Income Tax

Income Tax at a Glance 

Among direct taxes, income tax is one of the main sources of revenue. It is a progressive tax system. Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more he should pay''- is the basic principle of charging income tax. It aims at ensuring equity and social justice.

Income Tax Authorities: 

Income Tax Authorities are :- 

• National Board of Revenue, 
• Director-General of Inspection (Tax), 
• Commissioner of Taxes (Appeals), 
• Commissioner of Taxes, Large Taxpayers' Unit (LTU), 
• Director General (Training), 
• Director General, Central Intelligence Cell (CIC), 
• Commissioner of Taxes, 
• Additional Commissioner of Taxes (Appeal/Inspecting), 
• Joint Commissioner of Taxes(Appeal/Inspecting ), 
• Deputy Commissioner of Taxes, 
• Tax Recovery Officers, 
• Assistant Commissioner of Taxes, 
• Extra Assistant Commissioner of Taxes, 
• Inspectors of Taxes. 

Sources of Income: 

For the purpose of computation of total income and charging tax thereon, sources of income can be classified into 7 categories, which are as follows : 

• Salaries 
• Interest on securities 
• Income from house property 
• Income from agriculture 
• Income from business or profession 
• Capital gains 
• Income from other sources. 

Tax Rate (Assessment Year- 2010-2011) : 

Other than Company : 

For individuals (other than female taxpayers, senior taxpayers of 65 years and above and retarded taxpayers), tax payable for the

First 1,65,000/- Nil
Next 2,75,000/- 10%
Next 3,25,000/- 15%
Next 3,75,000/- 20%
Rest Amount 25%

For female taxpayers, senior taxpayers of age 65 years and above, tax payable for the: 

First 1,80,000/- Nil
Next 2,75,000/- 10%
Next 3,25,000/- 15%
Next 3,75,000/- 20%
Rest Amount 25%

For retarded taxpayers, tax payable for the: 

First 2,00,000/- Nil
Next 2,75,000/- 10%
Next 3,25,000/- 15%
Next 3,75,000/- 20%
Rest Amount 25%

Minimum tax for any individual assessee is Tk. 2,000

Non-resident Individual 25% (other than non-resident Bangladeshi)

On Dividend income 20% 

For Companies
Publicly Traded Company 27.5%
Non-publicly Traded Company 37.5%
Bank, Insurance & Financial Company 42.5%
Mobile Phone Operator Company 45%
Publicly Traded Mobile Operator Company 35%

If any publicly traded company (excluding Mobile Operator Company) declares more than 20% dividend, 10% rebate on total tax allowed. 

Tax Rebate for investment : 
Rate of Rebate: 
Amount of allowable investment is either actual investment in a year or up to 25% of total income or Tk. 10,00,000/- whichever is less. Tax rebate amounts to 10% of allowable investment.

Types of investment qualified for the tax rebate are :- 

• Life insurance premium , 
• Contribution to deferred annuity , 
• Contribution to Provident Fund to which Provident Fund Act, 1925 applies ,
• Self contribution and employer's contribution to Recognized Provident Fund , 
• Contribution to Super Annuation Fund , 
• Investment in approved debenture or debenture stock, Stocks or Shares , 
• Contribution to deposit pension scheme approved by the government, 
• Contribution to Benevolent Fund and Group Insurance premium , 
• Contribution to Zakat Fund , 
• Donation to charitable hospital approved by National Board of Revenue ,
• Donation to philanthropic or educational institution approved by the Government ,
• Donation to socio-economic or cultural development institution established in Bangladesh by Aga Khan Development Network, 
• Donation to ICDDR,B, Dhaka Community Hospital, 
•  Donation to philanthropic institution- CRP, Savar, Dhaka, 
• Donation upto five lac to (1) Shishu Swasthya Foundation Hospital Mirpur, Shishu Hospital, Jessore and Hospital for Sick Children, Satkhira run by Shishu Swasthya Foundation, Dhaka, (2) Diganta Memorial Cancer Hospital, Dhaka, (3) The ENT and Head-Neck Cancer Foundation of Bangladesh, Dhaka; and (4) Jatiya Protibandhi Unnayan Foundation, Mirpur, Dhaka; 
• Asiatic Society of Bangladesh; 
• Muktijudha Jadughar; 

Who should submit Income Tax Return ? 

• If total income of any individual (other than female taxpayers, senior taxpayers of 65 years and above and retarded taxpayers) during the income year exceeds Tk 1,65,000/-. 
• If total income of any female taxpayer, senior taxpayer of 65 years during the income year exceeds Tk 1,80,000/- 
• If total income of any retarded taxpayer during the income year exceeds Tk 2,00,000/-. 
• If any person was assessed for tax during any of the 3 years immediately preceding the income year. 
• A person who lives in any city corporation/paurashava/divisional HQ/district HQ and owns a building of more than one storied and having plinth area exceeding 1,600 sq. feet/owns motor car/owns membership of a club registered under VAT Law. 
• If any person subscribes a telephone. 
• If any person runs a business or profession having trade license and operates a bank account.
• Any professional registered as doctor, lawyer, income tax practitioner, Chartered Accountant, Cost & Management Accountant, Engineer, Architect and Surveyor etc. 
• Member of a Chamber of Commerce and Industries or a trade Association. 
• Any person who participates in a tender. 
• A person who has a Taxpayer's Identification Number (TIN). 
• Candidate for Union Parishad, Paurashava, City Corporation or Parliament elections.
• Any company registered under Companies Act, 1930 or ‡Kv¤•vbx AvBb, 1994 

Time to Submit Income Tax Return: 

For Company 
By fifteenth day of July next following the income year or, where the fifteenth day of July falls before the expiry of six months from the end of the income year, before the expiry of such six months.
For Other than Company
Unless the date is extended, by the thirtieth day of September next following the income year.

Consequences of Non-Submission of Return 

• Imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. 1,000/- 
• In case of a continuing default a further penalty of Tk. 50/- for every day of delay.

Assessment Procedures : 

• For a return submitted under normal scheme, assessment is made after hearing. 
• For returns submitted under Universal Self Assessment Scheme, the acknowledgement slip is determined to be an assessment order. Return filed under Universal Self Assessment is of course subject to audit. 

Appeal against the order of DCT :

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

Tax withholding functions : 

In Bangladesh withholding taxes are usually termed as Tax deduction and collected at source. Under this system both private and public limited companies or any other organization specified by law are legally authorized and bound to withhold taxes at some point of making payment and to deposit the same to the Government Exchequer. The taxpayer receives a certificate from the withholding authority and gets credits of tax against assessed tax on the basis of such certificate.

Heads of Income Subject to deduction or collection of income tax at source with specified rates of deduction.

Sl	Head of withholding	Withholding authority	Withholding rate/ rates of tax	Limitation
1.	Salaries [section-50]	Any person responsible for making such payment.	Average of the rates applicable to the estimated total income of the payee under this head.
2.	Discount on the real value of Bangladesh Bank bills. [section-50A]	Any person responsible for making such payment.	Maximum rate
3.	Interest on securities [section-51]	Any person responsible for issuing any security	10%	This shall not apply to the Treasury bond or Treasury bill issued by the Government or to any payment on account of interest payable on debentures issued by or on behalf of a local authority or a company.
4.	Payment to contractors & sub-contractors [section-52] [rule-16]	Any person responsible for making such payment.	Upto Tk. 2,00,000/--Nil. From 2,00,001 to Tk 5,00,000/- ------------1% From 5,00,001 to Tk. 15,00,000/- ------- 2..5% From 15,00,001 to Tk. 25,00,000/- ------- 3..5% From 25,00,001 to Tk. 3,00,00,000/- ------4% where the payment exceeds Tk. 3,00,00,000 ----------5% in case of oil supplied by oil marketing companies upto Tk 2,00,000 -- Nil where the payment exceeds Tk 2,00,000 -------- 0.75%
5.	Payment on indenting commission or shipping agency commission. [section-52, rule-17]	Any person responsible for making such payment.	on indenting commission -----------------------7.5% on shipping agency commission ---------5%
6.	Fees for Doctors [section-52A(1)]	The principal officer of a company or the chief executive of any NGO or trust responsible for making such payment	10%
7.	Royalty or technical know-how fee [section-52A(2)]	The government or any other authority, corporation or body or any company or any banking company or any insurance company or any co-operative bank or any NGO responsible for making such payment.	10%
8.	Fees for professional of technical services [section-52A(3)]	Do	10%	Person certified by NBR having non assessable income or person having income exempted from tax
9.	Payment of certain services like stevedoring agency, private security service [section-52AA]	The government or any other authority, corporation or body or any company or any banking company or any insurance company or any co-operative bank or any NGO responsible for paying any commission to a stevedoring agency or making any payment to a private security service.	10%
10.	Clearing and forwarding agents [section 52AAA]	Commissioner of Customs.	10%

 Tax withholding functions : 

Sl	Head of withholding	Withholding authority	Withholding rate/ rates of tax	Limitation
11.	Cigarettes manufacturing [section 52B]	Any person responsible for selling banderols to any manufacturer of cigarettes.	6% of the value of the banderols
12.	Compensation against acquisition of property [section 52C]	Any person responsible for payment of such compensation	(a). 2% of the amount of such compensation against the immovable property situated within City Corporation, Paurashava or Cantonment Board (b). 1% of the amount of such compensation against the immovable property situated outside the jurisdiction of City Corporation, Paurashava or Cantonment Board
13.	Interest on saving instruments [section 52D]	Any person responsible for making such payment	10%	No deduction to be made if the saving instrument is purchased by any approved superannuation fund or pension fund of gratuity fund or any recognized provident fund or any workers' profit participation fund. No tax to be deducted from interest of Pensioner Sanchayapatra and Paribar Sanchayapatra.
14.	Brick Manufacturer [section 52F]	Any person responsible for issuing any permission or renewal of permission for manufacture of bricks.	Tk.30,000/- for one section brick field. Tk. 45,000/- for two section brick field. Tk. 60,000/- for three section brick field.
15.	Commission of letter of credit [section 52T]	Any person responsible for opening letter of credit.	5%
16.	Renewal of trade license by City Corporation or Paurashava [section 52K]	City Corporation or Paurashava.	Tk. 500/- for each trade license.
17.	Freight forward agency commission [section 52M]	Any person responsible for making such payment.	15%
18	Rental Power Company [section 52N]	Bangladesh Power Development Board during payment to any power generation company against power purchase within three years from its commencement.	4%
19	Foreign technician serving in diamond cutting industries [section 52O]	Employer.	5%	This rate is for 3 years from the appointment of such foreign technician and appointment to be completed by 30 June 2010.
20.	Importer [section 53]	The Commissioner of Customs.	5%	Tax at source will not be withheld for items prescribed in rule 17A.
21.	House property [section 53A] [rule 17B]	The Government or any authority, corporation or body or any company or any banking company or any co-operative bank or any NGO run or supported by any foreign donation or any university or medical college or dental college or engineering college as tenant.	Up to Tk. 20,000/- per month [p. m] ---- Nil From Tk 20,001/- to Tk. 40,000/- p.m. -------3% More than Tk 40,000/- p.m.--- 5%	This does not apply if the owner of house property is given a certificate by the DCT regarding not having any assessable income during the year or is having income otherwise exempted from payment of income tax.
22.	Shipping business of a resident [section 53AA]	Commissioner of Customs or any other authority duly authorised.	5% of total freight received or receivable in or out of Bangladesh . 3% of total freight received or receivable from services rendered between two or more foreign countries.
23.	Export of manpower [section 53B, rule-17C]	The Director General, Bureau of Manpower, Employment and Training.	10%
24.	Export of Knit-wear and woven garments, terry towel, jute goods, frozen food, vegetables, leather goods, packed food [section 53BB]	Bank.	0.50% of the total export proceeds.	No deduction or deduction at a reduced rate to be made if an exporter produces certificate from NBR regarding having fully or partly exempted income.
25.	Member of Stock Exchanges [section 53BBB]	The Chief Executive Officer of stock exchange.	0.05%

Tax withholding functions :  Sl Head of withholding Withholding authority Withholding rate/ rates of tax Limitation  26.  Export or any goods except knit-wear and woven garments, terry towel, jute goods , frozen food, vegetables, leather goods, packed food [section 53BBBB]  Bank.  0.50% of the total export proceeds.  No deduction or deduction at a reduced rate to be made if an exporter produces certificate from NBR regarding having fully or partly exempted income.  27.  Goods or property sold by public auction [section53C] [rule 17D]  Any person making sale.  5% of sale price.  28.  Courier business of a non-resident [section 53CC]  Any person being a company working as local agent of a non-resident courier company.  15% on the amount of service charge accrued.  29.  Payment to actors and actresses [section 53D] [rule 17E]  The person producing the film.  5%  Payment needs to exceed thirty six thousand taka in the aggregate in any income year.  30.  Commission, discount or fees [section 53E]  Any person being a corporation, body including a company making such payment.  7.5%  31.  Commission or remuneration paid to agent of foreign buyer [section 53EE]  Bank.  7.5%  32.  Interest on saving deposits and fixed deposits [section 53F]  Any person responsible for making such payment.  10%  This shall not apply on the amount of interest or share of profit arising out of any deposit pension scheme sponsored by the government or by a schedule bank with prior approval of the Government.  33.  Real estate or land development business [section 53FF]  Any person responsible for registering any document for transfer of any land or building or apartment.  In case of Building/Apartment: (i) Tk. 2,000 per square meter for building or apartment situated at Gulshan Model Town, Banani, Baridhara, Defense Officers Housing Society (DOHS), Dhanmondi Residential Area, Lalmatia Housing Society, Uttara Model Town, Bashundhara Residential Area, Dhaka Cantonment Area, Motijeel Commercial Area, Dilkusha Commercial Area, Karwan Bazar Commercial Area of Dhaka and Khulshi Residential Area, Panchlaish Residential Area and Agrabad of Chittagong; (ii) Tk. 800 per square meter where the building or apartment is situated in areas other than areas mentioned in sub-clause (i) In case of Land: 2% of deed value in case of property situated in any city corporation, paurashava or cantonment board. 1% of deed value in case of property situated in places other than any city corporation, paurashava or cantonment board.  34.  Insurance commission [section 53G]  Any person responsible for paying such commission to a resident.  5%  35.  Fees of surveyors of general insurance company[section 53GG]  Any person responsible for paying such fees to resident  15%  36.  Transfer of property[section 53H]  Any person responsible for registering any document of a person.  2% of deed value in case of property situated in any city corporation, paurashava or cantonment board.1% of deed value in case of property situated in areas other than any city corporation, paurashava or cantonment board.  This shall not apply to sale by a bank or a financial institution as a mortgagee empowered to sell; mortgagee of any property to the BHBFC; mortgagee to any bank of any property; transfer of any agricultural land in Bangladesh except land situated in any area mentioned in paragraph [i] or [ii], of sub-clause [c] or clause [15] of section 2;  37.  Interest on deposit of post office & saving bank account[section 53I]  Any person responsible for making such payment.  10%  This shall not apply if the total amount of interest is paid to such payee or class of payees as specified by the Board.  38.  Rental value of vacant land or plant or machinery[section 53J] [rule 17BB]  The Government or any authority, corporation or body including its units, the activities or any NGO, any university or medical college, dental college, engineering college responsible for making such payment.  Up to Tk. 15,000/- per month ---------------Nil.From Tk 15,001/- to Tk 30,000/- per month –3% More than Tk. 30,000/- per month ----------5%  39.  Advertisement of newspaper or magazine or private television channel[section 53K]  The Government or any other authority, corporation or body or any company or any banking company or any insurance company or any cooperative bank or any NGO or any university or medical college or dental college or engineering college responsible for making such payment.  3%.  40.  Collection of tax from sale of share at a premium over face value [section 53L]  Securities & Exchange Commission  3%  41.  Collection of tax from transfer of shares by the sponsor shareholders or placement holders of a company listed on stock exchange [section 53M]  Securities & Exchange Commission/Stock Exchange  5%  42.  Dividends[section 54]  The principal officer of a company.  Resident/ non-resident Bangladeshi company ----- 20%Resident/ non-resident Bangladeshi person other than company -----10% Non-resident (other than Bangladeshi non-resident) person other than a company---25%.  If the DCT certifies, deduction in this regard may not be made or made at a rate less than the maximum rate.  43.  Income from lottery [section 55]  Any person responsible for making such payment  20%  44.  Income of non residents [section 56]  Any person responsible for making such payment.  Non resident company at the rate applicable to a company. Non-resident non-Bangladeshi person other than a company --- 25% Non-resident Bangladeshi person at the rate applicable to a resident.

Major areas for final settlement of tax liability : Tax deducted at source for the following cases is treated as final discharge of tax liabilities. No additional tax is charged or refund is allowed in the following cases:-  Supply or contract work  Band rolls of hand made cigarettes  Import of goods  Transfer of properties  Export of manpower  Real Estate Business  Export value of certain items including knit and woven garments.  Local shipping business  Royalty, technical know-how fee  Insurance agent commission  Auction purchase  Payment on account of survey by surveyor of a general insurance company  Clearing & forwarding agency commission  Transaction by a member of a Stock Exchange  Courier business  Compensation against acquisition of property  Premium value over face value of a share  Income from transfer of securities of a sponsor shareholder.  Winning lotteries.  Tax Recovery System : In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:-  Imposition of penalty,  Attachment of bank accounts, salary or any other payment,  Filing of Certificate case to the Special Magistrate.  Advance Payment of Tax :  Every taxpayer is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds Taka four lakh. Penalty and interest are imposed for default in payment of any installment of advance tax.  Fiscal incentives :  Following are fiscal incentives available to a taxpayer:-  a) Tax holiday : Tax holiday is allowed for industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions. Industrial Undertaking Eligible for Tax holiday : (i) An industry engaged in production of textile, textile machinery, jute goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers, compressors, basic raw materials of drugs, chemicals and pharmaceuticals, energy savings bulb, solar energy panel, barrier contraceptive or rubber latex. (ii) An industry engaged in agro-processing, ship building, diamond cutting. Physical Infrastructure Eligible for Tax holiday: Sea or river port, container terminals, internal container depot, container freight station, LNG terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, mono rail, underground rail, telecommunication other than mobile phone, large water treatment plant & supply through pipe line, waste treatment plant, solar energy plant, export processing zone. Tourism Industry Eligible for Tax holiday : Residential hotel having facility of three star or more. b) Accelerated depreciation: Accelerated depreciation on cost of machinery is admissible for new industrial undertaking in the first year of commercial production 50%, in the second year 30% and in the third year 20%. c) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods and having an annual turnover of not more than taka twenty four lakh is exempt from tax. d) Industry set up in EPZ is exempt from tax for a period of 10 years from the date of commencement of commercial production. e) Income from fishery (excluding income of a company), poultry, cattle breeding, dairy farming, horticulture, floriculture, mushroom cultivation and sericulture are exempt from tax up to 30th June, 2011, subject to investing at least 10% of the exempted income that exceeds one lakh Taka, in government securities or bonds. f) Income derived from export of handicrafts is exempted from tax up to 30th June, 2011. g) An amount equal to 50% of the income derived from export business is exempted from tax. h) Listed companies are entitled to 10% tax rebate if they declare dividend of 20% or more. i) Income from Information Technology Enabled Services (ITES) business is exempted up to 30th June, 2011. (j) Income of a private power generation company subject to to certain conditions included in fulfill conditions lies with private sector power generation policy of Bangladesh is exempted from tax for 15 years form the day of commencement of commercial production. Avoidance of Double Taxation Agreement :  There are agreements on avoidance of double taxation between Bangladesh and 28 countries which are:- (1) United Kingdom of Great Britain and Northern Ireland, (2) Singapore (3) Sweden (4) Republic of Korea (5) Canada (6) Pakistan (7) Romania (8) Sri Lanka (9) France (10) Malaysia (11) Japan (12) India (13) Germany (14) The Netherlands (15) Italy (16) Denmark (17) China (18) Belgium (19) Thailand (20) Poland (21) Philippines (22) Vietnam (23) Turkey (24) Norway (25) USA (26) Indonesia (27) Switzerland (28)