), Mahakhali, Lalmatia Housing Society, Uttara Model Town, Bashundhara Residential Area, Dhaka Cantonment, Kawran Bazar, Commercial Area of Dhaka, and Panchlaish R/A, Khulshi R/A, Agrabad and Nasirabad Area of Chittagong;

(iv) Tk. 6,000 per sq meter building used for commercial purpose for the areas mentioned in (iii).

15.2 Deduction of tax from payment of stevedoring agency and private security service [section# 52AA]

If National Board of Revenue issues certificate in writing that the person rendering such services is not likely to have any assessable income during the year or the income is otherwise exempted from tax under any provision of the Ordinance, payment shall be made without any deduction or with deduction at a lesser rate for that income year as per Certificate.

15.3 Withdrawal from deduction of tax on Bond transactions by a member of Stock Exchange [Section # 53BBB]

Requirement of deduction of tax at source on Bond transactions made by a member of Stock Exchange has been withdrawn. Since deduction of tax at source has been withdrawn, income on Bond transactions will not be assessed u/s 82C.

15.4 Deduction of tax from Collection of tax from manufacturer of soft drinks [section # 52S]

Tax @ 3% of the value of soft drinks will be collected while banderols or stamps are delivered to any manufacturer of soft drinks. The value of such soft drinks will be the value as determined for the purpose of the Value Added Tax (VAT).

15.5 Collection of tax on sale prices of Tea sold by public auction [section # 53C, rule-17D]

The person responsible for auction of tea shall collect tax at the rate of 1% [Previously it was 0.50%].

15.6 Deduction or collection of tax from commission, discount or fees [section# 53E (2)]

Any company, as defined in clause (20) of section 2 of the Ordinance other than oil marketing company, which sells goods to any distributor or to any other persons under a written contract at a price lower than the retail price fixed by such company, shall collect at the time of sale of such goods to such distributor or other persons at the rate of five per cent (5%) of the difference between the sale price to the distributor or other persons and the retail price fixed by such company.

16. Changes of rate of Withholding Tax at source

Sl. No

Sections & Rules




1 52B Collection of tax from cigarette manufacturers at the time of selling banderols

10% of the value of the banderols.

6% of the value of the banderols.


Continued Continued


19. Reference to High Court Division [section # 160]

For consideration of High Court Division, tax rate has been decreased from 25% to 15% where tax demand does not exceed Tk. 1 million and the rate from 50% to 25% where tax demand exceeds Tk. 1 million on the difference between the tax determined by taxes appellate tribunal and tax payable under section 74.

20. Amendment in Sixth Schedule, Part-A

Amendments are as follows:

¾ Paragraph 11 A: Income from dividend amounting to Tk. 10,000 previously it was Tk. 5,000.

¾ Paragraph 35: Any income from the export of handicrafts for the period from 01 July 2011 to 30 June 2015, previously it was 2013.

¾ Paragraph 39: Income derived from any small and medium enterprise (SME) engaged in production of any goods and having an annual turnover of not more than Tk. 30 Lac, previously it was Tk. 24 Lac.

¾ Paragraph 42: Any income from poultry farming for the period from 01 July 2011 to 30 June 2015, previously it was 2013.

21. Extension of time to avail reduced tax rate for certain industrial companies

Sl. Particulars AY: 2013-2014 AY: 2012-2013

1 Income from production of jute industries tax @ 15%. [As per SRO No.206 AIN/AIT/2013, dated 01 July 2013]

Till 30 June 2015 Till 30 June 2013

2 Income from production of Textile and Yarn manufacturing related companies regis-tered under the Company Act 1994 @ 15%. [As per SRO No. 207 AIN/AIT/2013, dated 01 July 2013]


3 Export oriented handicrafts an amount equal to 50% of the income is tax exempted.


4 Income derived from fisheries, production of seeds, marketing of locally produced seeds, cattle farming, dairy farming, horticulture, frog farming, mushroom farming, floricul-ture and sericulture. [As per SRO No.208 AIN/AIT/2013, dated 01 July 2013]

3% till 30 June 2015

5% till 30 June 2013

Sl. No

Sections & Rules




(V)Tk. 600 per square meter for residential building or apartment is situated in areas other than areas mentioned in (i) & (ii) above and Tk. 1,600 per sq meter for commercial building for the areas mentioned in (i) & (iii) above.

(V)Tk. 800 per square meter for residential building or apartment is situated in areas other than areas mentioned above and Tk. 2,000 per sq meter for commercial building for the areas mentioned in (i) & (iii) above.

3 Sec-52, rule-16

Supply of goods and execution of contracts, sub-contracts & local LC

In case of oil supplied by oil marketing companies: If payment exceeds 2 lac-0.60%.

In case of oil supplied by oil marketing companies: If payment exceeds 2 lac-0.75%.

17. Return of income-in simplified return form [Section# 75 (2) (di)]

An individual, not being a shareholder director of a company, having income from salary or income not exceeding Tk. 3 Lac from business or profession may opt not to submit particulars of life style statement or IT 10BB.

18. Power of giving order for not removing property [section # 116 A]

In the course of performing functions under the Ordinance, the Director General, Central Intelligence Cell or the Commissioner has definite information in his hands that any person has concealed the particulars of income or investment, he may, by order in writing- require any person who is in immediate possession or control of any money, bullion, jewellery, financial instrument, financial asset, valuable article or any other property not to remove, part with, or otherwise deal with it without obtaining previous permission of the concerned authority passing such order:

¾ Every such order shall cease to have effect after the expiry of a period of one year from the date of the order made.

¾ The income tax authority may extend such period or periods with the approval of the Board. Provided that the total period of extension shall in no case exceed one year.

¾ In computing the period if any, for which the order has been stayed by any Court, shall be excluded.


Continued


Initial capital InvestmentRate of

tax (Taka)Applicability

If the initial capital investment up to Taka 8 lac

3,000/- For assessee of any area.





(b) Where an assessee carrying on profession as a Lawyer or Doctor-

Length of professionRate of

tax (Taka)Applicable area

Upto 3 Years 1,000/- For the assessee not located under any city corporation or any paurashava of district Head quarters.

Upto 4 Years 2,000/- For the assessee located at paurashava in district headquarters and other area excluding city corporation.

Upto 5 Years 3,000/- For assessee of any area.

Upto 10 Years 5,000/- For assessee of any area.

25. Amendment of Tax-payers Identification Number [Rule-64B]

Every person shall, for the purpose of obtaining Tax-payers Identification Number (TIN) referred to in section 184B of the Ordinance, submit an application-

¾ Electronically through the website hosted by the Board for this purpose by following the procedure mentioned in the website. (web address: www.incometax.gov.bd)

¾ Manually in the form prescribed below to the Deputy Commissioner of Taxes with whom his Jurisdiction lies to any other authority or agency as may be authorized by the Board in this respect.

¾ All income taxpayers will have to get new TINs by December 31 next through e-TIN registration. The existing TIN will be invalid from 01 January 2014.

22. Tax exempted income as per different SROs

¾ Any income of Federation of Chamber of Commerce and Industries approved by Ministry of Commerce (except income from Bank interest, profit of organization and income from Business) as per SRO No. 210 AIN/AIT/2013, dated 01 July, 2013. It will be effective from Assessment Year 2014-2015.

¾ Private power generation companies (except coal based power generation companies) will get tax exemption for 15 years if its commercial production starts within 31 December 2014. [SRO No. 211/AIN/IT/2013, dated 01 July 2013].

¾ Private power generation companies (except coal based power generation companies) which will start commercial production from 01 January 2015 will enjoy tax exemption facility if it starts commercial production on or after 01 January 2015 as per following Schedule: [SRO No. 212/AIN/IT/2013, dated 01 July 2013]:


For the first five years (1st, 2nd,3rd, 4th & 5th year) 100% of income

For the next three years (6th, 7th, & 8th year) 50% of income

For the last two years (9th and 10th year) 25% of income

23. Amendment of Alternative Dispute Resolution (ADR) [SRO NO. 68-AIN/IT/2011, dated 05 March 2012 & SRO No. 205-AIN/IT/2012, dated 01 July 2013]

¾ In the case of a dispute pending before Appellate Tribunal, Assessee has to file application to the Register/Deputy Register/Assistant Register of the concerned Tribunal Bench.

¾ After getting permission from High Court Division or Appeal Division of the Supreme Court ,the assessee has to file an application to the Second Secretary (Taxes Legal) of NBR.

24. Procedure for spot assessment [Rule-38B (2)]

(a) Where an assessee carrying on business-

Initial capital InvestmentRate of

tax (Taka)Applicability


1,000/- For the assessee not located under any city corporation or any paura-

shava of district Head quarters.


2,000/- For the assessee located at paurashava in district headquar-ters and other area excluding city

corporation.


Continued


26. Summary of VAT Changes in FY: 2012-2013

¾ Enhancement of Annual Turnover amount for turnover tax: Turnover tax @ 3% if annual turnover of taxable goods or services is less than Taka 8,000,000 (Previous Taka 7,000,000)

¾ Condition for tax rebate: 80% rebate will be allowed on Telephone, Tele printer, Fax, Internet, Freight Forwarders, C&F agent, WASA, Audit & Accounting Firm, Procurement Provider, Security Service, Legal Consultant, Transport Contractor, Banking Service. [earlier it was 60%]

¾ Withholding VAT:

Areas of withholding VAT extended by the following:

� IT enabled service 4.5% � Other Miscellaneous Services 15% � Sponsorship Services 7.5% � Meditation Services 7.5%

¾ Package Value Added Tax for small businessmen-[SRO No.173-AIN/2013/677-Mushak, dated 06 June, 2013]

Minimum value added tax shall be payable by small businessmen and shop owner who got registration voluntarily as per following table:

Sl No.

Applicable AreaAnnual Maximum

Value Addition (Taka)VAT Rate

Minimum pay-able VAT (Taka)

1 Dhaka & Chittagong City Corporations

80,000/- 15% 12,000/-

2 Other City Corporations

60,000/- 15% 9,000/-

3 Paurashava of District headquarters

40,000/- 15% 6,000/-

4 Other areas 20,000/- 15% 3,000/-

¾ Declaration of Taxable Goods by NBR--[SRO No.176-AIN/2013/680-Mushak, dated 06 June, 2013]

Activity Code Activity Name

CO 17.28 Sweet & Sweet related goods

CO 38.30 Furniture

VAT Tax Incentives


1. Tax incentives for Expatriate

Salaries and allowances of expatriate personnel, employed in a foreign aided project established under an agreement between the Bangladesh Government and foreign Government, are tax exempted subject to respective agreement. SRO # 227-L/82 dated 20 June 1982.

2. Tax Incentives on Jute Industry, RMG & Textile Industry

Income tax rate for Jute Goods [SRO # 206-Ain/Income Tax/2013, dated 01 July 2013]: Any industry manufactures or produces jute goods shall have to pay tax @ 15% and this incentive will be applicable upto 30 June 2015.

Reduced rate of tax @ 10% of companies engaged in ready-made garments industries on export sale and this incentive will be applicable upto 30 June 2014. [SRO # 265-Ain/Income Tax/2010 later modified by SRO No. 217-AIN/IT/2012, dated 27 June 2012]

Reduced rate of tax @ 15% of companies engaged in textile industries from 01.07.2008 to 30.06.2015 [SRO # 207- Ain/Income Tax/2013, dated 01 July 2013]

3. Tax Incentives on Fisheries, Poultry, Dairy Farming etc.

Any income from fisheries, poultry, production of pelleted poultry feed, production seeds, marketing of locally produced seeds, cattle farming, dairy farming, horticulture, frog farming, mushroom farming, floriculture, sericulture etc. irrespective of individual or company assessee shall have to pay tax @ 3% (earlier which was tax exempted through para # 34 of sixth schedule). Ref. Income tax rate for fisheries, poultry, dairy farming etc. [SRO # 208-Ain/Income Tax/2013, dated 01 July 2013].

4. Tax Incentives on Real Estate and Land development Industry

According to Section 38, Sixth Schedule, Part A

Any income derived from any building situated in any area of Bangladesh, not less than five storied having at least ten flats, constructed at any time between the first day of July, 2009 and the thirtieth day of June, 2014 (both days inclusive), for ten years from the date of completion of construction of the building, except the buildings situated in any areas of City Corporation, Cantonment Board, Tongi Upazila, Narayanganj Paurashava, Gazipur Paurashava and any Paurashava under Dhaka district.

5. Tax Incentives on Information & Technological Industry

According to serial number 33, Sixth Schedule, Part A

Any income derived from the business of software development and Information Technology Enabled Services (ITES) for the period from the first day of July, 2008 to the thirtieth day of June, 2015:

Tax Incentives Tax Incentives


a. Company and Firm assessee: all companies [u/s-2(20)] and partnership firms [u/s-2(32)] shall pay tax @ 10% on income for transfer of stocks and shares public limited companies listed with stock exchange. This clause is only applicable for all listed companies and firms including banks and insurance entity. The tax shall be paid as advance & besides this all other income will be taxed as prescribed manner and it will be effective for any transfer of shares from 01 July 2010.

b. Sponsored shareholder assessee: any transfer of shares and stocks of bank, financial institution, merchant bank, insurance, leasing company, portfolio Management Company, stock dealer or stock broker company by individual sponsored shareholders or directors, the assessee has to pay tax @ 5%. On the other hand company assessee has to pay tax @ 10%. The payment of tax will be treated as advance tax and it will be effective for any transfer of shares from 01 July 2010.

c. More than 10% securities owned assessee: other than sponsored shareholders or directors, if any person owned more than 10% securities of listed companies i.e. bank, financial institution, merchant bank, insurance, leasing company, portfolio management company, stock dealer or stock broker company has to pay tax @ 5% on income from transfer of those securities. This will be applicable if any assessee holds more than 10% securities of listed companies any time within the income year. The tax shall be paid as advance and it will be effective for any transfer of shares from 01 July 2010.

Assessee has to pay ‘Advance Income Tax’ as per prescribed manner, if any income and/or gain from transfer of stocks and shares of a company listed with stock exchange [section: 64(2)]

Here securities means all stocks, shares, mutual fund unit, bond, debenture & other of listed companies and transacted in stock exchange but not government securities. Capital gain on transfer of listed shares by all individual assessee will be tax exempted.

Collection of tax from transfer of securities or mutual fund unit by sponsored shareholders of a company etc.

The Securities and Exchange Commission (SEC) or Stock Exchange (SE), as the case may be, at the time of transfer or declaration of transfer or according consent to transfer of securities or mutual fund unit of a sponsored shareholder or director or placement holder of a company or sponsor or placement holder of a mutual fund listed with a stock exchange shall collect tax @ 5% on the difference between transfer value and cost of acquisition of securities or mutual fund units.

Here ‘transfer’ includes transfer under a gift, bequest, will or an irrevocable trust and ‘transfer value’ means closing price prevailing on the day of consent accorded by SEC or SE or when last traded as the case may be.

Provided that the person shall file income tax return in accordance with the provisions of section 75(2)(c) of the Ordinance.

Explanation: Information Technology Enabled Services (ITES) means- Digital Content Development and Management, Animation (both 2D and 3D), Geographic Information Services (GIS), IT Support and Software Maintenance Services, Web Site Services, Medical Transcription, Business Process Outsourcing, Data entry, Data Processing, Call Centre, Graphics Design, Search Engine Optimization, Web Listing, E-commerce and Online Shopping, Document conversion, imaging and archiving.

6. Tax Incentives on investment in Stock Exchange

Income tax will be imposed on capital gain arising from the transfer of capital assets being stocks and shares of public limited companies listed with stock exchange in Bangladesh and bonus shares of the company but income from transfer of government securities is exempted [section: 32(7)]

nvestment in shares in the Stock Exchanges [SRO # 237-Ain/Income Tax/2011, dated 06 July 2011]

No explanation regarding sources of income will be searched by the tax authority if investment of un-taxed income is made on primary or secondary shares of any company listed with stock exchanges in Bangladesh and paid income tax @ 10% on invested amount subject to fulfilling following conditions:

Person (individual, firm, private limited company etc.) other than public limited company can take this opportunities;

Investment must be made within 01 July 2011 to 30 June 2012 and declaration of such investment in prescribed form must be submitted to Deputy Commissioner of Taxes (DCT) within 15 July 2012 or any time when investment will be made;

Copy of pay order for tax @ 10% on invested amount, portfolio statement and Beneficiary Owner’s (BO) account ledger should be submitted along with declaration form;

Invested amount should not be withdrawn from capital market before 30 June 2013 and if the amount or any part of amount is withdrawn, the amount withdrawn shall be treated as income from other source. But whole invested amount may be mobilized with purchasing and selling of listed company shares and any gain from transactions is allowed for withdrawal;

Any tax concealment is noticed to tax authority within 30 June 2011 and then action taken as per section # 93, no such benefit will be availed by the assessee;

Investment shall be shown with assets and liabilities in income tax return and no investment allowance shall be exercised.

As per SRO # 269-Ain/Income Tax/2010, dated 01 July 2010, assessee has to pay tax on the income of transfer of stocks and shares as per following schemes:

Tax Incentives Tax Incentives


7. Tax Incentive on money borrowed from abroad

SRO # 417-L/76 dated 29 November 1976

Under certain conditions, tax is fully exempted on the Interest on money borrowed from abroad by:

� Government

� Statutory bodies

� Industrial undertakings

8. Incentive for investment in residential building and apartment. [Sec: 19BBBBB]

No question as to the source of any sum invested by any person in the residential building or apartment, if such person pays tax @ 10% on sum invested before the relevant assessment year.

Tax Incentives Income Tax


Income TaxIncome Tax

1. Definitions

a. Assessee [Section: 2(7)]: Assessee means a person by whom any tax or other sum of money is payable under Income Tax Ordinance 1984.

b. Person [Section: 2(46)]: Person includes an individual, a firm, an association of persons, a Hindu undivided family, a local authority, a company and every other artificial juridical person.

c. Income [Section: 2(34)]: Income means any sum of income or gain from whatsoever source derived, or accruing or arising or received or deemed to be accrue or arise or to be received under any provision of IT Ordinance 1984.

d. Tax [Section: 2(62)]: Tax means the income tax payable under the Income Tax Ordinance 1984 and include any additional tax, excess profit tax, penalty, interest, fee or other charge leviable or payable under the IT Ordinance 1984.

e. Income Year [Section: 2(35)]: Income Year means the financial year immediately preceding the assessment year or when accounts are closed on a date within the financial year, the twelve months ending on the date on which accounts are closed.

f. Assessment Year [Section: 2(9)]: Assessment Year means the period of twelve months beginning from first day of July of every year. This is the immediate following financial year of Income Year. Examples of Accounting Year, Income Year and Assessment year:

Accounting Period/Year Income Year Assessment Year

1 Accounting Year: July 2012 to June 2013 2012-13 2013-14

2 Accounting Year: January 2012 to December 2012

2012-13 2013-14

3 Accounting Year: April 2011 to March 2012 2011-12 2012-13

4 Accounting Year: October 2011 to September 2012

2012-13 2013-14

5 Accounting Year: August 2011 to July 2012 2012-13 2013-14

g. Annual Value [Section: 2(3)]: Annual value means the sum arising from letting out any property and related furniture, fixture and fittings or any sum received as Annual Rent, whichever is higher.

h. Basis of Residence [Section: 2(55)]:

i. Individual: An individual will be Resident: - if he/she stays in Bangladesh for a period of or for the periods all together at least 182 days or more in the income year or - if he/she stays in Bangladesh for a period of or for the periods all together at least 90 days or more in the income year and 365 days or more during the immediate four preceding years of income year.


ii. Company: The company will be resident if the management of its affairs is situated wholly in Bangladesh in the income year.

iii. Hindu Undivided Family, Firm, Other Association of Persons: They will be resident if its control and management of affairs is situated wholly or partly in Bangladesh in the income year.

i. Non-resident [Section: 2(42)]: Non-resident means a person who is not a resident.

j. Salary [2(58) and 18] and Perquisites [2(45) and 30(e)]: Salary includes the following:

yy Basic Salary yy Contribution to PF

yy Festival Bonus yy Pension Fund

yy Incentive Bonus, allowable upto 10% of dis-closed net profit [Section # 30(j)]

¾yGratuity Fund

yy Arrear Salary yy Superannuation Fund

yy Advance Salary yy Project pay

yy Leave Encashment yy Compensation pay

yy Leave Fare Assistance yy Wages or any other payment

yy Overtime

Perquisites include the following:

Any benefits other than the items included under salary shall be considered as perquisites - Examples of perquisites are:

¾ Dearness Allowance

¾ House Rent allowed up to BDT 2,40,000

¾ Conveyance allowed up to BDT 30,000

¾ Medical allowed up to actual expenditure

¾ Maximum perquisites allowed BDT 250,000

¾ Excess of perquisites (over Tk. 250,000) will be taxed as per Organization’s tax rate.

¾ Any other allowance

2. Charge of Income Tax [Section 16]

Income tax shall be charged for any assessment year at any rate or rates in accordance with the provisions of this Ordinance in respect of the total income of the income year or years.

Income Tax

Income tax shall be deducted and collected at source and paid accordingly. Non-resident not being a company, capital gain and winnings shall be taxed as per second Schedule of this Ordinance.

3. Charge of Surcharge [Section 16A]

Surcharge on income shall be charged for any assessment year at any rate or rates as the case may be. Again, if any individual assessee whose total net worth more than Tk. 2 crore to 10 crore as per statement of assets, liabilities and expenses, shall have to pay tax @ 10% on tax payable, whereas the rate of surcharge is 15% for assets more than value of Taka 10 crore.

4. Charge of Additional Tax [Section 16B]

If a publicly traded company (other than banking or insurance company) does not issue, declare or distribute dividend or bonus share equivalent to at least 15% of its paid up capital within 6 months immediately following its income year, it will be charged 5% additional tax on undistributed profit in addition to tax payable under IT Ordinance 1984. Here undistributed profit means accumulated profit including free reserve.

5. Charge of Excess Profit Tax [Section 16C]

If a banking company operating under Bank Company Act 1991 shows profit exceeding 50% of the aggregate sum of capital and reserve, the bank shall pay @ 15% tax of such excess amount. Such tax is payable in addition to tax payable under IT Ordinance 1984.

6. Charge of Minimum Tax [Section 16CCC]

Minimum tax for every firm shall, subject to having more than gross receipts of Taka 50 Lacs and every company irrespective of its profits or loss liable to pay minimum tax @ 0.50% on total receipt from business in the income year. Total receipt from business for minimum tax purpose will be calculated as follows:

¾ Sum of received or receivable from sale of products;

¾ Sum of received or receivable from rendering of services;

¾ Interests, Commissions, Discounts, Fees or Charges; and

¾ Income received or receivable from any other sources.

Minimum tax of the company assessee will be determined on total received or receivable from all sources of income. Minimum tax will not be applicable, if any company has no received or receivable from sales or any other sources and if company’s income already taxed under section # 82C. But minimum tax will be applicable irrespective of net loss or adjustable accumulated loss from previous years. This minimum tax has to be paid by the company at the time of filling income tax return and in accordance with section # 74.

Income Tax


9. Minimum Tax (Individual)

Minimum tax for individual assessee has been changed on the basis of location. Whose taxable income exceeding exemption limit of Taka 220,000 or Taka 250,000 or Taka 300,000 (as the case may be) has to pay tax on the basis of following location:

¾ Minimum tax is Taka 3,000 for resident of City Corporations.

¾ Minimum tax is Taka 2,000 for resident of District Head Quarters and Paurashavas

¾ Minimum tax is Taka 1,000 for resident of Upazillas and others

If minimum tax becomes less than Taka 3,000 or Taka 2,000 or Taka 1,000 (as the case may be) or negative after adjusting Investment Tax Credit, individual assessee has to pay Taka 3,000 or Taka 2,000 or Taka 1,000 respectively as minimum tax.

Minimum tax exempted income for female, persons aged 65 years & more and disabled assessee having only agricultural income is Taka 300,000 and 350,000 respectively while for other assessee, this limit is Taka 270,000.

10. Incidence of Tax on Non-Resident

A person who is a non-resident is liable to pay tax on the incomes, profits and gains which are received or deemed to have been received or are deemed to accrue or arise to him in Bangladesh.

A non-resident assessee is not entitled to any sort of allowance and relief as are admissible to a resident assessee for the purpose of tax rebate;

A non-resident assessee (other than Bangladeshi non-resident) is liable to pay tax on his total income @ 25% [Second Schedule]

A Non-resident Bangladeshi (NRB) is subject to pay tax at normal rate, as applicable for a resident assessee.

11. Scope of Total Income [Section 17]

The total income of any income year of any person includes:

Resident Non-Resident

All income from whatever sources including received or deemed to be received in Bangladesh; accrue or arises or deemed to accrue or arises in Bangladesh; or accrue or arises outside Bangladesh.

All income from whatever sources including received or deemed to be received in Bangladesh; accrue or arises or deemed to accrue or arises in Bangladesh.

7. Income Exemption Limit

Tax exempted minimum income limit of individual assessee has been enhanced from Taka 200,000 to Taka 220,000 for male, while this limit for female, persons aged 65 years & above has been enhanced from Taka 225,000 to Taka 250,000 and for disabled assessee this limit enhanced from Taka 275,000 to Taka 300,000 with effect from Income Year 2012-2013 (Assessment Year 2013-2014).

8. Personal Tax Rate Structure

The person defined under section 2(46) of Income Tax Ordinance (ITO) 1984, every individual assessee (including Non-resident Bangladeshi), firm (partnership or single), association of persons, Hindu undivided family, artificial juridical person and Non-Government Organization (NGO) shall have to pay income tax on their total income according to 5 tier income slabs and tax rates for the Financial Year 2012-2013 and Assessment Year 2013-2014.

The following table entails comparable scenario of 5 tier income slabs and tax rates for the two consecutive financial years:



Income Slabs Tax Rates

Income Slabs Tax Rates

i. On the first Taka 220,000 of total income of assesses

Nil i. On the first Taka 200,000 of total income of assessee

Nil

On the first Taka 250,000 of total income for Female, persons aged 65 years & above assessee

Nil On the first Taka 225,000 of total income for Female, persons aged 65 years & above assessee

Nil

On the first Taka 300,000 of total income of physically challanged assessee

Nil On the first Taka 275,000 of total income of physically challanged assessee

Nil

ii. On the next Taka 300,000 of total income

10% ii. On the next Taka 300,000 of total income

10%

iii. On the next Taka 400,000 of total income

15% iii. On the next Taka 400,000 of total income

15%

iv. On the next Taka 300,000 of total income

20% iv. On the next Taka 300,000 of total income

20%

v. On the balance of total income 25% v. On the balance of total income

25%

Non-resident (Foreign) assessee

25% Non-resident (Foreign) assessee

25%



VIII Difference between the purchase price and fair market value - Income from Other Sources [Section 19(8)]

IX Salami or Premium - Income from Other Sources [Section 19(9)]

X Goodwill, compensation or damages, etc. - Income from Other Sources [Section 19(10)]

XI Cancellation of indebtedness - Income from Other Sources [Section 19(11)]

XII Managing Agency Commission - Income from Other Sources [Section 19(12)]

XIII Lotteries, crossword puzzles etc. - Income from Other Sources [Section 19(13)]

XIV Income from Insurance Business - Income from Business or Profession [Section 19(14)]

XV Receipt back of loss, bad debt or expenditure and unpaid trading liability etc. -Income from Business or Profession [Section 19(15)]

XVI Income from sale of depreciated assets having been used for the purpose of any business or profession - Income from Business or Profession [Section 19(16)]

XVII Income from sale of depreciated assets having been used for agricultural purpose - Income from Agriculture [Section 19(17)]

XVIII Income from receipt of insurance, salvage or compensation moneys in respect of assets having been used for the purpose of any business or profession - Income from Business or Profession [Section 19(18)]

XIX Income from receipt of insurance, salvage or compensation moneys in respect of assets having been used in agriculture - Income from Agriculture [Section 19(19)]

XX Income from sale of assets of capital nature - Income from Business or Profession [Section 19(20)]

XXI Unpaid loan Taka 500,000 is to be recognized as income immediately after expiry of 3 years of loan taken. Income from Other Source [Section 19(21)]

XXII Loan or gift received by the assessee shall be deemed to be his income of the year in which the same is received- Income from Other Source [Section 19(21A)]

XXIII Initial Capital of Business or Profession is shown in return of income under section # 82BB transferred fully or partly shall be deemed income of the year in which transferred being made- Income from Other Source [Section 19(21B)]

XXIV Un-adjustable security money taken from tenant - Income from House Property [Section 19(22)]

XXV Income from transfer of export quota by Garments Industry - Income from Business or Profession [Section 19(23)]v

XXVI Investment by a company, not listed with any stock exchange, received paid up capital from any share holder not being received by cross cheque or bank transfer - Income from Other Source [Section 19(24)]

12. Income Deemed to Accrue or Arise in Bangladesh [Section 18]:

The following income shall be deemed to accrue or arise in Bangladesh, namely:

a. Any income which falls under the head Salaries, wherever paid, if [Section 18(1)]: � it is earned in Bangladesh; or � it is paid by Bangladesh Government or local authority in the service of such

government or authority;

b. Any income accruing or arising, whether directly or indirectly, through or from [Section 18(2)]: � any business connection in Bangladesh; � any property, asset, right, other source of income in Bangladesh; � transfer of capital assets in Bangladesh;

c. Any dividend paid outside Bangladesh by a Bangladeshi company [Section 18(3)]

d. Any income by way of interest payable [Section 18(4)]: � by the government; or � by a person who is resident / non-resident in Bangladesh;

e. Any income by way of fees for technical services payable [Section 18(5)]: � by the government; or � by a person who is resident / non-resident in Bangladesh;

f. Any income by way of royalty payable [Section 18(6)]: � by the government; or � by a person who is resident / non-resident in Bangladesh;

13. Deemed Income [Section 19]

Unexplained cash credits, investments, possession of bullion, unpaid trading liabilities/ loan etc. will be treated as deemed income, which are mentioned below in brief with relevant heads of income and respective sub-section:

I Unexplained Cash credit - Income from Other Source [Section 19(1)]

II Unrecorded investment or possession of bullion, jewellery etc. - Income from Other Source [Section 19(2)]

III Unexplained expenditure - Income from Other Sources [Section 19(3)]

IV Unrecorded investment - Income from Other Sources [Section 19(4)]

V Ownership of any money, bullion etc. - Income from Other Sources [Section 19(5)]

VI Income received from discontinued business - Income from Business or Profession [Section 19(6)]

VII Receipt of Dividend - Income from Other Sources [Section 19(7)]



XXVII Company assessee receives loan from any other person other than crossed cheque or bank transfer shall be deemed income for that year of loan received- Income from Other Source [Section 19(26)]

XXVIII Company assessee purchases directly or on hire motor car or jeep and value of any motor car or jeep exceeds 10% of its paid up capital, then 50% of that exceeds amount shall be deemed to be income of the year- Income from Other Source [Section 19(27)]

XXIX Individual assessee receives any sum exceeding Taka 500,000 as loan or gift otherwise than by a crossed cheque or bank transfer-Income from Other source [Section 19(28)]

14. Special tax treatment in respect of investment in residential building and apartment [Section: 19BBBBB]

Source of any sum invested by any person in the construction or purchase of any residential building or apartment for residential purpose and pays tax on the basis of measurement before the assessment for the relevant assessment year in which the investment is completed, then tax authority will not raise question on the source of investment.

Area, measurement and tax rates of such residential building or apartment are as follows:

SL.#


Plinth area up to 200 square

meters, Tax amount per square

meter (Taka)

Plinth area more than 200 square

meters, Tax amount per square meter

(Taka)

1 Gulshan Model Town, Banani, Baridhara, Motijheel Commercial Area and Dilkusha Commercial Area of Dhaka

5,000/- 7,000/-

2 Dhanmandi Residential Area, Defence Officers Housing Society (DOHS), Mahakhali, Lalmatia Hous-ing Society, Uttara Model Town, Bashundhara Residential Area, Dhaka Cantonment, Kawran Bazar, Bijaynagar, Segunbagicha, Nikunja of Dhaka, and Panchlaish, Khulshi, Agrabad and Nasirabad Area of Chittagong

4,000/- 5,000/-

3 Other areas of City Corporations except serial nos. 1 & 2 above

2,000/- 3,000/-

Income TaxIncome Tax

SL.#


Plinth area up to 200 square

meters, Tax amount per square

meter (Taka)

Plinth area more than 200 square

meters, Tax amount per square meter

(Taka)

4 Areas of Paurasabhas of any district headquarters

1,000/- 1,500/-

5 Upazilla and Others 700/- 1,000/-

6 It already owned a building or apartment in any City Corporation before such investment is completed or the assessee invests in two or more Buildings or Apartments

As per above tax Plus extra 20% of above calculated

tax

As per above tax Plus extra 20% of

above calculated tax

15. Special tax treatment in respect of investment in the purchase of bond under Bangladesh Infrastructure Finance Fund (BIFF) [Section: 19C]

No question shall be raised as to the source of any investment by any person in the purchase of bond issued under Bangladesh Infrastructure Finance Fund (BIFF) during the period between 01 July 2010 and 30 June 2012 (both days inclusive), if assessee pays tax @ 10% on such investment before filling return of income for the relevant income year. Any person may invest under this scheme.

16. Special tax treatment in respect of investment in the purchase of Bangladesh Government Treasury Bond [section # 19D]

Notwithstanding anything contained in any other provision of the Ordinance, no question as to the source of any sum invested by any person, being an individual, in the purchase of Bangladesh Government Treasury Bond shall be raised if such person pays, before the filling of return of income for that income year as per provisions laid down in section # 75(2), tax @ 10% on sum invested.

17. Voluntary disclosure of income [section # 19E]

Any person, who has not been assessed tax for previous assessment year or years or who has been assessed for tax lower than actual tax those year or years may disclose such income in the respective heads of income in the return of income along with the income for the current assessment year.

Return of income under this provision shall be treated as valid, if:

¾ The return of income is submitted within the time as specified u/s 75 (2)

¾ Tax payable at applicable rate on total income inculding such income and penalty @310% proportionate to such income are paid before submission of Return

Continued


¾ any salary paid or allowed to him in the income year by or on behalf of an employer, though not due or before it became due to him;

¾ any arrears of salary paid or allowed to him in the income year by or on behalf of an employer, if not charged to income tax for any earlier income year;

ii. House rent allowance receivable in cash [Rule # 33A]: House rent allowance in Taka 20,000 per month or 50% of basic salary or, whichever is less, shall be included in income.

iii. Rent free accommodation [Rule # 33B]: The rental value of the accommodation or 25% of basic salary, whichever is less, shall be included in income.

iv. Conveyance allowance receivable in cash with no conveyance facility [Rule # 33C]: Allowable amount is Taka 30,000 per annum. The allowance so receivable in excess of Taka 30,000 per annum shall be included in income.

v. Conveyance provided partly or exclusively for personal or private use [Rule # 33D]: An amount equal to 7.5% of basic salary shall be included in income.

vi. Additional conveyance allowance [Rule # 33E]: The whole amount shall be included in income.

vii. Free or concessional passage for travel abroad or within Bangladesh [Rule # 33G]:

¾ Where free or concessional passage for travel abroad or within Bangladesh is provided by the employer to an employee (including the members of his household and dependents) shall be included in the income of the employee:

Where the passage is provided in accordance with the terms of employment:

An amount equal to the sum by which the cash payments, if any, made by employer exceeds the actual expenditure incurred by the employee;

¾ Where the passage is not in accordance with the terms of employment:

The whole of the amount paid in cash and if not paid in cash, the amount which would have been expended by the employee if not provided by the employer;

¾ Where free concessional passage for travel abroad is availed more than once in two years:

The whole of the amount paid in cash, if any, for such additional passage or if no cash payment is made, the amount which would have been expended for this passage if not provided by the employer shall be included in his income.

¾ Where the transport is provided free of cost or at a concessional rate:

By an undertaking engaged in the transport of passengers or the carriage

¾ A declaration is enclosed with the return of income including

� Name of the person declaring

� Head of the declared income and amount thereof; and

� Amount of tax and penalty paid thereof.

The provision of this section shall not apply, where -

¾ A notice under clause (b) of sub-section (3) of section 93 has been issued before submission of such return of income

¾ A notice on a banking company under clause (f) of section 113 has been issued before submission of such return of income;

¾ Any proceeding under section 164,165,166 has been initiated before submission of such return of income ;or

¾ Any income declared under this section is –

� Not derived from any legitimate source of income or

� Derived from any criminal activities under any other law for the time being in force.

The income shown under this section may be invested in income generating activities or any section including the following:

¾ Industrial undertaking including its expansion;

¾ Balancing ,moderating, renovation and extension of an existing industry;

¾ Building or apartment or land;

¾ Securities listed with a stock exchange in Bangladesh; or

¾ Any trade, commercial, or industrial venture engaged in production of goods or services.

18. Income from Salary [Section 21]

Any income classifiable as salaries irrespective of its place of payment shall be deemed to be income accruing or arising income in Bangladesh if it is earned in Bangladesh or it is paid by the government or local authority in Bangladesh to a citizen in Bangladesh.

Salary once included in any year on due basis or advance payment basis is not includible in the income of any other year.

i. Income classified under the head Salaries: Salaries include the following-

¾ any salary due from an employer to the assessee in the income year whether paid or not;



i. Maintenance allowances: (25% of annual value in case it is used for residential purposes, and 30% of annual value in case it is used for commercial purpose)

ii. Insurance premium

iii. Interest on mortgage or other capital charges

iv. Any tax not being a charge leviable on annual basis

v. Ground rent

vi. Land development tax

vii. Interest payable on capital borrowed for the purpose of acquisition, construction, reconstruction, repair or renovation of the house property; subject to owner’s self occupied portion for which interest on borrowed capital not exceeding Taka 2,000,000.

viii Proportionate vacancy allowances

ix. Interest payable during construction period to be allowed in 3 subsequent equal installments.

Interest or annual charge payable outside Bangladesh shall not be allowed as deduction on which tax has not been paid or deducted at source.

21. Income from Business or Profession [Section 28]

Income from business or profession includes the following:

i. profits and gains of any business or profession;

ii. income of trade or professional association derived on account of specific services performed for its members;

iii. value of any benefit or perquisite arising from business or exercise of profession;

iv. receipt back of loss, bad debt or expenditure and unpaid trading liability as referred to section 19 (15);

v. income from sale of asset of depreciated asset as referred to section 19 (16);

vi. income from receipt of insurance, salvage or compensation money as referred to section 19 (18);

vii. income from sale of asset of capital nature as referred to section 19 (20);

viii income from transfer of export quota as referred to section 19 (23).

22. Allowable Deductions on income from Business or Profession [Section 29(1)]

The allowable deductions which have been specifically mentioned are the following:

i. Rent for the business premises [Para # 1(i)]

ii. Repairs to hired business premises [Para # 1(ii)]

of goods of an employee of the undertaking in any conveyance owned or charted by the undertaking for the purpose of the transport of passengers, nothing shall be added in his income;

viii. Entertainment allowance [Rule # 33H]: The whole amount shall be included in income except for free tea, coffee, beverages or the like thereof provided at the office premises during the course of work.

ix. Medical expenses [Rule # 33I]: Receipts / receivable from employer in excess of actual expenditure shall be included in the income of the assessee.

x. Other benefits [Rule # 33J]: Equivalent amount shall be included in income.

xi. Allowable exemptions on the income of Sponsor / Shareholder Directors [Rule # 33(2)(b)]: As per SRO 207-Ain/2005 dated 06.07.2005, a shareholder, being director of more than one company, shall be entitled to the benefits under rule # 33 from one company only.

19. Income from Interest on Securities [Section 22 & 23]

Incomes classifiable under the head Interest on Securities are:

a. Interest receivable by the assessee on any security of the government or any security approved by the government;

b. Interest receivable by him on debenture or other securities of money issued by or on behalf of a local authority or company;

c. Deductions permissible in the determination of income from interest on securities are:

i. Commission or charges deducted from interest by a bank realizing the interest on behalf of the assessee;

ii. Interest payable on money borrowed for the purpose of investment in the securities;

Provided that allowance or deduction on account of interest or commission in respect of or allocable to the tax-free government securities shall not be allowed. Deduction will also not be allowed in respect of interest payable outside Bangladesh on which tax has not been paid or deducted.

20. Income from House Property [Section 24 & 25]

a. Income from house property whether used for commercial or residential purposes is taxable on the basis of its annual value. The value determined by the tax authority u/s- 2(3) will be treated as annual value.

b. Deductions allowable in the determination of income from house property: The following deductions are allowable in determining the net income:



xvii Provision for bad and doubtful debt and interest thereon made by a commercial bank including the Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Karmosangsthan Bank for a sum equal to 1% of the outstanding loan including interest thereon or the amount of actual provision, whichever is less, subject to the specified conditions, allowable during the assessment years 2001-2002,2002-2003,2003-2004 and 2004-2005, 2005-06 and 2006-07; If any amount out of the provision for bad and doubtful debt and interest thereon, which has been allowed, is ultimately recovered, the amount so recovered shall be deemed to be profit of the year in which it is recovered [Para # 1(xviiiaa)]

xviii Any expenditure, not being capital expenditure, laid out or expected on scientific research related to the business [Para # 1(xix)]

xix Any expenditure of a capital nature laid out or expended on scientific research related to the business subject to the stipulated conditions [Para # 1(xx)]

xx Any sum paid to scientific research institute etc. subject to the stipulated conditions [Para # 1(xxi)]

xxi Any sum, not being of capital nature laid out or expended on any educational institute or hospital established for the benefit of employees subject to the stipulated condition [Para # 1(xxii)]

xxii Expenditure (including capital expenditure) incurred on any educational institution or hospital established for benefit of employees and their dependents is deductible provided no charge is made for the services rendered by such hospital or institution. Expenditure incurred on the construction, maintenance or running of any institute for the training of industrial workers will be similarly deductible [Para # 1(xxiii)]

xxiii Any expenditure laid out or expended on the training of citizens of Bangladesh in connection with a scheme approved by the National Board of Revenue [Para # 1(xxiv)]

xxiv Expenses incurred in connection with visits abroad in a Trade Delegation sponsored by Government [Para # 1(xxv)]

xxv. Subscription paid to a registered trade organization or to a recognized professional institution is allowable expenditure for the purpose of computation of income from business [Para # 1(xxvi)]

xxvi. Any expenditure, not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of the business or profession of the assessee [Para # 1(xxvii)]

xxvii. Allowance in respect of expenditure on publicity and advertisement [Section 30, Para # f(iii)]

iii. Bank interest paid or any profit shared with a bank run on Islamic principles in respect of capital borrowed for the purpose of business or profession [Para #1(iii)]

iv. Share of profit paid by a bank run on Islamic principles [Para # 1(iv)]

v. An amount not exceeding 5% of the profit transferred to Special Reserve by financial institutions approved by the Government [Para # 1(v)]

vi Repairs to own buildings, plants, machinery, furniture etc. [Para # 1(vi)

vii. Insurance premium for insurance against risk of damage etc. of buildings plant etc. used in business or profession [Para # 1(vii)]

viii Depreciation of building, machinery, plant or furniture being owned by the assessee or bridge or road or fly over owned by a physical infrastructure undertaking and used for business or profession; the allowances are admissible under Third Schedule [Para # 1(viii)]In respect of amortization of license fees as admissible under the third schedule [Para # 1(viiia)]

ix Investment allowance for a passenger vessel or a fishing trawler, which is entitled to special depreciation at 20% of the original cost subject to stipulated conditions (Third Schedule, Para # 8) [Para # 1(ix)]

x Obsolescence allowance for building, machinery or plant, which has been discarded, demolished or destroyed, under the stated circumstances and to the prescribed extent (Third Schedule, Para # 10) [Para # 1(xi)]

xi Obsolescence allowance and allowance on account of death or useless animals; [Para # 1(xii)]

xii Land development tax or rent, local rates, etc. [Para # 1(xiii)]

xiii Bonus paid to employees including festival bonus [Para # 1(xiv)]

xiv The amount of bad debt, which is established to have become irrecoverable, under the stated circumstances [Para # 1(xv)]

xv The amount of bad debt written off as irrecoverable but deduction not allowed on the ground that it was not then irrecoverable, the amount which was established to be irrecoverable [Para # 1(xvi)]

xvi The amount for bad debt having been irrecoverable in an earlier year, is allowable for the earlier year under the stated circumstances and with the consent of the assessee [Para # 1(xvii)]



iii. Payment of interest, salary, commission or remuneration by a firm or an association of persons to any partner of the firm or any member of the association as the case may be [Para # 30(b)]

iv. Brokerage or commission paid to a non-resident if tax has not been deducted there from under section 56 [Para # 30(c)]

v. Payment to a provident or other fund unless effective arrangement has been made for deduction of tax at source while making the payments from the fund which are taxable under the head Salaries [Para # 30(d)]

vi. Amount of perquisites or other benefits paid, as defined under Section 2(45), to any employee in excess of Taka 250,000 [Para # 30(e)] Provided that this ceiling shall not be applicable to an employer where perquisites were paid to an employee in pursuance of any government decision to implement the recommendation of a Wage Board constituted by the government;

vii. The amount of expenditure in excess of the prescribed rates and as is not, in the case of sales and services liable to excise duty, supported by excise stamp or seal in respect of the following items [Para # 30(f)]Entertainment (Rule # 65) Foreign travels of employees and their dependants for holidaying and recreation (Rule # 65A) Distribution of free samples (Rule # 65C)

viii. Any expenditure exceeding 10% of the profit under the head office expenses by a company not incorporated in Bangladesh under Companies Act 1994 [Para # 30(g)]

ix. Any payment by way of royalty, technical services fee, technical know how fee or technical assistance fee exceeding 8% of the profit [Para # 30(h)]

x. Any payment by way of salary or remuneration made otherwise than by crossed cheque or bank transfer by a person to any employee having gross monthly salary of Taka 15,000 or more [Para # 30(i)]

xi. Any expenditure by way of incentive bonus exceeding 10% of the disclosed net profit [Para # 30(j)]

xii. Any expenditure by way of overseas traveling exceeding 1% of the disclosedturnover [Para # 30(k)]

xiii. Any payment by way of commission paid or discount made to its shareholder director by a company [Para # 30(l)]

xiv. Any payment by a person exceeding Taka 50,000 or more, otherwise than by a crossed cheque or bank transfer excluding payment for the purchase of raw materials and payment for government obligation.

24. Capital Gains [Section 31]

Any gains arising from transfer of a capital asset (both movable and immovable) as defined in Section 2(15) of the Income Tax Ordinance is chargeable to income tax in accordance with the

xxviii. Any allowance in respect of expenditure on entertainment not in excess of the amount prescribed in this behalf, Ceiling of admissible expenditure has been prescribed in Rule 65 of Income Tax Rules, 1984 [Section 30, Para # f(i)]üOn the first Taka 1,000,000 of income from business or profession : 4%üOn the balance income : 2%

xxvix. Foreign travel expenses for holidaying and recreation incurred by business houses on account of their employees and their dependants not exceeding the amount prescribed in this behalf under Rules 65A of the Income Tax Rules, 1984 [Section 30, Para # f(ii)] The amount has been restricted upto 3 months’ basic salary or three-fourth of the actual expenditure whichever is less, not oftener than once in every 2 years; subject to sum exceeding Taka 10,000 shall not be allowed as deduction unless such payment is made through bank.

xxx. Allowable expenditure on distribution of Free-Sample {(Rule: 65C), (Section 30,Para # f(iv)} In respect of industry other than pharmaceutical industry:Turnover upto Taka 5 crore : 1.50%Turnover exceeding Taka 5 crore but not exceeding Taka 10 crore : 0.75%Turnover exceeding Taka 10 crore : 0.375%

In respect of pharmaceutical industry:Turnover upto Taka 5 crore : 2.0%Turnover exceeding Taka 5 crore but not exceeding Taka 10 crore : 1.0%Turnover exceeding Taka 10 crore : 0.50%

xxxi Head Office Expenses for a Company not incorporated in Bangladesh, allowable upto 10% of the net profitt (Section 30g)

xxxii Technical Assistance Fee / Royalty allowable upto 5% of the profit (Section 30h)

xxxiii Incentive Bonus allowable upto 10% of the disclosed net profit (Section 30j)

23. Deductions are not admissible in certain circumstances [Section 30]

The following expenditures are not admissible deductions in the determination on income from business or profession:

i. Payment of salaries if tax is not deducted at the time of payment and paid thereon in accordance with section 50 [Para # 30(a)]

ii. Any payment made by an assessee to any person if tax thereon has not been deducted and credited in accordance with Chapter VII and VAT thereon has not been collected or deducted and credited in accordance with VAT Act. 1991 [Para # 30(aa)]



iv. Transfer of Capital Asset of a firm to a new company: Capital gain arising from transfer of capital asset of a firm to a new company registered under companies Act 1994 and the whole amount of capital gain is invested in the equity of the said company by the partners of the firm, then the capital gain shall not be charged to tax as income of the year of transfer [Section 32(11)]

v. Transfer of Stocks and Shares of a public company by a non-resident: Capital gain arising in the hand of a non-resident from transfer of stocks or shares of a listed company is exempted from tax provided such assessee is entitled to similar exemption in the country in which he is a resident [Section 31]

26. Capital Gain Tax [Second Schedule]

Assessee New RateAY 2013-14

Previous RateAY 2012-13

Tax in respect of Capital Gain: In Case of Company: [Second Schedule,

Para # 2(a)] Capital gain will be taxed as a block of income separate from other income of the assessee company at flat rate

15% 15%

In Case of a person other than Company: [Second Schedule, Para # 2(b)]Where the capital gain arises as result of a

disposal after not more than 5 years from the date of acquisition

Where the capital gain arises as result of a disposal after 5 years from the date of acquisition;

Applicable rate on total income including capital

gainTax payable at the

rate applicable on total income including said

income @ 15% on the capital

Applicable rate on total income including

capital gainTax payable at the rate

applicable on total income including said income @ 15% on the

capital

27. Income from Other Sources: [Section 33]

Following income of an assessee is assessable under the Income from Other Sources:

a. Dividend;

b. Interest;

c. Royalties and Technical Services;

d. Income from letting of machinery, plant, furniture, building etc;

e. Deemed Income [Section 19 (1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 21 & 24)]

f. Income of any kind which is not classifiable under any other heads specified in Section 20.

Second Schedule, Para # 2 of the Income Tax Ordinance, 1984 which prescribes rates of income tax in certain special cases;

In determination of the gain on transfer of any expenditure incurred solely in connection with transfer of the capital asset and the cost of acquisition including expenditure, if any, incurred for the provement of asset are deductible from the sale value. In case of acquisition of asset:

Events Value of cost capital assets

i. By purchase the actual cost of the asset;

Actual cost of the previous owner as reduced by depreciation allowance;

ii. Property acquired by gift, bequest or will or under a transfer on a trust or distribution of capital asset on liquidation of company or solution of a firm or association of persons;

Where actual cost of the previous owner as reduced by depreciation allowance. Where actual cost to the previous owner cannot be ascertained, fair market value of assets on the date on which it became the property of previous owner, shall be taken to be the cost of acquisition in the hand of present owner;

25. Exemption of Capital Gains from tax [Section 32]

Capital gains or portion thereof arising out of transfer of certain capital assets are exempted from the income tax under certain circumstances and upon fulfillment of certain conditions. Following are the cases of full or partial exemptions:

i. Transfer of capital asset used in the business with following rules: [Section 32(5)]

A declaration shall have to be made before the assessment is made;

y a new capital asset for the purpose of business or profession has to be purchased within 1 year before or after the date of transfer;

y when capital gain is greater than the cost of new asset, capital gain upto the extent of cost of acquisition of new asset shall be exempted and balance shall be charged to tax;

y when capital gain is equal or less than the cost of new asset, no tax shall be charged on the capital gain;

ii. Capital gain arising out of transfer of Government Securities is exempted from tax [Section 32(7)]

iii. Transfer of Buildings and Lands to a new company for setting up an industry and the whole amount of capital gain arising out of such transfer is invested in the equity of the said company, the capital gain shall not be charged to tax as income of the year of transfer [Section 32(10)]



iiiIncome of a religious or charitable institution derived from voluntary contributions. [Para # 2]

iv Income of Local Government. [Para # 3]

v Income of Provident Fund and other Funds. [Para # 4]

viTraveling Allowances, etc. (to meet expenses wholly and necessarily incurred in performance of the duties of an office or employment of profit) incurred. [Para # 5]

vii Income of Trustees on behalf of any recognized fund. [Para # 6]

viiiIncome of the personnel of the foreign missions, not being a citizen of Bangladesh. [Para # 7]

ix Pension. [Para # 8]

x Income from dividend amounting to Taka 10,000.

xi Share of Capital Gains of a Partner of a Firm. [Para # 18]

xii Income of a member of Hindu Undivided Family. [Para # 19]

xiii Gratuity. [Para # 20]

xivAny payment received from Provident Fund and other Funds (PF, WPPF and approved superannuation fund). [Para # 21]

xv Income from dividend of a mutual fund or a unit fund upto Taka 25,000. [Para # 22A]

xvi Interest on tax-free Government Securities. [Para # 24]

xvii Interest on the balance in a Recognized Provident Fund. [Para # 25]

xviii Payment received on voluntary retirement. [Para # 26]

xix Income of indigenous Hillman. [Para # 27]

xx Income from export business. [Para # 28]

xxi Income from agriculture upto Taka 50,000. [Para # 29]

xxii Capital Gains from Machinery or Plant used in business or profession. [Para # 31A]

xxiii Income from the business of Software Development and Information Technology Enabled Services (ITES) upto 30 June 2015. [Para # 33]

xxiv Income from fisheries (not applicable to a company), poultry, production & marketing of seeds, farming (cattle, dairy, frog & mushroom), horticulture, floriculture and sericulture; if such income exceeds Taka 150,000 and at least 10% of income invested in bond & govt. Securities. [Para # 34]

xxv Income from the export of handicrafts upto 30 June 2015. [Para # 35]

xxvi Any amount paid by govt. as tax on behalf of Petroleum Exploration Company under Production Sharing Contract (PSC). [Para # 36]

xxvii Income from educational activities of private Agricultural College and University. [Para # 37]

28. Set-Off of Losses [Section 37]

Whenever an assessee sustains a loss in any year under any of the following heads of income, such as, property, interest on securities, business or profession, agricultural income and other sources, he is entitled to set-off the loss so sustained against his income, profits or gains under any other head in that year. Any speculative transactions undertaken by an assessee should be treated as a distinct and separate business and any loss incurred in those transactions should be set-off only against the income, profits or gains of that business. Loss on Capital Gains cannot be set-off against income from any other head. Such loss can be set-off only against the Capital Gains. Any loss from Business or Profession shall not be set off against income from House Property in the year such loss crop up.

29. Carry forward of loss [Section 38]

Whenever an assessee sustains any loss under the head of Business or Profession not being loss from speculation business and the loss cannot wholly be set-off against income under any other head i.e. salary, property, agricultural income, interest on securities and income from other sources, such unadjusted loss shall be carried forward to the following year to be set-off against the profits and gains of the same business or profession. The only exception in this regard is that the loss sustained in speculative business shall be carried forward to be set-off only against speculative profits, if any, of the following year. Loss cannot be carried forward for more than six successive assessment years.

30. Carry forward of Depreciation Allowance [Section 42(6)]

Depreciation allowance which cannot be given full effect of, in any year, because of there being no profits or of inadequate profits, unadjusted allowances or portion thereof as the case may be, shall be carried forward to the next year or so on for succeeding years and be part of allowance for that year.

While setting-off loss on account of depreciation allowance, effect shall first be given to business loss (Section 38) including loss from speculation business (Section 39).

31. Income fully exempted from Tax subject to fulfillment of prescribed conditions and limitations [Section 44(1) and Part A of Sixth Schedule]

Certain incomes are totally exempted from tax and they are not includable with other income even for rate purpose. Income specified in Part-A of the Sixth Schedule (Exclusions from Total Income) of the Income Tax Ordinance 1984 are exempt and excluded from the computation of total income subject to fulfillment of limits, conditions and qualifications laid down therein:

iIncome from property held under Trust but shall not apply to NGOs registered with NGO Affairs Bureau. [Para # 1]

iiAny income derived from micro credit operations by NGOs registered with NGOAB. [Para # 1A]



i. The undertaking is set up in Bangladesh between 01 July 2011 and 30 June 2015;

ii. The undertaking is managed either by (i) a body corporate established by or under an act of Parliament having head office in Bangladesh or (ii) a company defined under Companies Act 1913 or 1994 having subscribed & paid up capital of not less than Taka 1,000,000 on the date of commencement of commercial production;

iii. The undertaking is engaged in: [Section 46(B), Para # 2]

The Industrial Undertaking in the production of textile, jute, high value garments (overcoats, jackets & suits), pharmaceuticals, melamine, plastic, ceramics, sanitary, steel, fertilizer, computer and agriculture machinery, energy saving bulbs, solar energy panel, barrier contraceptive or rubber latex etc;

Providing on commercial basis, physical infrastructure facilities;

Tourist industry as defined in the explanation to Section 46;

iv. 30% of the tax exempted income to be invested in the same undertaking or for a new industry during the period of exemption or within one year of expiring tax holiday period. An additional 10% profit has to be invested each year within 3 months of closing the income year by purchasing shares of listed companies in Bangladesh;

Provided that the purchase of shares of a listed company except readymade garments industry and if 40% of income re-invested between 01 July 2008 and 30 June 2013 in the said or new industrial undertaking during the period or within one year from end of the period.

v. The undertaking is not formed by splitting up or by reconstruction or reconstitution of an existing business or by transfer to a new business of any machinery or plant used in Bangladesh at any time before commencement of the new business;

vi. An application shall be filed with the Board for approval of the undertaking within 6 months from the end of the month of commencement of commercial production or operation, and the undertaking must be approved by the Board;

vii. A clearance certificate from the Directorate of Environment shall be obtained for the relevant income year.

B. Period of Exemption [Section 46(B), Para # 1]

Dhaka and Chittagong divisions, excluding Dhaka, Narayanganj, Gazipur,Chittagong, Rangamati, Bandarban and Khagrachari districts, for a period of five years beginning with the month of commencement of commercial production of the said undertaking:

xxviii Any income derived from any building situated in any area of Bangladesh (other than areas of city corporation, Cantonment board, Tongi Upazila, Naryangonj Paurashava, Gazipur , Paurashava and any Paurashava under Dhaka district), not less than five storied having at least ten flats, constructed at any time between 01 July 2009 and 30 June 2014 for ten years from the date of completion of construction of the building has been declared tax free.

xxix Income from any Small and Medium Enterprise (SME) having annual turnover not more than Taka 3,000,000. [Para # 39]

xxx Income from Zero Coupon Bond. [Para # 40]

xxxi Income from poultry farming for the period from July 2011 to June 2015. [Para # 42]

xxxii Any profits and gains under the head “Capital Gains” arising from the transfer of stocks or Shares of a public company in listed in any stock exchange in Bangladesh of an assessee being a non-resident subject to the condition that such assessee is entitled to similar exemption in the country in which he is a resident . [Para # 43]

xxxiii An amount of income derived from cinema hall or Cineplex which starts commercial exhibition between the first day of July 2012 and thirtieth day of June 2015. [Para # 44]

xxxiv An amount of income derived by an industrial undertaking engaged in the production of rice bran oil and commencing commercial production by thirtieth day of June 2015 at the specified rates. [Para # 45]

xxxv An amount equal to fifty percent of the income of an assessee derived from the production of corn/maize or sugar beet. [Para # 46]

xxxvi Income of an assessee donated in an income year to any fund established by or under the provisions of Trust of Prime Minister’s Education Assistance Act 2012 subject to a maximum of :twenty percent (20%) of income of a company or Taka eight crore, whichever is less. [Para # 47 (a)]

Twenty percent (20%) of income of an assessee other than a company or one crore Taka, whichever is less. [Para # 47 (b)]

32. Tax Holiday for newly established industrial undertaking, Tourist Industry and Physical Infrastructure facility set-up between the period of July 2011 to June 2015 etc. in certain cases [Section 46B]

A. Condition for Tax Holiday

Period of tax holiday has been further extended for 3 years beyond 30 June 2011 in respect of industrial undertaking, tourist industry and physical infrastructure facility subject to following conditions:



33. List of eligible sectors for Tax Holiday [Section 46B]

i. Industrial Undertaking

y Textile; y Insecticide & pesticide;

y Jute goods; y Computer hardware;

y High Value Readymade Garments (overcoat, jackets, suits);

y Residential hotel having facility of three star or more;

y Pharmaceuticals; y Petro chemicals;

y Barrier contraceptive or rubber latex.

y Basic raw materials of drugs, chemicals & Pharmaceuticals;

y Plastic products; y Agricultural machine;

y Ceramics & sanitary ware; y Boilers & compressors;

y Steel from iron ore; y Textile machinery;

y Sanitary ware; y Energy saving bulb;

y MS Rod & CI Sheet; y Solar energy panel;

y Fertilizer; y Melamine;

ii. Physical Infrastructure Facility:

y Sea or river port; y Mono-rail & underground rail;

y Container terminals, internal container depot (ICD) & container freight station (CFS);

y Telecommunication other than mobile phone

y LNG terminal and transmission line; y Large water treatment plant &

supply through pipe line;

y CNG terminal and transmission line; y Waste treatment plant;

y Gas pipe line; y Solar energy plant;

y Flyover; y Export processing zone;

And any other category of industrial including as the government may be notification in to official Gazette specify.

iii. Tourism Industry:

Residential hotel having facility of three star or more and any other category of tourist industry facility as the Government may by notification in the official Gazette specify.


For the first two years ( 1st and 2nd year) 100% of income




If the said undertaking is set-up in Rajshahi, Khulna and Barisal divisions, and hill districts of Rangamati, Bandarban, and Khagrachari; for a period of 7 years beginning with the month of commencement of commercial production or operation;


For the first and second year 100% of income






Provided that an industry engaged in the production of bio-fertilizer or petro-chemicals shall be entitled for exemption from tax even if it is set up in the districts of Dhaka, Gazipur, Narayanganj or Chittagong.

c. Computation of Tax Holiday Income

¾ The profit and gain shall be computed under the head income from business or profession (section 28)

¾ Loss sustained in a tax holiday undertaking shall not be set off against profits of taxable units. Loss shall be carried forward to be set off against income from same undertaking in the following years, but not beyond tax holiday period;

¾ Only normal depreciation allowance, if any, shall be allowed;

¾ Any dividend distributed by a tax-holiday company to its shareholders out of its exempted profit shall not be exempt from tax;

¾ Capital gains earned by tax holiday undertaking shall not be exempt from tax;

¾ Income of the said undertaking resulting from disallowance made under section 30 shall not be exempted from tax;



y gas pipe line, y Hi-tech park;

y Information and Communication Technology (ICT) village or software technology zone;

y Liquefied Natural Gas (LNG) terminal and transmission line;

y Information Technology (IT) park; y waste treatment plant; or

y large water treatment plant and supply through pipe line;

y toll road and toll bridge;

y any other category of physical infrastructure facility as the Government may, by notification in the official Gazette, specify.

y renewable energy (e.g. energy saving bulb, solar energy plant, windmill);

The exemption shall apply to the said facility if it fulfills the following conditions, namely:-

√ that the said facility is owned and managed by-

(i) a body corporate established by or under any law for the time being in force with its head office in Bangladesh; or

(ii) a company as defined in company law, 1994 with registered office in Bangladesh and having a subscribed and paid up capital of not less than two million taka on the date of commencement of commercial operation;

√ that thirty percent of the exempted income is invested in the said facility or in any new physical infrastructure facility during the period of exemption or within one year from the end of the period to which the exemption relates and in addition to that, another ten percent of the exempted income is invested in each year before the expiry of three months from the end of the income year in the purchase of shares of a company listed with any stock exchange, notwithstanding the provisions of this Ordinance, be subject to tax in the assessment year for which the exemption was allowed.

√ Provided that the quantum of investment referred to in this clause shall be reduced by the amount of dividend, if any, declared by the company enjoying tax exemption under this section.

√ that the said facility is approved, and during the relevant income year, stands approved by the Board for the purposes of this section;

√ that application in the prescribed from for approval for the purposes of this section, as verified in the prescribed manner, is made to the Board within six months from the end of the month of commencement of commercial operation;

√ that the said facility maintains books of accounts on a regular basis and submits return of its income as per provisions of section 75 of this Ordinance.

34. Tax Holiday for Hospitals [SRO 204-Ain/IT/2005 dated 6th July 2005]

a. A newly established private hospital will be eligible for exemption of income for another 5 years subject to the following conditions:

b. The hospital is owned by a company registered under the Companies Act 1913 or 1994;

c. The hospital is established between the period 1st July 1999 to 1st July 2008 in the private sector;

d. The hospital is housed in a building constructed on the company’s own land;

e. The hospital has number of beds (i) 200 beds in case of general hospital (ii) 50 beds in case of specialized hospital for heart, kidney and cancer patients;

f. 10% of the beds must be kept reserved for treatment of poor free of charge;

35. Exemption from tax of newly established physical infrastructure facility set up between the period of July 2011 and June 2015, etc. in certain cases [section # 46C]

Subject to the provisions of this Ordinance, income, profits and gains under section 28 from physical infrastructure facility (hereinafter referred to as the said facility) set up in Bangladesh between the first day of July 2011 and the thirtieth day of June 2015 (both days inclusive) shall be exempted from the tax payable under this Ordinance for the 10 years beginning with the month of commencement of commercial operation, and at the rate, specified below:


For the first and second year 100% of income


F or the fourth year 70% of income




For the eighth year 30% of income

For the ninth year 20% of income

For the tenth year 10% of income

For the purpose of this section, “physical infrastructure facility” means,-

y deep sea port; y underground rail;

y elevated expressway; y mono-rail;

y export processing zone; y rapid transit;

y flyover y sea or river port;



Sl. # Particulars

VIII. Donation to Zakat Fund [Para # 13]

IX. Contribution to Benevolent Fund and Group Insurance Scheme [Para # 17]

X. Donation of Aga Khan Development Network [Para # 21]

XI. Donation to philanthropic or educational institution [Para # 22]

XII. Any sum invested in the purchase of one computer or one laptop by an individual assessee subject to maximum Taka 100,000 for laptop and Taka 50,000 for desktop. [Para # 23]

XIII. Any sum paid by an assessee as donation to a national level institution set up in memory of the liberation war [Para # 24]

XIV. Any sum paid by an assessee as donation to a national level institution set up in memory of Father of the Nation [Para # 25]

XV. Any sum invested by an assessee, being an individual, in the acquisition of any stocks or shares of a company, mutual fund or debenture listed with any stock exchange [Para # 27]

XVI. Any sum invested by an assessee, being an individual, in the purchase of Bangladesh Government Treasury Bond [Para # 28]

38. Rates of Corporate Tax

Irrespective of profit or loss all companies and every firm having gross receipts of more than Tk. 50,00,000 have to pay tax @ 0.50% on gross receipts as minimum Tax. Tax rates applicable for companies are as follows:

SL.No.

AssesseeNew RateAY 2013-14


i Publicly traded Companies (other than Banks, Insurance & Financial Institutions):

Minimum Dividend is 10%

27.50% 27.50%

Publicly traded companies and declare dividend more than 20%

24.75% -

Additional Tax, if declared dividend or bonus share rate is less than 15% [section: 16B]

5% on undistributed porfit

5% on undistributed porfit

Companies declaring dividend less than 10% or dividend not paid within the time

37.50% 37.50%

36. Exemption of income of cooperative societies (Section-47)

Any income derived from sale of goods, lending of money or lease of land and buildings which is for personal use of the members of the co-operative societies will be exempted:

¾ The entire income of the societies if it is carried on the following businesses:

√ Agricultural or rural credit

√ Cottage industry

√ Marketing of agricultural produce of its members

√ Purchase of agricultural implements, seeds, livestock, etc. for supplying those to the members for agriculture purpose

√ The processing which help agricultural produce turned into marketable goods without any power generated manufacturing operation

¾ Exception

√ Co-operative society does not get any exemption, if it is engaged in any insurance business carried on by a mutual insurance according to paragraph 8 of the Fourth Schedule.

37. Investment Allowance for Tax Rebate [Section 44 (2) & (3) and Part B of Sixth Schedule]

a. Maximum ceiling of Investment Allowance: Maximum ceiling for Investment Allowance is taka 15,000,000, subject to maximum of 30% of the total income excluding employer’s contribution to recognized PF & Interest thereon and actual amount of investment, whichever is lower.

b. Tax Rebate: Tax Rebate @ 15% of the eligible investment shall be allowed as Rebate.

c. Investments eligible for Tax Rebate:

Sl. # Particulars

I. Life insurance premium paid by an individual [Para # 1]

II. Life insurance premium paid by Hindu Undivided Family [Para # 2]

III. Contribution to Provident Fund and Other Funds [Para # 3, 4, 5 & 6]

IV. Investment in Unit Certificate etc [Para # 10]

V. Contribution in any Deposit Pension Scheme (DPS) not exceeding Taka 60,000 [Para # 11]

VI. Donation to a charitable Hospital [Para # 11A]

VII. Donation to organization for the welfare of the retarded people [Para # 11B]


Continued


SL.No.



xiii. Payment of Dividend: Payment of Dividend by companies formed under Company Act. 1994 or by foreign companies (FED/702/2006/5743 and Finance Ordinance 2008) to:

Non Resident Assessee: Other than non-resi-dent Bangladeshi: Company shareholders of tax treaty country with more than 10% total shareholdings

10% 10%

Company shareholders of tax treaty country holding less than 10% of total shares of the company

20% 20%

Company shareholders of non tax treaty countries

20% 20%

Remittance of Profit to/by a Foreign Company 20% 20%

Person or Individual 25% 25%

Resident Assessee: Including non-resident Bangladeshi:Company Shareholders

20% 20%

Individual 10% 10%

xiv. Tax in respect of Capital Gain:In Case of Company: [Sectioned Schedule, Para # 2(a)]Capital gain will be taxed as a block of income separate from other income of the assessee company at flat rate

15% 15%

In Case of a person other than Company: [Sec-tioned Schedule, Para # 2(b)]

Where the capital gain arises as result of a disposal after not more than 5 years from the date of acquisition

At appli-cable rate on total income including capital gain

At appli-cable rate on total income including capital gain

SL.No.



ii Banks, Insurance and Financial Institutions: 42.5% 42.5%

Excess Profit Tax (banks only): Profit in excess 50% of Capital+ Reserve

15% on ex-cess profit

15% on excess profit

Merchant bank 37.50% 42.50%

iii Companies not publicly traded 37.50% 37.50%

iv Mobile Operator Company:

If the company is converted into publicly traded company through at least 10% share for Initial Public Offering (IPO) Subject to not more than 5% of pre IPO placement;

If not converted into a publicly traded company with 10% share for IPO

40%

45%

35%

45%

v Private University: Income accrued from private universities approved by University Grant Commission and other universities which are not public universities shall pay tax

15% 15%

vi Company engaged in Diamond cutting and Polishing industry

15% 15%

vii Readymade Export oriented Garments Indus-tries

10% 10%

viii Companies which manufacture of yarn related production of fabrics, dying, finishing and covering of yarn

15% 15%

ix. Textile Industries 15% 15%

x. Jute Industries 15% 15%

xi. Cigarette Manufacturing Company:

Publicly traded company 40% 35%

Non publicly traded company 45% 42.5%

xii. Tax on Income Accrued from Research Institute under Trust Act

15% 15%


Continued Continued


SL No.

Class of Assets

Rate of WDV except as otherwise indicated

Remarks

1) Ocean-going ships (new) 12%

2) Ocean-going ships (Second hand) age at the time of purschase

The allowance is to be calculated on the original cost

* Less than 10 years 12%

* 10 years or more 24%

3) Inland ships including steamers, motor vessels, iron or steel flats for cargo, wooden cargo boats, motor launches and speed boats

24%

ü 1) Batteries, X-Ray and electronic therapeutic apparatus and accessories thereto

20%

2) Machinery used in the production and exhibition of cinematographic films

20%

3) Motor vehicles, not plying for hire 20%

4) Motor vehicles, plying for hire 24%

5) Computer & computer equipments 30%

6) Bangladeshi made computer software

50%

1) Professional & reference books 30%

2) Aircraft, aero-engine and aerial photographic apparatus

30%

3) Moulds used in the manufacture of glass or plastic goods or concrete pipe

30%

√ Mineral of concerns 30%

1) Below ground installation 30%

2) Above ground installations, that is to say, portable boilers, drilling tools, well-head tanks and rigs

30%

SL.No.



Where the capital gain arises as result of a dis-posal after 5 years from the date of acquisition

At the rate applicable on total incomeincluding saidincome OR@ 15% on thecapital gainwhichever is lower

At the rate applicable on total incomeincluding saidincome OR@ 15% on thecapital gainwhichever is lower

xv. Income accrued outside Bangladesh to any of her citizen, if such income is brought into Bangladesh

Nil (SRO-

Ain/IT/2004,

dated 13.09.04)

Nil (SRO-

Ain/IT/2004,

dated 13.09.04)

xvi. Income from business of software and IT Enabled Services (ITES) including IT Support & Software maintenance services, data entry, data processing, call centre, BPO Services, etc.

Nil Nil

xvii. Capital gain arising out of transfer of govt. Securities [Section 32(7)]

Nil Nil

39. Normal Depreciation Allowance and Amortization (Third Schedule, Para # 3): [section: 29(1) (viii) & (ix)]

SL No.

Class of Assets


Remarks

ia) Building 10%

b) Factory building 20%

ii Furniture & fittings 10%

iii Machinery & plant

a) General rate 20%

b) Special rates-

Ships


Continued Continued


- For the first year in which the undertaking starts commercial production

50% of the actual cost of plant and machinery to the assessee

- For the next following second year 30% of the actual cost of plant and machinery to the assessee

- For the next following third year 20% of the actual cost of plant and machinery to the assessee

The assets enjoying accelerated depreciation will not be eligible for any other depreciation under the Income Tax Ordinance.

The undertaking must fulfill all the prescribed conditions and apply to Board in the prescribed manner for approval for the purpose of deprecation of this category within six months from the end of the month of commencement of commercial production. Board is to give decision on the application within 45 days [Section 46A (3) or 46B (6)].

Accelerated depreciation is also allowable on machinery and plant other than office appliances and road transport vehicles which having not being previously used in Bangladesh, has been or is used in the expansion unit of any existing undertaking or in the treatment and disposal of toxic and environmentally hazardous wastes or in the collection or processing of biodegradable waste or in the research and development in any industrial undertaking owned by a company. In this case accelerated depreciation is allowed at 80% for 1st year (starts commercial production or operation) and 20% for the next following year [Para # 7A (1)].

43. Withholding Tax / Tax Deducted at Source (TDS) [Section # 50, 51, 52, 53, 54, 55 & 56]

All taxes deducted or collected in accordance with the section 48 to 74, shall be paid to the credit of govt. by e-payment, challan or pay order within 3 weeks from the date of such deduction or collection and all taxes deducted or collected shall be deposited to Bangladesh Bank or Sonali Bank, except deduction from –

√ Supply of goods or execution of contracts (u/s-52)

√ Professional or technical service fee (u/s-52A)

√ House property (u/s-53A)

√ Commission or fees (u/s-53E)

For the above four cases, cheque equivalent to deducted amount needs to be issued in favor of concerned DCT and send to the person [u/s-2(46)] from whom tax has been deducted subject to production of counter foil of treasury challan. Provided that if the person is not resident in Bangladesh, exception will not be applicable.

SL No.

Class of Assets


Remarks

Physical infrastructure undertaking 30%

1) Bridge 2%

2) Road 2%

3) Fly over 2%

In case of motor vehicles, being passenger vehicles or sedan cars, not plying for hire cost for the purpose of depreciation is restricted to Taka 2,000,000.

40. Amortization of License fees [Section 29 (1) (VIIIa)/Third schedule Para 10A]

Addition of new paragraph 10A after paragraph 10:

10A. (1) Amortization of license fees.- (1) Where an assessee, - being a resident company, paid any sum as license fees on or after the first day of July, 2012 wholly and exclusively for the purpose of obtaining a permission from any authority = authorised by the government applicable for two or more years to run a business, the assessee shall be allowed a deduction of an amount proportionate to such years and such deduction shall continue till the last year of the period for which the license was granted.

(2) For the purpose of this paragraph, license fees means Spectrum Assignment fees paid by a cellular mobile phone operator.”

41. Initial depreciation: [Third Schedule, Para # 5A]

Where any building has been newly constructed or any machinery or plant has been in Bangladesh after 30th June 2002, an amount by way of initial depreciation allowance in respect of the year of construction or installation or the year in which such building, machinery or plant is used by the assessee for the first time for the purpose of his business or profession or the year in which commercial production is commenced, whichever is later, shall be allowed at the following rates:

In the case of building - 10% of the cost; In the case of machinery or plant other than ships or motor vehicles not plying for hire 25% of

the cost;

42. Accelerated Depreciation [Third Schedule, Para # 7 & 7A]

In the case of any machinery or plant (other than office appliance and road transport vehicles) which not having been previously used in Bangladesh, has been or is used in an industrial undertaking set up in Bangladesh between the first day of July, 1977 and the thirtieth day of June 2012 (both days inclusive) accelerated depreciation allowance shall be allowed and computed as follows:



SL. No.

Section/ Rule #

ParticularsRate of

deduction (%)

5 52 (1) & Rule 17

Indenting commission received through remittance 7.5

Shipping agency commission received through remittance

5

6 52 A (1) Fees for services rendered by Doctors, Accountants, Engineers & Consultants

10

7 52A(2) Royalty or Technical Know How Fee 10

8 52 A (3) Fees for Professional or Technical Services- if furnishes TIN

10

Fees for Professional or Technical Services- if fails to furnish TIN

15

9 52AA Payments of Commission to Stevedoring Agency and any Other Services not covered under sections # 52

10

Payment for Private Security Services 1.5

10 52AAA Commission to Clearing & Forwarding agents 10

11 52 B Collection of tax from Cigarette Manufacturers 10

12 52 C Compensation against Acquisition of Property:

Immovable property situates within city corporation, paurashava or Cantonment board area 2

Immovable property situates outside of city corporation,paurashava or Cantonment board area

1

13 52 D Interest on saving instruments [Interest on sanchayapathra purchased after 01 July 2011]

5

14 52 F Collection from brick manufacturers (at the time of permission for manufacture of bricks):

- for one section brick field

- for two section brick field

- for three section brick field

Tk. 30,000

Tk. 45,000

Tk. 60,000

15 52 I Commission of Letters of credit 5

44. Rates of tax at source:

SL. No.

Section/ Rule #

ParticularsRate of

deduction (%)

1 50 Salaries and benefits: On first Taka 220,000 (Male Assessee); On first Taka 250,000 (Female Assessee); On first Taka 250,000 (Assessee aged 65 & more); On first Taka 300,000 (Physically challenged Assessee);On next Taka 300,000;On next Taka 400,000; On next Taka 300,000;On the rest of the balance

Average rateNilNilNilNil10152025

2 50 A Discount of the real value of Bangladesh Bank bills IndividualCompany

27.5 or 37.5 or 42.5 or 45

whichever is applicable

3 51 Interest on securities excluding treasury bond ortreasury bill issued by the government

10

4 52 (1) & Rule 16

In case of Supply of goods or execution of Contracts, subcontracts, local L/C, payment of Indenting or Shipping Agency Commission locally:

Where the cumulative payment does not exceed Taka 200,000

Nil

Where the cumulative payment exceeds Taka 200,000 but does not exceed Taka 500,000

1

Where the cumulative payment exceeds Taka 500,000 but does not exceed Taka 1,500,000

2.5

Where the cumulative payment exceeds Taka 1,500,000 but does not exceed Taka 2,500,000

3.5

Where the cumulative payment exceeds Taka 2,500,000 but does not exceed Taka 30,000,000

4

Where the cumulative payment exceeds Taka 30,000,000 5

In the case of supplied by oil marketing company

Where the payment does not exceed Taka 200,000 Nil

Where the payment exceeds Taka 200,000 0.60


Continued Continued


SL. No.

Section/ Rule #

ParticularsRate of

deduction (%)

27 53 B & Rule 17C

Export of manpower (service charges) 10

28 53 BB Collection of tax from export of knitwear and woven garments

0.80

29 53 BBB Collection of tax from Member of stock exchanges (bond has been omitted from members portfolio)

0.05

30 53 BBBB Collection of tax from export of any goods except knitwear and woven garments

0.80

31 53 C & Rule 17D

Collection of tax on sale price of goods or property sold by public auction

5

32 53 CC Deduction or collection of tax at source from courier business of a non resident

15

33 53 D Payment to actors, actress, producers etc. Exceeding Tk. 10,000

10

34 53 DDD Deduction from export cash subsidy 5

35 53 E(1) Commission, discount or fees on account of marketing or distribution of goods

10

53 E(2) Company (other than oil marketing company) shall collect tax on the difference between the sale price to the distributor or other persons and the retail price fixed by the company

5

36 53 EE Commission or remuneration paid to agent or representative of a foreign buyer as per terms of L/C or under any other instructions

7.5

37 53 F Interest on Savings and Fixed Deposits or any term deposit maintained with schedule bank including a corporation, bank or by way of profit on term deposits, financial institutions, Leasing Company or housing company √ For TIN holder

√ For assessee Without TIN having deposit above Taka 1,00,000

√ For assessee Without TIN having deposit less than Taka 1,00,000

10

15

10

SL. No.

Section/ Rule #

ParticularsRate of

deduction (%)

16 52 K Renewal of trade license by City Corporation or Paurashava: √ For Dhaka City Corporation or Chittagong City

Corporation

√ In any City Corporation, other than Dhaka City Corporation and Chittagong City Corporation

√ In any paurashava at any district headquarter

√ In any other paurashava

Tk 500

Tk . 300

Tk. 300

Tk. 100

17 52 M Collection from freight forward agency commission 15

18 52 N Rental power company 4

19 52 O Collection of tax for making payments or giving credit to a foreign technician serving in a diamond cutting Industry

5

20 52 P Services from convention hall, conference centre, etc. 5

21 52 Q Credit or Payment to the account of any resident out of remittances received from abroad by way of Service Charge / Consultancy Fee/ Commission / Remuneration or other Fees

10

22 52R Deduction of tax from receipts in respect of international phone call On total amount of international phone call received

through International Gateway (IGW)

On the amount of international phone call paid or credited by International Gateway(IGW) services operator to the account of Interconnection Exchange (ICX ), Access Network Services (ANS) or any other person under any agreement with BTRC

1

5

23 52 S Collection of tax from manufacturer of soft drink 3

24 53 & Rule 17A

Collection of tax from importers. The board shall specify from whom collection to be made

5

25 53A Payment of rent to landlord 5

26 53 AA Collection of tax from shipping business of a resident:Freight received or receivable in or out of BangladeshFreight received or receivable from service rendered

between two or more countries

5 3


Continued Continued


SL. No.

Section/ Rule #

ParticularsRate of

deduction (%)

41 53 H Collection of tax on transfer, etc. of property: - On deed value within the jurisdiction of RAJUK and CDA - On deed value within the jurisdiction of Dhaka and

Chittagong districts excluding RAJUK, CDA, Gazipur, Narayanganj, Munshiganj, Manikganj and Narsingdi districts, City corporation excluding Dhaka South City Corporation, Dhaka North City Corporation and Chittagong City Corporation, paurashava, cantonment board

- On deed value for any areas other than areas mentioned above.

3

2

1

42 53 I Interest on deposit of Post Office Savings Bank Account, deductible only when total interest exceeds Tk. 150,000 and TDS applicable only on the interest in excess of Tk. 150,000

10

43 53 J Payment of rental value of vacant land or plant 5

44 53 K Advertising bill of newspaper or magazine or private television channel and private radio station

3

45 54 Deduction from Dividends: - Company beneficiary for non-tax treaty countries

- Company beneficiary for tax treaty countries

- Company beneficiary for tax treaty countries having less than 10% shareholding

- Resident Company with more than 10% shareholding

- Individual: Resident & Non-resident Bangladeshi

- Individual: Non –resident Foreigner

20

10

20

20

10

25

46 55 & Rule 17

Income from lottery etc. 20

47 56 Deduction from income of non-residents: Company

Rate applicable to company, i.e.,

37.5%

Person other than company & non-resident Bangladeshi 25

Non resident Bangladeshi Rate applicable for resident individual

SL. No.

Section/ Rule #

ParticularsRate of

deduction (%)

38 53 FF Collection of tax from persons engaged in real estate or land development business:In case of building or apartment - Building for residential purpose:

Situated at Gulshan, Banani, Baridhara, Moti-jheel and Dilkusha of Dhaka

Situated at DOHS, Dhanmondi, Mohakhali, Lalmatia, Uttara, Bashundhara, Cantonment, Kawran Bazar of Dhaka and Khulshi, Pan-chlaish, Nasirabad & Agrabad of Chittagong

Other areas in Bangladesh

Tk. 1,600 per square meter


Tk. 600 per square meter

Building not for residential purpose:

Situated at Gulshan, Banani, Baridhara, Moti-jheel and Dilkusha of Dhaka

Situated at DOHS, Dhanmondi, Mohakhali, Lal-matia, Uttara, Bashundhara, Cantonment, Kaw-ran Bazar, of Dhaka and Khulshi, Panchlaish, Nasirabad & Agrabad of Chittagong

Other areas in Bangladesh.




In case of land: On deed value for Dhaka, Gazipur, Narayanganj,

Munshiganj, Manikganj, Narsingdi and Chit-tagong districts

On deed value for any other district

5

3

39 53 G Payment of insurance commission 5

40 53 GG Payment of fees / remuneration to surveyor of General Insurance Company

15


Continued


8. Particulars of tax deducted or collected:

SL.Type of

payment

Section of I.T.O,

1984

Payment

during the

quarter

Rate of

deduction/

collection

Amount of

Tax deduction / collection

(1) (2) (3) (4) (5) (6)

1. Salary 50

2. a. Payment to contractors/ supplier

52

b. Indenting commission

52

c. Shipping agency commission

52

3. a. Service of doctor

52A(1)

b. Royalty or technical know-how fee

52A(2)

c. Fees for professional & technical services

52A(3)

4. a. Payment for private security service

52AA

b. Payment to Stevedoring agencies

52AA

c. Any other service

52AA

5. L/C commission 52I

6. Freight forward agency commission

52M

45. Form of Return of WithholdingTax under Income Tax Ordinance, 1984 (Ord. XXXVI OF 1984)

(Return under section 75A)

FOR COMPANY TAXPAYERS ONLY

1. Name of the Company:

- -

2. TIN/UTIN:

- -

3. TCAN -

4. (a) Circle:…………………. (b) Taxes Zone:

5. Deduction/Collection Period:

1st quarter (July-September),......................................................... Year ... .. ;

2nd quarter (October-December),.................................................. Year ... .. ;

3rd quarter (January-March),.......................................................... Year ... .. ;

4th quarter (April-June),.................................................. ............... Year ... .. ;

6. (a) Address:

(b) Phone:

(c) Fax No.:

(d) E-mail:

(e) Web address: http://www...

7. Contact person:

(a) Name:

(b) Designation:

(c) Telephone: ... .

(d) Mobile:

(e) E-mail: ...


Continued


SL.Type of

payment

Section of I.T.O,

1984

Payment

during the

quarter

Rate of

deduction/

collection

Amount of


(1) (2) (3) (4) (5) (6)

16. Collection of tax from export of any good except certain items.

53BBBB

17. Receipt from public auction

53C

18. Courier business of a non-resident.

53

19. Payment to actor/actress.

53D

19A Deduction of tax at source from export cash subsidy

53DDD

20. Payment as commission or discount for distribution of goods.

53E(1)

20A. Company, other than oil marketing company, shall collect tax on the difference between the sale price to the dis-tributor or other persons and the retail price fixed by such company.

53E(2)

21. Payment to foreign buyer’s agent.

53EE

SL.Type of

payment

Section of I.T.O,

1984

Payment

during the

quarter

Rate of

deduction/

collection

Amount of


(1) (2) (3) (4) (5) (6)

7. Payment to foreign technician serving in diamond cutting industry

52O

8. Payment for services 2P from convention hall etc.

52P

9. Payment to resident person against services provided person

52Q.

9A Deduction of tax from the service of international gateway service in respect of phone call

52R

10. Collection of tax from manufacturer of soft drink

52S

11. House/office rent 53A 53A12. Collection of tax from

shipping business of a resident

53AA

13. Receipt from export of manpower

53B

14. Collection of tax from export of knit-wear and woven garments.

53BB

15. Collection of tax from member of stock exchanges

53


Continued Continued


10. Tax shall be deposited to respective account code according to the following table:

Name of the ZoneIncome tax-

PersonIncome tax-

CompanyOther Fees

Taxes Zone-1, Dhaka 1-1141-0001-0111 1-1141-0001-0101 1-1141-0001-1876

Taxes Zone-2, Dhaka 1-1141-0005-0111 1-1141-0005-0101 1-1141-0005-1876

Taxes Zone-3, Dhaka 1-1141-0010-0111 1-1141-0010-0101 1-1141-0010-1876

Taxes Zone-4, Dhaka 1-1141-0015-0111 1-1141-0015-0101 1-1141-0015-1876

Taxes Zone-5, Dhaka 1-1141-0020-0111 1-1141-0020-0101 1-1141-0020-1876

Taxes Zone-6, Dhaka 1-1141-0025-0111 1-1141-0025-0101 1-1141-0025-1876

Taxes Zone-7, Dhaka 1-1141-0030-0111 1-1141-0030-0101 1-1141-0030-1876

Taxes Zone-8, Dhaka 1-11410035-0111 1-1141-0035-0101 1-1141-0035-1876

Taxes Zone-9, Dhaka 1-1141-0080-0111 1-1141-0080-0101 1-1141-0080-1876

Taxes Zone-10, Dhaka 1-1141-0085-0111 1-1141-0085-0101 1-1141-0085-1876

Taxes Zone-11, Dhaka 1-1141-0090-0111 1-1141-0090-0101 1-1141-0090-1876

Taxes Zone-12, Dhaka 1-1141-0095-0111 1-1141-0095-0101 1-1141-0095-1876

Taxes Zone-13, Dhaka 1-1141-0100-0111 1-1141-0100-0101 1-1141-0100-1876

Taxes Zone-14, Dhaka 1-1141-0105-0111 1-1141-0105-0101 1-1141-0105-1876

Taxes Zone-15, Dhaka 1-1141-0110-0111 1-1141-0110-0101 1-1141-0110-1876

Taxes Zone, Narayangonj 1-1141-0115-0111 1-1141-0115-0101 1-1141-0115-1876

Taxes Zone, Gazipur 1-1141-0120-0111 1-1141-0120-0101 1-1141-0120-1876

Taxes Zone, Mymenshing 1-1141-0125-0111 1-1141-0125-0101 1-1141-0125-1876

Taxes Zone, Comilla 1-1141-0130-0111 1-1141-0130-0101 1-1141-0130-1876

Taxes Zone, Chittagong 1-1141-0135-0111 1-1141-0135-0101 1-1141-0135-1876

Taxes Zone, Bogra 1-1141-0140-0111 1-1141-0140-0101 1-1141-0140-1876

Large Taxpayer Unit (LTU 1-1145-0010-0111 1-1145-0010-0101 1-1145-0010-1876

Central Survey Zone 1-1145-0005-0111 1-1145-0005-0101 1-1145-0005-1876

Taxes Zone-1, Chittagong 1-1141-0040-0111 1-1141-0040-0101 1-1141-0040-1876



Taxes Zone- Khulna 1-1141-0055-0111 1-1141-0055-0101 1-1141-0055-1876

Taxes Zone- Rajshahi 1-1141-0060-0111 1-1141-0060-0101 1-1141-0060-1876

Taxes Zone- Rongpur 1-1141-0065-0111 1-1141-0065-0101 1-1141-0065-1876

Taxes Zone-Sylhet 1-1141-0070-0111 1-1141-0070-0101 1-1141-0070-1876

Taxes Zone- Barisal 1-1141-0075-0111 1-1141-0075-0101 1-1141-0075-1876

SL.Type of

payment

Section of I.T.O,

1984

Payment

during the

quarter

Rate of

deduction/

collection

Amount of


(1) (2) (3) (4) (5) (6)

22. Interest on savings and fixed deposit.

53F

23. Insurance commission.

53G

24. Payment to surveyor of general insurance.

53GG

25. Rental value of vacant land, plant or machinery.

53J

26. Advertising bill of newspaper or magazine.

53K

27. Transfer of securities by sponsor shareholders.

53M

28. Dividends. 54

29. Lottery. 55

30. Payment to non-resident.

56

Verification

9. I, ....................................................................… designation.……….......................…... s o l e m n l y declare that to the best of my knowledge and belief the information given in this return is correct and complete.

Place:

Date: Signature and seal

NB: 1. The return shall be accompanied by a statement of deduction or collection of tax along with copy of treasury challans or payment orders.



income not exceeding Taka 300,000 (Taka Three Lac) from business or profession may opt not to submit his/her lifestyle statement. This will be effective from Assessment Year: 2013-2014.

50. Filing of Return of Income and Statement [Section 75, 76, 77 & 78]

Every person whose total income during an income year exceeds the exemption limit i.e. the maximum amount which is not chargeable to tax and every person whatever his income in the income year who was assessed to tax for any year within three years preceding that year, shall furnish a return setting forth therein (along with such other particulars as may be prescribed) his total income and total income during the income year.

Every company shall file a return of its income or the income of any other person for whom the company is assessable, on or before the date specified.

Where a person is not required to file a return under sub-section 1 of section 75, he is to file a return if he:

a. resides in a city corporation or paurashava, or divisional head quarters or district head quarters and fulfils any of the following conditions:

i. owns a more than one story building with an area of more than 1,600 sft;

ii. owns a motor car;

iii. subscribes a telephone;

iv. is a member of club registered under VAT Act 1991;

b. runs a business or profession with trade license from a city corporation or paurashava, union parishad and operates a bank account;

c. is registered with a recognized professional body as a doctor, dentist, ITP, CA, CMA, engineer, architect, surveyor or any similar profession.

d. member of a club or a trade association;

e. is a candidate for an office of paurashava or a city corporation or a member of a parliament;

f. participant in a tender floated by government, semi-government, autonomous body or local authority;

g. has a tax payers identification number in accordance with the provision of section 184A;

h. any non government organization registered with NGO Affairs Buraeu.

Every individual shall furnish, along with the return or the certificate, as the case may be, a statement in the prescribed form and verified in the prescribed manner giving particulars of the total assets and liabilities of himself,

Name of the Zone Income tax- Person & Company

Appeallate Zone-1 1-1143-0001-1876




Appeallate Zone- Rajshahi 1-1143-0040-1876

Tribunal Fee 1-1143-0015-1876

I.R.C 1-1731-0001-1801

VAT Deposit 1-1133-0000-0311

Affix Stamp 1-1101-0020-1301

46. Advance Payment of Tax [Section 64]

The ceiling of the amount of income for payment advance tax is Taka 400,000; [Section 64]The new assesses have been exempted from the payment of advance tax unless their income exceeds Taka 400,000; [Section 68]

Advance tax is payable by an assessee during each financial year if the latest assessed income (assessment completed either on regular or provisional basis before the fifteenth May of the year) exceeds Taka 400,000. Advance tax is payable in four equal installments on 15th September, 15th December, 15th March and 15th June. If one estimates that one’s income during any financial year will be less than the last assessed income, one may submit an estimate of income of one’s own and that the tax paid on the basis of the estimate does not fall short of 75% of the tax payable on regular assessment. Because, if the tax paid falls short he is liable for interest [Section 73].

47. Payment on the Basis of Return [Section 74(1)]

Every person who is required to file a return under Sections 75, 77, 78, 89 (2), 91 (3) & 93 (1) shall, on or before the date on which he files the return, pay the amount of tax payable by him on the basis of such return or tax liabilities, if applicable, as per provision of section #16CCC as reduced by the amount of any tax deducted from this income or paid by him.

48. Mode of payment of Tax by assessee (Rule-26A)

All payments of Tax U/S-64,70,73,74,82D,83(2),84,89(3),107(2)(a),120,121(4)(a),123-129,135 (2),137(1),154(1), 158(5),160(1) and any other payments shall be made by pay order or demand draft or account payee cheque of scheduled bank in favor of concerned DCT.

Provided that payment does not exceed Taka 10,000 can be made through treasury challan.

49. Return of statement of lifestyle [Section # 75 (2) (d) (i)]

An individual note being a shareholder Director of a company, having income from Salary or



and functions of the DCT shall be concurrently exercised by such other authority as may be specified by the board.

54. Assessments

i. Assessment on Correct Return: [Section 82]

Where a return or a revised return has been filed under Chapter VIII and the Deputy Commissioner of Taxes is satisfied, without requiring the presence of the assessee or the production of any evidence, that the return is correct and complete, he shall assess the total income and determine the tax payable by him on the basis of such return and communicate the assessment order to the assessee within thirty days next following: Provided that-

Such return shall be filed on or before the date as specified in clause (c) of sub section (2) of section 75;

The amount of tax payable shall be paid on or before the date on which the return is filed; and

Such return does not show any loss or lesser income than the last assessed income, or assessment on the basis of such return does not result in refund;

ii. Universal Self Assessment [Section 82 BB]

� Where an assessee furnish a correct and complete return of income, the DCT shall receive such return himself or cause to be received by any other official and issue a receipt of such return and, the receipt shall be deemed to be an order of assessment for the assessment year for which the return is filed.

� A return shall be taken to be complete, if it is filed in accordance with the provisions of sub-section (2) or (3) of section 75.

� The amount of tax payable shall be paid on or before the date on which the return is filed in accordance with section 74.

� The Board or any authority authorized by the Board may select a number of such returns filed may refer to the DCT for the purpose of audit to make the assessment under section 83 or 84.

� No question as to the source of investment made by a new assessee deriving income from business or profession shall be raised, if he shows income at least not less than 25% of the capital invested in business or profession and pays tax on such income before filling of income.

� The initial capital investment of business or profession or any fraction of such initial capital shall not be transferred from that business or profession within the income year when the investment was made or within five years when the investment was made or within five years from the end of that income year.

his spouse and his minor children and dependants. He shall also furnish particulars of his personal and family expenditure as per proforma determined by the board to be called life-style as per rule 25A:

Provided that an individual, not being a shareholder director of a company, having income from salary or income not exceeding three lakh taka from business or profession may opt not to submit such statement;

In the case of a company the return will be accompanied by a statement of accounts audited by a chartered accountancy firm.

51. Return of withholding tax [Section # 75A and Rule # 24A]

Every person, being a company, shall file or cause to be filed, with the deputy commissioner of taxes where he is being assessed, a return of withholding tax collected or deducted at source. The return shall be submitted on quarterly basis within 15th day of October, January, April and July of each financial year. Following conditions are applicable for the return:

� Return of withholding tax shall be in prescribed form specified in Rule # 24A;

� Return shall be submitted in Tax Circle in which company’s tax assessment is being made;

� Return submission is mandatory for any amount of tax if deducted at source;

� Time extension of 15 days may be allowed by DCT;

� Return shall be signed by chief official of the entity;

� Summary of tax deducted at source and related treasury challans or payment orders shall be affixed with the return;

� Penalty shall be imposed under section # 124 if return is not submitted within prescribed time period;

� If any person fails to collect, deduct or credit the tax, the assessee shall be treated as assessee in default.

52. Obligation to furnish Annual Information Return [Section # 75B]

Government may, by notification in the official gazette, require any person or group of persons responsible for registering or maintaining books of account or other documents containing a record of any specified financial transaction, under any law for the time being in force, to furnish an Annual Information Return, in respect of such specified financial transaction.

53 Concurrent jurisdiction [Section # 75C]

Board may, by general or special order in writing, direct that in respect of all or any proceedings relating to receiving of return of income and issuance of acknowledgement thereof in accordance with the provisions of sections 75, 77, 78, 89(2), 91(3) or 93(1), the power



Final discharge of tax liability shall not be applicable subject to following condition:

Tax deduction or collection at source shall not be adjusted against refund due for earlier year or years or refund due for the assessment year from any source other than mentioned in this section;

Income from the sources mentioned in this section shall be determined on the basis of the tax deducted or collected at source and the rate or rates of tax applicable for the assessment year;

This income mentioned in earlier clause shall not be set off against loss;

Any income shown or assessed in excess of the amount mentioned in earlier clause shall be liable to tax at the rate applicable for the assessment year;

Any income not admissible as allowances under section # 30 shall be added to this income;

56. Assessment on the basis of Report of a Chartered Accountant [Section 83AAA]

Where a return or a revised return filed by a company is reasonable believed to be incorrect or incomplete, the Board may appoint a registered Chartered Accountant to examine the accounts of that assessee.

The Chartered Accountant shall exercise the powers and functions of the DCT and after examining the accounts shall submit a report to the Board in writing. The Board shall forthwith forward the report to the Deputy Commissioner of Taxes and the Deputy Commissioner of Taxes after giving an opportunity to the assessee shall make the assessment on the basis of the report of the chartered Accountant and on the basis of the other evidences within thirty days after completion of hearing or consideration as the case may be and communicate the order within thirty days from the date of such order.

57. Assessment and computation of Income of Contractor of an Oil company (Rule 39)

1. Any person/company who resides out of Bangladesh and carries on business in Bangladesh under an agreement as a contractor to an oil company or as a subcontractor to the contractor to an oil company engaged in Petroleum Operations in Bangladesh for exploration and development of oil & gas may exercise an option or ascertainment of income, profits and gains from the operation of drilling of oil, geophysical survey, marine seismic survey, shallow water seismic survey and other activities relating to petroleum operations, under Rule 39.

In such case his income, profits and gains derived from such operations shall, subject to the provision of this rule, be deemed to be an amount equivalent to 10% of the gross earrings from such operations provided that:

a. such option shall be exercised before the 30th day of September of the year of assessment in which such person is assessable for the first time in Bangladesh.

b. the option once exercised shall be treated as final and shall be applicable to all assessments thereafter.

55. Some final settlement of tax liability [section # 82C]

Tax deducted or collected at source in accordance with the provisions mentioned below shall be deemed to be the final discharge of tax liability from that source. These are as follows:

Section references Sources of tax deduction or collection

Section # 52 Payment on account of supply of goods or execution of contract or local Letter of Credit (L/C)

Section # 52A(2) Payment on account of royalty, fees for technical services

Section # 52AAA Commission from clearing and forwarding agency business

Section # 52B Value of banderols computed on account of manufacturer of cigarettes

Section # 52C Compensation against acquisition of property

Section # 52N Amount received by sale of rental power by rental power companies

Section # 52O Salaries of foreign technician serving in a diamond cutting industry

Section # 52R Amount received by International Gateway (IGW) services operator or Interconnection Exchange (ICX) in respect of international phone call

Section # 53 Goods imported, not being goods imported by an industrial undertaking as raw materials for its own consumption

Section # 53AA Amount received or receivable from shipping business of a resident

Section # 53B Amount received on account of export of manpower

Section # 53BB Amount received on account of export of certain items

Section # 53BBB Amount received on account of transaction by a member of stock exchange

Section # 53C The amount of auction purchase

Section # 53CC Amount received on account of courier business of a non-resident

Section # 52DDD Amount received on account of Export cash subsidy

Section # 53FF Amount received from persons engaged in real estate or land development business

Section # 53G The amount of remuneration or reward, whether by way of commission or otherwise payable to an insurance agent

Section # 53GG The amount representing the payment on account of survey by surveyor of a general insurance company

Section # 53H The amount of value of property

Section # 53L The premium received from raising of share at a premium over face value

Section # 53M Income received from transfer of securities or mutual fund units by sponsor shareholders of a company

Section # 55 & 19(13) The amount on account of winnings

Provided that final discharge of tax liability shall not be applicable for a contractor of an oil company or a sub-contractor to the contractor of an oil company [section # 52, 82C & rule # 39]



(2) “International transaction” means a transaction between associated enterprises, either or both of whom are non- residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses, assets, financial position or economic value of such enterprises, and includes-

(a) a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to anyone or more of such enterprises;

(b) a transaction entered into by an enterprise with a person other than an associated enterprise, if there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined in substance between such other person and the associated enterprise;

(3) “Uncontrolled transaction” means a transaction undertaken between enterprises not being the associated enterprises.

60. Determination of income from international transaction having regard to arm’s length price [Section #107B]

The amount of any income, or expenditure, arising from an international transaction shall be determined having regard to the arm’s length price.

61. Reference to Transfer Pricing Officer [Section # l07D]

Deputy Commissioner of Taxes, with prior approval of the Board, may refer the determination of the arm’s length price to the Transfer Pricing Officer, the Transfer Pricing Officer, with prior approval of the Board, may proceed to determine the arm’s length price in relation to any international transaction.

62. Maintenance and keeping of information, documents and records [Section # l07E]

(1) Every person who has entered into an international transaction shall keep and maintain such information, documents and records as may be prescribed.

(2) The Board may prescribe the period for which the information, documents and records shall be kept and maintained.

(3) The Deputy Commissioner of Taxes may, by notice in writing, require any person to furnish any information, documents and records within the notice period.

63. Report from an accountant to be furnished [Section# 107F]

Every person who has entered into international transaction or transactions the aggregate of value which, as recorded in the books of account, exceeds three crore Taka during an

2. For the purposes of the Rule 39:

a. The expression income, profits and gains shall mean the net income, profts and gains determined after considering all expenses, allowances and depreciation as allowed for the purposes of sections 28, 29 and 30 of the Ordinance;

b. the expression gross earnings shall include the total value of all fees, moneys, income, compensations or reimbursable costs as stipulated in the agreement with the oil company, or in the agreement with the contractor to the oil company (whether in cash or in kind and whether received or not) derived from the operations referred to in sub-rule by the person but excluding the amount of tax, if any, paid or payable on behalf of the said persons, as reduced by the following amounts-

� amount constituting compensations or reimbursements exclusively for expenditures effected by the said person for the purchase of equipment’s for the oil company, which are, in fact, not his responsibility; and

� amount constituting compensations or reimbursements exclusively for expenditures effected by the said person for the purpose of transporting or moving, drilling and other equipment’s into and out of Bangladesh

58. Assessments under other sections

a. Spot Assessment u/s 82D and Rule 38B;

b. Provisional Assessment u/s 81;

c. Best Judgment Assessment u/s 84;

d. Assessment in thend case of discontinued business u/s 89;

e. Assessment in the case of Deceased Persons u/s 92;

f. Assessment in the case of departure from Bangladesh u/s 91;

g. Assessment in the case of Minors, Lunatics, Idiots, Beneficiaries of any Trust, etc. u/s 95;

h. Assessment of Co-operative Societies u/s 47;

59. Transfer Pricing

In section 107A, following definitions on Transfer Pricing have been mentioned:

(1) “Arm’s length price” means a price in a transaction, the conditions (e.g. price, margin or profit split) of which do not differ from the conditions that would have prevailed in a comparable uncontrolled transactions between independent entities carried out under comparable circumstances;



67. Most appropriate method [Rule#72]

The most appropriate method for determining the arm’s length price of an international transaction shall be the method that, under the facts and circumstances, provides the most reliable measure of an arm’s length price in relation to the international transaction.

68. Information and documents to be kept and maintained under section l07E [Rule#73]

� ownership profile of the multinational group in which the assessee enterprise is a member

� business profile of the group

� Brief business profiles of each of the member of the group

� information on the business relationship

� consolidated financial statement of the group

� profile of the assessee enterprise and each of the associated enterprises operating in Bangladesh, including tax and VAT registration number, IRC & ERC numbers, address and locations of activity centers etc

� business profile of the assessee enterprise and each of the associated enterprise operating in Bangladesh including the line of business, industry dynamics, and market and economic environment

� brief description of the functions performed, risks assumed and assets employed or to be employed by the assessee and by the associated enterprise involved in the international transaction

� financial statements of the assessee

� information on economic and market analyses, forecasts, budgets or any other financial estimates.

� details of all transactions with the associated enterprises

� contracts, terms and agreements of the transactions with associated enterprise; etc.

69. Additional powers of enquiry and production of documents [section # 116 (1)]

Directors-General of Inspection (DGI), the Commissioner, the Director General (DG), Central Intelligence Cell (CIC) and the Inspecting Joint Commissioner of Taxes (IJCT) can make an enquiry on any assessee or above assessee or related any person and ask for documents including electronic copy along with authority to ask them to appear before authority for providing information.

70. Power of giving order for not removing property [section # 116 A]

In the course of performing functions under this Ordinance, the Director General, Central

income year shall furnish, on or before the specified date in the form and manner as may be prescribed, a report from a Chartered Accountant.

64. Provision of penalty on transfer pricing [Section# 107G, 107H, and 107I]

References Particulars Penalty

Section# 107G Penalty for failure to keep, maintain or furnish information, documents or records to the Deputy Commissioner of Taxes

A penalty not exceeding one percent of the value of each international transaction

Section # 107H Penalty for failure to comply with the notice or requisition

A penalty not exceeding one percent of the value of each international transaction

Section#107I Penalty for failure to furnish report from a Chartered Accountant

A penalty of a sum not exceeding three lac Taka

65. Determination of arm’s length price under section 107C [Rule#70]

(a) Comparable uncontrolled price method: The price charged or paid for property transferred or services provided in an uncontrolled transaction + the differential amount from the price of the international transaction+ adjustment = arm’s length price

(b) Resale price method: The resold price to an independent enterprise - comparable normal gross margin+ adjustment =the adjusted price =arm’s length price

(c) Cost plus method: Direct and indirect costs + comparable profit mark-up + adjustment =arm’s length price

(d) Profit split method: the combined profit arising from international transaction or transactions and divisible among the associated enterprises based on the relative contribution of each associated enterprise to that profit = arm’s length price.

66. Factors to be considered in judging comparability [Rule # 71]

� The characteristics, nature, extent, forms of property, services or intangible properties involved in the transaction

� The functions performed, the risks assumed and the assets employed

� The contractual terms

� Economic circumstances including geographic location, the size and level of markets; the extent of competition in the market, the availability of substitute goods and services, the purchasing powers of consumers, government orders and policies and the timing of the transaction

� Any other factors that have material effect on the international transaction and uncontrolled transaction.



Intelligence Cell or the Commissioner has definite information in his hands that any person has concealed the particulars of income or investment, he may, by order in writing- require any person who is in immediate possession or control of any money, bullion, jewellery, financial instrument, financial asset, valuable article or any other property not to remove, part with, or otherwise deal with it without obtaining previous permission of the concerned authority passing such order:

� Every such order shall cease to have effect after the expiry of a period of one year from the date of the order made.

� The income tax authority may extend such period or periods with the approval of the Board. Provided that the total period of extension shall in no case exceed one year.

� In computing the period if any, for which the order has been stayed by any court, shall be excluded.

71. Avoidance of Double Taxation [Section 144]

The Government of Bangladesh may enter into an agreement with the Government of other countries for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income leviable under the Ordinance and also under corresponding law of the other country. Under the agreement, each dominion determines the total income of an assessee in the ordinary way under its own laws but in respect of the source of income or categories of transactions, as specified in the agreement, it is entitled to retain tax on such portion of the income there from as is calculated according to the percentage as embodied in the agreement.

At present, Government of Bangladesh has entered into agreement for the avoidance of double taxation with the following 28 countries:

Belgium India Norway Singapore Thailand

Canada Indonesia Oman South Korea Turkey

China Italy Pakistan Sri Lanka UK

Denmark Japan Philippines Sweden USA

France Malaysia Poland Switzerland Vietnam

Germany Netherlands Romania

72. Relief in respect of Foreign Income [Section 145]

Where there is no reciprocal arrangement for avoidance of double taxation, relief is available in respect of doubly taxed income. If any person who is resident in Bangladesh during any year can prove to the satisfaction of the Deputy Commissioner of Taxes that he paid income tax in respect of any income arising outside Bangladesh, he shall be entitled to deduction from Bangladesh income tax payable by him of a sum equal to the tax calculated on the double taxed income at the Bangladesh rate of tax or at the rate of tax of the foreign country, whichever is the lower.



Value Added Tax

73. Who will deduct VAT?

Following persons are responsible to deduct VAT at source, such as:

¾ Govt. organization;

¾ Semi-govt. organization;

¾ Autonomous organization;

¾ NGO;

¾ Bank;

¾ Insurance;

¾ Financial Institutions;

¾ Limited company; and

¾ Educational Institutions.

74. Where to deposit the deducted VAT?

Deducted VAT amount shall have to be deposited to govt. exchequer with following area code, such as:

Commissionerate Areas Treasury Challan Financial Code

Large Tax-payer Unit (LTU) 1/1145/0010/0311

Dhaka (North) 1/1133/0015/0311

Dhaka (South) 1/1133/0010/0311

Chittagong 1/1133/0025/0311

Sylhet 1/1133/0018/0311

Rajshahi 1/1133/0020/0311

Jessore 1/1133/0005/0311

Khulna 1/1133/0001/0311

75. Scope of VAT and its specified rates

Applicable VAT rates on various services, and areas where VAT Deduction at Sources (VDS) are applicable shown as per following table.

Value Added Tax Value Added Tax

Continued


Head #Service Code #

Service Provider

Rate of VAT (%)2013-2014

VDS * Applicable

S 012 S 012.10 Telephone Service Provider

15

S 012.11 Tele-printer Service Provider

15

S 012.12 Telex Service Provider 15

S 012.13 Fax Service Provider 15

S 012.14 Internet Service Provider

15

S 012.20 SIM Card Distributors 15

S 013 S 013.00 Automated Laundry 15

S 014 S 014.00 Indenting Service 15 VDS Applicable

S 015 S 015.10 Freight Forwarders 15

S 015.20 Clearing and Forwarding Agent

15

S 016 S 016.00 Travel Agency 15

S 017 S 017.00 Community Centre 15

S 018 S 018.00 Film Studio 15

S 019 S 019.00 Photo Grapher 4.5

S 020 S 020.00 Survey Sangstha 15 VDS Applicable

S 021 S 021.00 Plants or Capital Machineries Rent Provider

15 VDS Applicable

S 022 S 022.00 Sweet Shop 15

S 023 S 023.10 Cinema Hall or Film Distributor

15

S 023.20 Film Producer 15

S 024 S 024.00 Sales Centre of Furniture:

At the time of production 6 VDS Applicable

At the time of marketing subject to treasury challan for 6% at production stage

4 VDS Applicable


Service Provider

Rate of VAT (%)2013-2014

VDS * Applicable

S 001 S 001.10 Hotels including Club 15

S 001.20 Restaurant including Club:

a) Restaurant with Air Condition

15

b) Restaurant without Air Condition

6

S 002 S 002.00 Decorators and Caterers 15 VDS Applicable

S 003 S 003.10 Motor Garage & Workshop

4.5 VDS Applicable

S 003.20 Dockyard 4.5 VDS Applicable

S 004 S 004.00 Construction Works /Firms (Builders)

5.5 VDS Applicable

S 005 S 005.10 Warehouse 15

S 005.20 Port for import or export

15

S 006 S 006.00 Cold Storage 15

S 007 S 007.00 Advertisement Organizations

15 VDS Applicable

S 008 S 008.10 Printing Press 15 VDS Applicable

S 008.20 Binding Organizations 15

S 009 S 009.00 Auction 15 VDS Applicable

S 010 S 010.10 Land Development Organization

1.5 VDS Applicable

S 010.20 Building Construction Organization

1.5 VDS Applicable

S 011 S 011.10 Video Cassette Shop 15

S 011.20 Video Games Shop 15

S 011.30 Video, Audio Recording Shop

15

S 011.40 Video and Audio CD Rent Provider Shop

15


ContinuedContinued



Service Provider

Rate of VAT (%)2013-2014

VDS * Applicable

S 040 S 040.00 Security Service Provider

15 VDS Applicable

S 042 S 042.00 Automated Saw-machine 15

S 044 S 044.00 Specialized Doctors 15

S 045 S 045.00 Legal Advisors 15 VDS Applicable

S 046 S 046.00 Health Club and Fitness Centre

15

S 047 S 047.00 Sports Organizer 15

S 048 S 048.00 Transport Contractor:

For carrying petrol and related goods

2.25 VDS Applicable

Others goods 4.5 VDS Applicable

S 049 S 049.00 Transport Fare or Rent-a-car

15 VDS Applicable

S 050 S 050.10 Architect, Interior Designer or Interior Decorator

15 VDS Applicable

S 050.20 Graphics Designer 15 VDS Applicable

S 051 S 051.00 Engineering firms 15 VDS Applicable

S 052 S 052.00 Sound and Lighting Instruments Rent Providers

15 VDS Applicable

S 053 S 053.00 Present at Board Meeting

15 VDS Applicable

S 054 S 054.00 Advertisement with Satellite Channel

15 VDS Applicable

S 055 S 055.00 Land Sellers other than Land Developers

15

S 056 S 056.00 Banking and non-banking service provider

15

S 057 S 057.00 Electricity Supplier 5

S 058 S 058.00 Chartered Airplane or Helicopter Rent Providers

15 VDS Applicable


Service Provider

Rate of VAT (%)2013-2014

VDS * Applicable

S 025 S 025.00 WASA 15

S 026 S 026.00 Goldsmith, Silversmith and Gold & Silver Trader

2

S 027 S 027.00 Insurance Company 15

S 028 S 028.00 Courier & Express Mail Service

15 VDS Applicable

S 029 S 029.10 Medical Centre 15

S 029.20 Dental Clinic 15

S 029.30 Pathological Laboratory 15

S 030 S 030.00 Beauty Parlor 15

S 031 S 031.00 Repairing or Servicing of Taxable Goods

15 VDS Applicable

S 032 S 032.00 Consultancy firm and Supervisory firm

15 VDS Applicable

S 033 S 033.00 Lessee 15 VDS Applicable

S 034 S 034.00 Audit and Accounting Firm 15 VDS Applicable

S 035 S 035.00 Shipping Agent 15

S 036 S 036.10 Air-Conditioned Bus Service

10

S 036.20 Air-Conditioned Launch Service

10

S 036.30 Air-Conditioned Railway Service

10

S 037 S 037.00 Procurement Provider 4 VDS Applicable

S 038 S 038.00 Organizer of Cultural Program with Foreign Performers

15

S 039 S 039.10 Satellite Cable Operators 15

S 039.20 Satellite Channel Distributors

15


Continued Continued



Service Provider

Rate of VAT (%)2013-2014

VDS * Applicable

S 075 S 075.00 Stock or Securities Broker

15

S 076 S 076.00 Social and Sports related Club

15

S 077 S 077.00 Tour Operator 15

S 078 S 078.00 Sales Centre of RMG of Own Brand

5

S 099 S 099.00 Any services not specified under SRO # 175-Ain/2011/598-Mushak dated 09 June 2011, Second Schedule and section # 14 of VAT Act. 1991 will be taxed under this code

15

S 099.10 Information Technology Enabled Services

4.5 VDS Applicable

S 099.20 Other services 15 VDS Applicable

S 099.30 Sponsorship Services 7.5 VDS Applicable

S 099.40 Meditation Services 7.5

Section 3 5(2) of SRO # 242-Ain/2012/659-Mushak dated 28 June 2012

Advance Trade VAT 4

* VDS denotes VAT deduction at source.


Service Provider

Rate of VAT (%)2013-2014

VDS * Applicable

S 059 S 059.00 Glass Sheet Manufacturer

15

S 060 S 060.00 Buyer of Auction Goods 4 VDS Applicable

S 061 S 061.00 Credit Card Supplying organization

15

S 062 S 062.00 Money Changer 15

S 063 S 063.00 Tailoring Shop 15

S 064 S 064.10 Amusement and Theme Park

15

S 064.20 Picnic Spot and Shooting spot

15

S 065 S 065.00 House, Floor & Space Cleaning and Maintenance organization

15 VDS Applicable

S 066 S 066.00 Lottery ticket seller 15 VDS Applicable

S 067 S 067.00 Immigration Advisor 4.5

S 068 S 068.00 Coaching Centre 15

S 069 S 069.00 English Medium School 4.5

S 070 S 070.10 Private University 15

S 070.20 Medical and Engineering College

15

S 071 S 071.00 Event Organizer 15 VDS Applicable

S 072 S 072.00 Human Resource Providers

15 VDS Applicable

S 073 S 073.00 Human Resource Exporters

15

S 074 S 074.00 Rent of Office Space or Building used for Commercial Purpose **

9


Continued

** VAT is exempted on rent of office space upto 300 sft. and also on the rent for residential purposes (SRO # 08 -Aain/2011/584-Mushak, Gezzette dated 10-01-2011)


Value Added Tax Gift Tax


76. Gift Tax

The gift tax is leviable on gift made in any financial year on and from the 1st day of July 1990 at the prescribed in the schedule [u/s-3]. Gift means the transfer by one person to another of any existing immovable or moveable property made voluntarily and without consideration of any money or money’s worth Sec 2 (d), The Gift Tax Act 1990;

The value of property under gift other than cash shall be the value which, in the opinion of the Deputy Commissioner of Taxes, it would fetch if sold in the open market on the date of gift. When a property is not saleable in the open market and its 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.

77. Exemption from Gift Tax [Section 4]

Gift tax shall not be charged under the Act in respect of the following gifts made by any person:

1) of property situated outside Bangladesh;

2) to the Government or any local authority;

3) to the following funds or institutions, for charitable purpose:

(i) 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;

(ii) any hospital recognized or run by the Government or any local authority or any hospital aided by the Government or any Local Authority;

(iii) any flood or disaster management fund established or approved by the Government;

(iv) such institutions or funds for religious or charitable purposes, not being a private religious institution or fund which does not ensure for the benefit of the public, as are established in Bangladesh and approved by the Government for such purposes or to any institution established for religious or charitable purposes and registered under any law for the time being in force, upto 20% of the total income determined for the concerned year or Tk. 100,000 whichever is less;

4) to dependent relative upto Tk. 20,000 on the occasion of his/her marriage;

5) by way of payment of policy of insurance or annuity for any person (other than wife/spouse) dependent upon him for support and maintenance upto Tk. 20,000;

6) under a will;

Gift Tax Gift Tax


7) under contemplation of death;

8) to sons, daughters, father, mother, his or her spouse, own brothers and sisters;

In addition to the above exemptions, gifts made in any financial year up to 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.

78. Provisions of the Gift Act shall NOT apply to following gifts made by [Section 20]

1) a body corporate established or constituted by or under any law

2) any institution or fund, income whereof is exempt from income tax under paragraph 1 and 2 of Part A of the Sixth Schedule of the Income Tax Ordinance 1984;

79. Return of Gift Tax [Section 7]

Every person who had made taxable gift during any financial year of an amount as to render him liable to gift tax under the gift tax act shall before the fifteenth day of September of the corresponding assessment year furnish a return to the Deputy Commissioner of Taxes in the prescribed form and in the prescribed manner. Tax on the basis of the return is payable on or before the date on which such return is furnished.

80. Rates of Gift Tax [Section 3]

Particulars (Slab Amount of Taxable Gifts)

Percentage

Rate (%)

On the first Tk. 500,000 of the value of all taxable gifts 5

On the next Tk. 1,000,000 of the value of all taxable gifts 10

On the next Tk. 2,000,000 of the value of all taxable gifts 15

On the balance of the value of all taxable gifts 20

Gift Tax Gift Tax


Gift Tax Gift Tax

Bangladesh Tax Handbook 2013-2014 1€¦ · 8 Bangladesh Tax Handbook 2013-2014 Bangladesh Tax Handbook 2013-2014 9 1. Tax Exemption Limit The ceiling of tax exempted income for the

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