Bangladesh Tax Handbook 2008-2009 Foreword Editor: Humayan Kabir, ACA Obaidul Islam Khan, ACA The National Budget of Bangladesh for the year 20082009 was presented by the Finance Advisor Dr. A. B. Mirza Md. Azizul Islam on 28th June 2008 in the form of a Finance Bill and the Bill was nally approved by the Hon able President of the Government of Bangladesh to effect from 1st July 2008. We have attempted to summarize the salient features of the new Finance Ordinance 2008 and basic taxation laws/rules for the bene t of our clients, business houses and potential investors. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. The information contained in this handbook is based on taxation laws/rules, but not intended to be a comprehensive guide. Every effort has been given to ensure correctness of the information. However, readers should always seek speci c advice before acting on the information provided in the tax handbook. For further information and assistance you may contact our of ce: Editorial Board: Baizid Md. Faiaz, MBA Advisory Board: Nurul Haque, FCA Badrul Ahsan, FCA Fazle R M Hasan, FCA Faruk U. Ahammed, FCA Green Sayera B-1, House : 125, Road: 2, Block: A, Niketon Society, Gulshan-1, Dhaka, Bangladesh Phone : 986 2802, Fax : + 880-2- 986 2819, E-mail :
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Index Particulars Page nos. 5-10 11 15 16 16 17 18 18 18 18 19 19 19 20 20 21 22 23 24 24 25-27 28-31 31 32 33 33 34 35 36 36 36 37 37 37-41 41 42 43 44 44 44 45-48 48 48 49-50 51 51 52 52 52 Changes in Taxation Laws 2008-2009 Income Tax Value Added Tax Summary in Taxation Laws 2008-2009 Income Tax Definitions Heads of Income Income Deemed to Accrue or Arise in Bangladesh Deemed Income Scope of Total Income Charge of Additional Tax Charge of Excess Profit Tax Income Exemption Limit Personal Tax Rate Structure Tax Rebate for assesses paying tax at the highest rate of 25% Minimum Tax (Individual) Incidence of Tax on Non-Resident Income fully Exempted from Tax subject to prescribed conditions and limitations Investment Allowance for Tax Rebate Income from Salary Income from House Property Income from Interest on Securities Income from Business or Profession Rates of Corporate Tax are as follows Allowable Deductions on income from Business or Profession Normal Depreciation Allowance Initial depreciation Accelerated Depreciation Deductions are NOT admissible in certain circumstances Capital Gains Exemption of Capital Gains from tax Capital Gain Tax Income from Other Sources Set-Off of Losses Carry forward of loss Carry forward of Depreciation Allowance Withholding Tax / Tax Deducted at Source (TDS) Tax Holiday for newly established industrial undertaking, Tourist Industry and Physical Infrastructure facility Tax Holiday for Hospitals New List of eligible sectors for Tax Holiday Advance Payment of Tax Payment on the Basis of Return Filing of Return of Income and Statement: Assessments Avoidance of Double Taxation Relief in respect of Foreign Income Value Added Tax Deduction of VAT at source Gift Tax Gift Tax Exemption from Gift Tax Provisions of the Gift Act shall NOT apply to following gifts made by Return of Gift Tax Rates of Gift Tax Major Changes in Bangladesh Taxation Laws 2008-2009 Income Tax Value Added Tax 000. persons aged 70 years & more and disabled assessees having only agricultural income has been enhanced from Taka 190. individual assessees have to pay Taka 2. the level of income to charge highest tax @ 25% has been raised from Taka 1.Income Tax 1. Tax Exemption Limit: Changes in Taxation Laws 2008-2009 The ceiling of minimum tax exempted income for the individual assessee has been enhanced from Taka 150.000 or negative after adjusting Investment Tax Credit.000 as minimum tax.000 of total income Not Applicable Tax Rates Nil Tax Rates Nil Nil Nil 10% 15% 20% 25% 25% Tk.000 of total income iv. On the next Taka 375.000 with effect from Financial Year 2007-2008 (Assessment Year 2008-2009).000 (as the case may be).000 to Taka 230. persons aged 70 & above and Disabled assessees ii. On the next Taka 325.000 to Taka 180. 2.000 of total income for Male On the rst Taka 180. On the next Taka 275. Personal Tax Rate Structure: The 5 tier Income slabs and Tax rates for individual assessee (Including Non-resident Bangladeshi) have been changed and that will be effective from Income Year 2007-2008 (Assessment Year 2008-2009) as per following table: Income Year 2007-2008 (Assessment Year 2008-2009) Income Slabs i.000 of total income iv. Minimum tax exempted income for female.000 of total income 10% 15% 20% 25% 25% iii.000 of total income v. 2.000. persons aged 70 years & more and disabled assessee has been enhanced from Taka 150.000. On the next Taka 275.000.000 of total income v.000 Minimum Tax (Individual): Minimum tax for individual assessees has been remained same as Taka 2. 5 Bangladesh Tax Handbook 2008-2009 .140.000 to Taka 1. On the rst Taka 150. On the next Taka 325. On the rst Taka 165.000 while for other assesees this limit is Taka 215.000 or Taka 215. whose income exceeding exemption limit of Taka 165.125. 2.000 ii. while this limit for the individual female. On the balance of total income Non-Resident (Foreign) assessee Income Year 2006-2007 (Assessment Year 2007-2008) Income Slabs i. If minimum tax becomes less than Taka 2. Accordingly.000 of total income for Female. On the next Taka 375.000 or Taka 230. Minimum Tax: Individuals Tk. On the balance of total income Non-Resident (Foreign) assessee Minimum Tax: Individuals 3.000 of total income iii.000 to Taka 165.000 or Taka 180. and hill districts of Rangamati. Rate of Exemption 100% of Income 50% of Income 25% of Income If the said undertaking is set-up in Rajshahi. and Khagrachari. Period of Exemption For the rst three years (1st. whichever is lower among the respective three above alternatives.000 to Taka 500.000. Investment Allowance for Tax Credit: [Section: 44] Maximum ceiling for Investment Allowance has been enhanced from Taka 250. Tax Holidays applicable for a period of 7 years beginning with the month of commencement of commercial production or operation.000 per annum from Taka 18. Khulna and Barisal divisions. 20. Bandarban.000 6 Bangladesh Tax Handbook 2008-2009 . Tax Rebate @ 10% (previously was 15%) on Investment. and Khagrachari. Period of Exemption For the rst two years (1st and 2nd year) For the next two years (3rd and 4th year) For the last one year (5th year ) b.000. subject to certain cases. excluding the hill districts of Rangamati. excluding employer s contribution to recognized PF & interest thereon. shall be allowed. 5. subject to maximum of 25% (previously was 20%) of the total income. Tax Holiday: [Section: 46B] Exemption of Tax from the income and gains of newly established industrial undertakings. Changes in ceiling of House Rent Income for TDS (Section 53A & Rule 17B) Monthly ceiling of House Rent income for TDS has been enhanced to Tk.Income Tax 4. whichever is lower. 5th & 6th year) For the last one year (7th year) Rate of Exemption 100% of Income 50% of Income 25% of Income 7. 6. and actual investment made by assessee. Tax Holidays applicable for a period of 5 years beginning with the month of commencement of commercial production or operation.000 from Tk. 2nd & 3rd year) For the next three years (4th. Changes in Taxation Laws 2008-2009 Conveyance Allowance: [Rule # 33C] Exemption limit for conveyance allowance receivable by an employee in cash has been extended to Taka 24. shall be exempted from tax at the rate speci ed as: a. 15. If the said undertaking is set-up in Dhaka and Chittagong divisions. tourism industry or physical infrastructure facility set-up between 1st July 2008 and 30th June 2011 (both days inclusive). Bandarban. 000 at least 10% of the income shall be invested in Bond or Government Securities [Para # 34] Income from the export of handicrafts from 1st July 2008 to 30th June 2011 [Para # 35] Any amount paid by the Government as Tax on behalf of Petroleum Exploration Company under Production Sharing Contract (PSC) in the hands of oil and gas companies [Para # 36] Income from educational activities of private Agricultural College and University [Para # 37] Income from any building not less than five storied having at least ten flats and constructed between 1st July 2008 to 30th June 2013 in the speci ed areas [Para # 38] Income from any Small and Medium Enterprise (SME) having annual turnover not more than Taka 2. dairy. Provided that DCT shall not extend the date of submission of return in respect of Universal Self Assessment under Section 82BB.000 is only taxable [Para # 22A] Agricultural Income upto Tk.000 fully exempted. floriculture and sericulture from 1st July 2008 to 30th June 2011. frog & mushroom). if such income exceeds Taka 150. 25.000 (previously it was Tk. Part A] Certain exemptions have been granted through Sixth Schedule of ITO 1984: 3 3 3 Income from dividend of a Mutual Fund or a Unit Fund upto Taka 25.000) [Para 29] Income from the business of Software Development and Information Technology Enabled Services (ITES). production & marketing of seeds. Bangladesh Tax Handbook 2008-2009 7 . Exemption of Tax from Total Income: [Sixth Schedule.400. Income Tax Return for Govt. horticulture. farming (cattle. including IT support & Software maintenance support services. BPO services. at a time. Changes in Taxation Laws 2008-2009 Enhancement of Computer Depreciation Rate and time for Accelerated Depreciation (Third Schedule) Computer and computer equipments Depreciation Rate has been enhanced to 30% from 20% Time limit for Accelerated Depreciation (Plant & Machinery) has been extended upto 30th June 2010. etc from 1st July 2008 to 30th June 2011 [Para # 33] Income from fisheries. 50.Income Tax 8. 9. Such Income in excess of Tk.000 [Para # 39] Income from Zero Coupon Bond received by a person [Para # 40] 3 3 3 3 3 3 3 10. Employees living abroad [Section 75]: An individual being Govt. within 3 (three) months from the date of his return to Bangladesh. call centre. data processing. official engaged in higher education on deputation or employed under lien outside Bangladesh shall file Return or Returns for the period of such deputation or lien. 40. data entry. poultry. 000 for each each trade trade license license renewed issued/renewed by by City Corpn. 35. 15. 15. 40. 20. 30. 150.000 = Nil Rent from Tk. 15.000 52N 53A & Rule 17B Nil Rent upto Tk. City Corpn. 20. 40.5% Nil Rent from Tk. 150.000 3 Rent exceeds Tk.000 = 5% 7. 53 & Rule 17A Bangladesh Tax Handbook 2008-2009 8 . 4% Nil 2 3 Rental Power Company Monthly House Rent to Landlord: Rent upto Tk.000 53J & Rule 17BB Nil 3% 5% 53K 3% Nil Nil Nil Nil 7 Advertising bill of newspaper or magazine or private television channel. Changes in Withholding Tax/ TDS rates: [Section 52 and 53] Sl # Head of Deduction/ collection of Tax at Source 1 Trade License Section New TDS Rates Earlier TDS Rates FY 2008-2009 FY 2007-2008 52K Taka 500 for Taka 1.000 4 5 Insurance Commission Office Interest on deposit of Post Savings Bank Account 53G 53I 5% 3% 10% (deductible only when total interest exceeds Tk. 30.) 6 Monthly Rental value of vacant land or plant or machinery : (not applicable for lease rentals payable to leasing companies) 3 Rent upto Tk.000 only. 15. 35. TDS from Importers 8 Sec.Income Tax Changes in Taxation Laws 2008-2009 11.000 = 3% Rent exceeds Tk.001 to Tk.000 and TDS applicable on the excess of interest Tk.001 to Tk.000 3 Rent Tk.001 to Tk.000 3% Rent exceeds Tk. 13.xed @ 10% of tax X number of years tax avoided. 7108. 25 & 25A] As per SRO # 88-Ain/Income Tax/2008.00) Ferrous waste and scrap of stainless steel (H. which would have been avoided with effect from 1st July 2008. Introduction of new Annual Income Tax Return Form: [Rule 24. shall be applied at same rate like resident assessees.00) Silver Bullion (H. Code 7106.00.25% from export of any goods.00) Gold Bullion (H. dated 7th April. 2008. TDS on Dividend Income of NRBs will be @ 10% only (Section 54). approved DPS under section 53F is withdrawn.00. new Income Tax Return Forms IT-11 GA (for Individual) and IT-11 GHA (for Company) have been introduced to amend earlier forms with Wealth Statement (IT 10B) and Life Style Statement (IT 10BB) and subject to unavailability of new forms assessee may use earlier Income Tax Return Forms.13. 7106.12. other than Dividend income. TDS on income of NRBs (Non-Resident Bangladeshi). 15.S.xed at Tk. except knit wear land woven garments. Code 7108.50.S.21.91. Presumptive Tax on AC Bus has been re. 14. This will now be considered as Advance Tax. Penalty for Concealment of Income: [Section 128] Penalty for concealment of income has been re. 12. the Income of CA Firms will taxable in the hands of the Firms effective from the Income Year 2008-2009 by omitting SRO # 150-Ain/1995 dated 28th August 1995 (Amended SRO # 183-Ain/1998 dated 19th August 1998 and SRO # 181-Ain/1999 dated 1st July 1999). under section 53BBBB will no more be considered as Final Settlement of Tax (Section 82C) effective from 1st July 2008.10) Changes in Taxation Laws 2008-2009 Section New TDS Rates Earlier TDS Rates FY 2008-2009 FY 2007-2008 3% 3% 3% 3% Nil Nil Nil TDS @ 0. Code 7204.S.Income Tax Sl # Head of Deduction/ collection of Tax at Source Electronic Cash Register (H. Presumptive Tax on AC Bus: As per SRO # 204-Ain/Income Tax/2008 dated 30th June 2008. Code 8470. payable at the time of registration and renewal Bangladesh Tax Handbook 2008-2009 9 . effective from 1st July 2008. TDS from Interest of Scheduled Bank & Govt.S.92. 5.000 effective from 1st July 2008. Withdrawal of Exemption of Tax from Income of CA Firms: As per SRO # 205-Ain/Income Tax/2008 dated 30th June 2008. 18. persons already enjoying such bene t will continue to get the same until end of 3 years. Car. in income Tax Return. they may get redemption by paying tax liability & penalty @ 7% on tax of Income Year 2008-2009 and get advantage to show that income as investment in prescribed form between 1st July 2008 and 31st October 2008. However. 19. Cancellation of Provision for submission of Return u/s 82B. Withdrawal of Minimum Tax for Companies [Section 16CC]: Provision for charging minimum tax for companies u/s 16CC has been withdrawn. Withdrawal of provision on Foreign Technicians Tax-Free Income (6th Schedule): Provision for exemption of tax on income of foreign Technician for 3 years has been withdrawn effective from 1st July 2008. 10 Bangladesh Tax Handbook 2008-2009 .Income Tax Changes in Taxation Laws 2008-2009 16. Stock etc. 17. company or other assessee has failed to show his/her/its legal income and investment in Land. 2011. 83A and 83AA and Rule 38: Provision for ling Return under Self Assessment Scheme u/s 83A & Rule 38. Whitening Black Money: As per SRO # 208-Ain/Income Tax/2008 dated 30th June 2008. Assessment on the basis of Return u/s 82B and Self Assessment Scheme for Private Limited Companies u/s 83AA have been withdrawn effective from 1st July 2008. any individual. Building. Extension of Time to charge Tax at Reduced Rate Tax on Income of Jute Industry and Textile Industry: As per SRO # 206-Ain/Income Tax/2008 dated 30th June 2008 the Jute Industry and SRO # 207-Ain/Income Tax/2008 dated 30th June 2008 Jute and Textile Industries will continue pay tax at reduced rate of @ 15% on their income until 30th June. 20. Bank balance. 000 (Previous Taka 2. 3.400. e.Value Added Tax Value Added Tax 1.000. f. Engineering Firms. Others: a. private Medical & Engineering college.400. Scented Tobacco and Burnt Tobacco Relieve from the Scope of VAT: Income of the following sectors will not be included in the scope of VAT: a. Poultry. Offences & Penalties [Section 37]: Penalties will be imposed for not maintaining any documents.400. Dairy.000. Investment of Cottage Industry does not exceed Taka 1. b. d. and Fishing. 2. 5. Turnover Tax @ 4% if annual turnover of taxable goods or services is less than Taka 2. Indenting Commission. b. 4. Silver Bullion.500.000). Services rendered by Academic & Training Institute except English Medium School. Repairing & Servicing of taxable goods. b. Rods & Iron. Electronic Cash Register (ECR) or Computer.000 and corresponding annual turnover does not exceed Taka 2. c. VAT authority shall return the sample to its owner within 30 days.000.000). h. c. Enhancement of Area Regarding Turnover Tax & Cottage Industry: a. e. VAT Return Form Mushok 19 format has been revised. Examination of Return by Inspector or Superintendent or concerned authority within not more than 30 days (previous 60 days) has been re. c. d. Expansion of VAT net: Changes in Taxation Laws 2008-2009 Income from the following businesses will be included in the scope of VAT: a.000 (Previous 10.xed. Registration for Taxable goods or Services must have at least annual turnover Taka 2. Jarda. Exemption of VAT on supply of sample for export does not exceed Taka 20. Bangladesh Tax Handbook 2008-2009 11 . g. Fabrics. b. Fax : + 880-2. House : 125. Road: 2. grade and step with payment amounts Transfer and promotion history of employees Manpower statement Certi cate of service Company s organogram and job description of employees Multi-company operations and dataset keeping Online operations between branches and HQs having LAN/WAN connectivity Of ine operations among companies. Block: A. Niketon Society.986 2819. E-mail :
[email protected] Modules for Human Resource Management Employees data OT & LW P Hol iday s Leave encashment Emplo ye data es & ata es d ge loye acka Emp enefit p b Paym e nts E ees loy mp dat a g Traininance perform Emplo yees d ata a& dat ees kage ploy ac Em enefit p b Employees data & benefit package Employees database (default sub-module) Keeping all the employee records and the organogram in a central database Facility of keeping employees photograph. Dhaka. For your queries and software presentation you may contact: Green Sayera B-1. Gulshan-1. and between HQs and branch of ces in a company through a data synchronization utility support Company wise and branch wise backup/restore support Users activity audit trail The central place of all HR Management Pack modules (PayPack and TaxTool) for data sharing. absent and on leave Integration with electronic attendance card systems Automatic overtime (OT) calculation based on the company policy con gurable by the user OT calculation methods and parameters and attendance options are user.con gurable Leave Register (optional sub-module) Con guration on leave types and total days in the year Storing leave application form Online veri cation of leave application forms Direct leave record entry form where online veri cation process will not be used Affecting the attendance register automatically by leave records Adjusting the leave at the year end (earn or lapse) Auto-posting of leave encashment into PayPack as an income item Leave management options are user-con gurable Training & Development (optional sub-module) Creating annual training plan Creating training courses and keeping training program records . nominees photograph and signature in the system Auto-generation of appointment letters Employee grade matrix can be con gured with grade category.local & overseas training Maintaining participants list in each training programs & keeping records of performance Evaluate staff performance and recommend for training Training cost budget and actual expense comparison Auto-posting of staff performance achieved from training into Performance Appraisal process Performance Appraisal (optional sub-module) Mechanisms for evaluating the performance of employees Mechanisms for appraising the performance of employees Exit interview with the staff . This is the base module for all these packages. Attendance Register (optional sub-module) Provision for keeping attendance records Online veri cation Auto-posting of leave without pay into PayPack as a deduction in the salary or into Leave Register as a deduction in the leave available Holiday calendars Printing attendance statements with various parameters Annual statements on hartal days Employee-wise monthly statements on total number of days attended.com & nts me ons Pay ducti de Tax challan late. Bangladesh Phone : 986 2802. Summary in Taxation Laws 2008-2009 Income Tax Value Added Tax Gift Tax . . Basis of Residence [Section: 2(55)]: i. Hindu Undivided Family. ii. Bangladesh Tax Handbook 2008-2009 15 . interest. or accruing or arising or received or deemed to be accrue or arise or to be received under any provision of IT Ordinance 1984 Tax [Section: 2(62)]: Tax means the income tax payable under the Income Tax Ordinance 1984 and include any additional tax. Company: The company will be resident if the management of its affairs is situated wholly in Bangladesh in the income year. Examples of Accounting Year. g. iii. 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. Person [Section: 2(46)]: Person includes an individual. f. a firm. Income [Section: 2(34)]: Income means any sum of income or gain from whatsoever source derived. a company and every other artificial juridical person. Summary in Taxation Laws 2008-2009 Assessee [Section: 2(7)]: Assessee means a person by whom any tax or other sum of money is payable under Income Tax Ordinance 1984. 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. fee or other charge leviable or payable under the IT Ordinance 1984. d. This is the immediate following financial year of Income Year. a Hindu undivided family. Individual: An individual will be Resident: if he 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 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. e. Firm. b. an association of persons.Income Tax 1. a local authority. the twelve months ending on the date on which accounts are closed Assessment Year [Section: 2(9)]: Assessment Year means the period of twelve months beginning from first day of July of every year. penalty. excess profit tax. Income Year and Assessment year: Accounting Period / Year 1 2 3 4 5 Accounting Year: July 2007 to June 2008 Accounting Year: January 2007 to December 2007 Accounting Year: April 2006 to March 2007 Accounting Year: October 2006 to September 2007 Accounting Year: August 2006 to July 2007 Income Year Assessment Year 2007-08 2007-08 2006-07 2007-08 2007-08 2008-09 2008-09 2007-08 2008-09 2008-09 c. Definitions: a. d. it is earned in Bangladesh. any annuity. any fee.Income Tax h. 2. Salaries [Section 2(58) and 18]: Salary includes: i. g. transfer of capital assets in Bangladesh. Pension Fund and Superannuation Fund. right. Any dividend paid outside Bangladesh by a Bangladeshi company [Section 18(3)] Any income by way of interest payable [Section 18(4)]: 16 Bangladesh Tax Handbook 2008-2009 .000. Summary in Taxation Laws 2008-2009 Non-resident [Section: 2(42)]: Non-resident means a person who is not a resident. namely: a. Capital Gains [Section 31 & 32]. Salaries [Section 21]. 29 & 30]. whether directly or indirectly. or it is paid by Bangladesh Government or local authority in the service of such government or authority. Interest on Securities [Section 22 & 23]. iv. j. i. b. Agricultural Income [Section 26 & 27]. Perquisites [Section 2(45). e. f. Income from House Property [Section 24 & 25]. or in addition to. Heads of Income [Section 20]: a. through or from [Section 18(2)]: • • • c. any wages. any business connection in Bangladesh. 3 Income Deemed to Accrue or Arise in Bangladesh: [Section 18] The following income shall be deemed to accrue or arise in Bangladesh. commission. wherever paid. d. Income from Other Sources [Section 33 & 34]. any advance of salary. pension or gratuity. Anything paid in excess of allowable perquisite limit is taxed in the hands of employer. asset. Any income which falls under the head Salaries. v. iii. any property. allowance. other source of income in Bangladesh. if [Section 18(1)]: • • b. 30(e)]: Perquisite limit Taka 200. Perquisite means any payment made to an employee in the form cash or in any other form excluding: • basic salary • festival bonus • arrear salary • advance salary • overtime • leave encashment • leave fare assistance • incentive bonus maximum upto 10% of disclosed profit of relevant income year • contribution to a recognized Provident Fund. perquisites or profit in lieu of. salary or wages. Income from Business or Profession [Section 28. c. Any income accruing or arising. ii. any leave encashment. Income from Business or Profession [Section 19(16)] Income from sale of depreciated assets having been used for agricultural purpose Income from Agriculture [Section 19(17)] 17 Bangladesh Tax Handbook 2008-2009 . by the government. .Income from Other Source [Section 19(4)] Ownership of any money.Income from Other Source [Section 19(5)] Income received from discontinued business .Income from Business or Profession [Section 19(14)] Receipt back of loss.Income from Other Source [Section 19(3)] Unrecorded investment . or Summary in Taxation Laws 2008-2009 • by a person who is resident / non-resident in Bangladesh.Income from Other Source [Section 19(12)] Lotteries.Income from Other Source [Section 19(1)] Unrecorded investment or possession of bullion. • • 4. jewellery etc. .Income from Other Source [Section 19(11)] Managing Agency Commission . or by a person who is resident / non-resident in Bangladesh. investments. will be treated as deemed income.Income from Other Source [Section 19(7)] Difference between the purchase price and fair market value . Any income by way of royalty payable [Section 18(6)]: Deemed Income: [Section 19] Unexplained cash credits. bullion etc. compensation or damages. which are mentioned below in brief with relevant heads of income and respective sub-section: i ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi xvii Unexplained Cash credit . etc. bad debt or expenditure and unpaid trading liability etc.Income from Other Source [Section 19(9)] Goodwill.Income from Other Source [Section 19(8)] Salami or Premium . Any income by way of fees for technical services payable [Section 18(5)]: • • f.Income from Other Source [Section 19(10)] Cancellation of indebtedness .Income Tax • by the government. or by a person who is resident / non-resident in Bangladesh.Income from Other Source [Section 19(13)] Income from Insurance Business . e. Income from Business or Profession [Section 19(15)] Income from sale of depreciated assets having been used for the purpose of any business or profession .Income from Business or Profession [Section 19(6)] Receipt of Dividend . by the government. . unpaid trading liabilities/ loan etc. possession of bullion. .Income from Other Source [Section 19(2)] Unexplained expenditure . crossword puzzles etc. declare or distribute dividend or bonus share equivalent to at least 15% of its paid up capital within 6 months following its income year. Such tax is payable in addition to tax payable under IT Ordinance 1984.Income Tax Summary in Taxation Laws 2008-2009 xviii Income from receipt of insurance.000 for male individual assesses. 7.000 with effect from Income Year 2007-2008 (Assessment year 2008-2009). it will be charged 5% additional tax on undistributed profit in addition to tax payable under IT Ordinance 1984. salvage or compensation moneys in respect of assets having been used in agriculture . 8. accrue or arises or deemed to accrue or arises in Bangladesh 18 Bangladesh Tax Handbook 2008-2009 . Scope of Total Income [Section 17] The total income of any income year of any person includes: 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. Income Exemption Limit: Tax exemption income limit of individual assesses enhanced from Taka 150.000 to Taka 165.Income from House Property [Section 19(22)] xxiii Income from transfer of export quota by Garments Industry . or accrue or arises outside Bangladesh 6. persons aged 70 & above and disabled assesses has been Þxed at Taka 180. Non-Resident All income from whatever sources including received or deemed to be received in Bangladesh. salvage or compensation moneys in respect of assets having been used for the purpose of any business or profession .Income from Agriculture [Section 19(19)] Income from sale of assets of capital nature . Char ge of Ad ditionalTax [Section 16B]: If a publicly traded company (other than banking or insurance company) does not issue.Income from Business or Profession [Section 19(23)] xxiv Investment by a private limited company or a public limited company in its equity received from share holder or director not being received by cross cheque . Char ge of Excess Pr Tax [Section 16C]: ofit If a banking company operating under Banking Companies Act 1991 shows a profit exceeding 50% of the aggregate sum of capital and reserve. the bank shall pay @ 15% tax of such excess amount.Income from Other Source [Section 19(21)] xxii Un-adjustable security money taken from tenant .Income from Business or Profession [Section 19(18)] xix xx Income from receipt of insurance.Income from Business or Profession [Section 19(20)] xxi Unpaid Loan . Here undistributed profit means accumulated profit including free reserve. while this limit for female.Income from Other Source [Section 19(24)] 5. 000 of total income iv. 2.000. On the next Taka 375. On the next Taka 325.000 or Taka 215.000 of total income for Female On the first Taka 180. On the next Taka 275.000 of total income for person aged 70 & above On the first Taka 180. individual assessees have to pay Taka 2.000 Not Applicable ii.000 or Taka 180. persons aged 70 years & more and disabled assessees having only agricultural income has been enhanced from Taka 190.000 of total income Not Applicable Not Applicable Tax Rates Nil Nil Nil Tax Rates Nil Nil Nil Nil 10% 15% 20% 25% 25% Tk.000 of total income iii.000 of total income for Disabled person ii.000 of total income v.000 as minimum tax.000 or Taka 230.000 (as the case may be). On the balance of total income Non-Resident (Foreign) assessee Nil 10% 15% 20% 25% 25% Tk.000 to Taka 230.000 of total income v. Minimum Tax (Individual): Minimum tax for individual assessees has been remained same as Taka 2. On the next Taka 375. If minimum tax becomes less than Taka 2. On the first Taka 150.000 Minimum Tax: Individuals Minimum Tax: Individuals 10. Tax Rebate for assesses paying tax at the highest rate of 25% Individual assesses paid tax @ 25% during the assessment year 2007-2008 with declaration of more than 10% higher income in 2008-2009 will get 10% tax rebate on tax attributable to that additional higher income declared in 2008-2009 assessment year. On the first Taka 165.000 of total income for Male On the first Taka 180. The Five-tier taxable income slabs and tax rates for individual assessees (Including Non-resident Bangladeshi) applicable for the assessment year 2007-2008 and 2008-2009 are as follows: Income Year 2007-2008 (Assessment Year 2008-2009) Income Slabs i.000. On the next Taka 325. 2.000 while for other assesees this limit is Taka 215. On the balance of total income Non-Resident (Foreign) assessee Income Year 2006-2007 (Assessment Year 2007-2008) Income Slabs i.Income Tax 9. Bangladesh Tax Handbook 2008-2009 19 . 11.000 of total income iii.000 of total income iv.000 or negative after adjusting Investment Tax Credit. Minimum tax exempted income for female. On the next Taka 275. whose income exceeding exemption limit of Taka 165. Summary in Taxation Laws 2008-2009 Personal Tax Rate Structure: Taxable income slab and tax rates have been changed for personal income tax. Income from property held under Trust but shall not apply to NGOs registered with NGO Affairs Bureau [Para # 1] Any income derived from micro credit operations by NGOs registered with NGOAB [Para # 1A] Income of a religious or charitable institution derived from voluntary contributions. iv. conditions and quali cations laid down therein: i. xv. vi. as applicable for a resident assessee.Income Tax Summary in Taxation Laws 2008-2009 12. x. ix. ii. A person who is a non-resident is liable to tax on the incomes. iii. d. Income fully Exempted from Tax subject to 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. xiv. 13. Securities of Taka 5000 [Para # 13] Share of Capital Gains of a Partner of a Firm [Para # 18] Income of a member of Hindu Undivided Family [Para # 19] Gratuity [Para # 20] Any payment received from Provident Fund and other Funds (PF. A non-resident assessee (other than Bangladeshi non-resident) is liable to tax on his total income @ 25%. xiii. Incidence of Tax on Non-Resident: a. (to meet expenses wholly and necessarily incurred in performance of the duties of an of ce or employment of pro t) incurred [Para # 5] Income of Trustees on behalf of any recognized fund [Para # 6] Income of the personnel of the foreign missions. xi. etc. vii. v. profits and gains which are received or deemed to have been received or are deemed to accrue or arise to him in Bangladesh. WPPF and approved superannuation fund) [Para # 21] 20 Bangladesh Tax Handbook 2008-2009 .000 [Para # 12] Interest on Debentures approved by SEC upto Taka 20. b. A Bangladeshi non-resident is subject to tax at normal rate. viii. [Para # 2] Income of Local Government [Para # 3] Income of Provident Fund and other Funds [Para # 4] Traveling Allowances. 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. c.000 including exemption of interest on Govt. not being a citizen of Bangladesh [Para # 7] Pension [Para # 8] Interest on government securities maximum upto Taka 5. xii. Income speci ed 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 limits. 000. Income from sheries. Capital Gains from Machinery or Plant used in business or profession [Para # 31A] xxv. xvii. Income from Savings Instruments upto Taka 150. Income from any Small and Medium Enterprise (SME) having annual turnover not more than Taka 2. 4. subject to maximum of 25% of the total income excluding employer s contribution to recognized PF & Interest thereon. c.000 [Para # 31B] xxvi. Bangladesh Tax Handbook 2008-2009 21 . Investments eligible for Tax Rebate: i) ii) iii) Life insurance premium paid by an individual [Para # 1] Life insurance premium paid by Hindu Undivided Family [Para # 2] Contribution to Provident Fund and Other Funds [Para # 3.000 [Para # 22A] Interest on tax-free Government Securities [Para # 24] Payment received on voluntary retirement [Para # 26] Income of indigenous Hillman [Para # 27] Income from export business [Para # 28] Income from agriculture upto Taka 50. oriculture and sericulture. as tax on behalf of Petroleum Exploration Company under Production Sharing Contract (PSC) [Para # 36] xxx Income from educational activities of private Agricultural College and University [Para # 37] xxxi. securities [Para # 34] xxviii. Interest on the balance in a Recognized Provident Fund [Para # 25] xxiii. dairy.400. xxi. Income of Mutual Fund [Para # 30] xxiv. 5 & 6] b. xx. production & marketing of seeds. Income from the business of Software Development and Information Technology Enabled Services (ITES) [Para # 33] xxvii. farming (cattle. horticulture. Income from any building not less than ve storied having at least ten ats [Para # 38] xxxii. xxii. Any amount paid by govt.000 [Para # 29] xviii. frog & mushroom). Tax Rebate: Tax Rebate @ 10% of the eligible investment shall be allowed as Rebate. Maximum ceiling of Investment Allowance: Maximum ceiling for Investment Allowance is Taka 500. Income from the export of handicrafts [Para # 35] xxix. xix.000 and at least 10% of income invested in bond & govt.000 [Para # 39] xxxiii. Summary in Taxation Laws 2008-2009 Income from dividend of a mutual fund or a unit fund upto taka 25. Income from Zero Coupon Bond [Para # 40] 14 Investment Allowance for Tax Rebate [Section 44 (2) & (3) and Part B of Sixth Schedule]: a. poultry. if such income exceeds taka 150.Income Tax xvi. if not charged to income tax for any earlier income year. though not due or before it became due to him. Salary once included in any year on due basis or advance payment basis is not includible in the income of any other year. means the pay and allowances payable monthly or otherwise but does not include: dearness allowance or dearness pay unless it includes in the computation of superannuation or retirement benefits. allowances which are exempt from the payment of tax. Income from Salary [Section 21]: Any income classi able 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. any arrears of salary paid or allowed to him in the income year by or on behalf of an employer. shall be included in income. perquisites. any salary paid or allowed to him in the income year by or on behalf of an employer. whichever is less.Income Tax iv) v) vi) vii) ix) x) xi) xii) Summary in Taxation Laws 2008-2009 Investment in Stocks and Shares [Para # 8] Investment in Debentures or Debenture-Stocks [Para # 9] Investment in Unit Certi cate etc [Para # 10] Contribution in any Deposit Pension Scheme (DPS) [Para # 11] Donation to organization for the welfare of the retarded people [Para # 11B] Donation to Zakat Fund [Para # 13] Contribution to Benevolent Fund and Group Insurance Scheme [Para # 17] Donation of Aga Khan Development Network [Para # 21] viii) Donation to a charitable Hospital [Para # 11A] xiii) Donation to philanthropic or educational institution [Para # 22] 15. allowances and benefits. iii. allowances.000 per month or 50% of basic salary or. employer s contribution to a recognized provident fund or a fund to which Provident Fund Act 1925 applies and the interest thereon. annuities and benefits as referred to sub rule 1 of rule-33. House rent allowance receivable in cash [Rule # 33A]: House rent allowance in excess of Taka 15. Perquisites. i. allowances and benefits includible as income of Salaried Persons: Extent of perquisites. A share-holder being director of more than one company shall be entitled to the benefit under rule-33 for one company only. Basic salary for the purpose of determination of value of perquisites. 22 Bangladesh Tax Handbook 2008-2009 . etc. ii. Income classi ed under the head Salaries: Salaries include the followingany salary due from an employer to the assessee in the income year whether paid or not. includible as income under the head salary has been prescribed in rule 33A to 33J. Medical expenses [Rule # 33I]: Receipts / receivable from employer in excess of actual expenditure shall be included in the income of the assessee. beverages or the like thereof provided at the office premises during the course of work. the amount which would have been expended by the employee if not provided by the employer.000 per annum the allowance so receivable in excess of Taka 24. 16. a shareholder. vii. v.2005. Additional conveyance allowance [Rule # 33E]: The whole amount shall be included in income. Conveyance provided exclusively for personal or private use [Rule # 33D]: An amount equal to 7. Rent free accommodation [Rule # 33B]: The rental value of the accommodation or 25% of basic salary.07. vi. b. if any. 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 will be treated as annual value. viii. for such additional passage. Entertainment allowance [Rule # 33H]: The whole amount shall be included in income except for free tea. made by employer exceeds the actual expenditure incurred by the employee. Other benefits [Rule # 33J]: Equivalent amount shall be included in income. if any. shall be included in income. coffee. Allowable exemptions on the income of Sponsor / Shareholder Directors [Rule # 33(2) xii.Income Tax Summary in Taxation Laws 2008-2009 iv. shall be entitled to the benefits under rule # 33 for one company only. being director of more than one company.Income from House Pr ty [Section 24 & 25]: oper a. If no cash payment is made. Deductions allowable in the determination of income from house property: The following deductions are allowable in determining the net income: Bangladesh Tax Handbook 2008-2009 23 . whichever is less. Conveyance allowance receivable in cash with no conveyance facility [Rule # 33C]: Allowable amount Taka 24. Where free concessional passage for travel abroad is availed more than once in two years: The whole of the amount paid in cash. x. xi. Free or concessional passa for tra abr ad or within Bangladesh [Rule # 33G]: ge vel o 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. (b)]: As per SRO 207-Ain/2005 dated 06.000 per annum shall be included in income. 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. Where the transport is provided free of cost or at a confessional rate: By an undertaking engaged in the transport of passengers or the carriage 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. ix. nothing shall be added in his income. the amount which would have been expended for this passage if not provided by the employer.5% of basic salary shall be included in income. repair or renovation of the house property. Income from Interest on Securities [Section 22 & 23]: Incomes classifiable under the head Interest on Securities are: A. ii. 17.Income Tax i) ii) iii) iv) v) Summary in Taxation Laws 2008-2009 Maintenance allowances: (25% of annual value in case it is used for residential purposes. construction. and 30% of annual value in case it is used for commercial purpose) Insurance premium Interest on mortgage or other capital charges Any tax not being a charge leviable on annual basis Ground rent vi) Land development tax vii) Interest payable on capital borrowed for the purpose of acquisition. [Sixth Schedule. reconstruction. C. Deduction will also not be allowed in respect of interest payable outside Bangladesh on which tax has not been paid or deducted. ii. Interest or annual charge payable outside Bangladesh shall not be allowed as deduction on which tax has not been paid or deducted at source. 24 Bangladesh Tax Handbook 2008-2009 . B.000. Interest on Debentures approved by SEC upto Taka 20. Income from Business or Profession [Section 28]: Income from business or profession includes the following: i.000. Securities of Taka 5.000 including exemption of interest on Govt. income of trade or professional association derived on account of specific services performed for its members. Interest receivable by the assessee on any security of the government or any security approved by the government. Interest receivable by him on debenture or other securities of money issued by or on behalf of a local authority or company. subject to owner s self occupied portion for which interest on borrowed capital not exceeding Taka 2. profits and gains of any business or profession. Para # 13] 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. Interest payable on money borrowed for the purpose of investment in the securities. iii.000. viii) Proportionate vacancy allowances ix) Interest payable during construction period to be allowed in 3 subsequent equal installments. Commission or charges deducted from interest by a bank realizing the interest on behalf of the assessee. 18. Deductions permissible in the determination of income from interest on securities are: i. 5% 30% 10% 5% on undistributed profit 40% New Rate AY 2008-09 Previous Rate AY 2007-08 45% Excess Profit Tax (banks only): Profit in excess 15% 50% of Capital+ Reserve [section: 16C] (on excess profit) iii. bad debt or expenditure and unpaid trading liability as referred to section 19 (15). Companies not publicly traded Mobile Operator Company: If the company is converted into publicly traded company through at least 10% share for Initial Public Offering (IPO). 19. Private University: Income accrued from private universities approved by University Grant Commission and other universities which are not public universities shall pay tax (other than Medical. income from transfer of export quota as referred to section 19 (23).Income Tax iii. Insurance & Financial Institutions): Normal Tax Rate (paying Dividend 10% or more) Rebate @ 10% on applicable tax in case where declared dividend is more than 20% Additional Tax. receipt back of loss. vi. Assessees Publicly traded Companies (other than Banks. Bangladesh Tax Handbook 2008-2009 25 . viii. v. vii. income from sale of asset of capital nature as referred to section 19 (20). income from sale of asset of depreciated asset as referred to section 19 (16). If not converted into a publicly traded company with 10% share for IPO. Banks. Summary in Taxation Laws 2008-2009 value of any benefit or perquisite arising from business or exercise of profession. salvage or compensation money as referred to section 19 (18).5% 10% 5% on undistributed profit 37. Rates of Corporate Tax are as follows: SL. Engineering and Agricultural University). Insurance Institutions: Corporate Tax and Financial 45% 15% (on excess profit) 40% 35% 27. iv. Dental.5% 35% 45% 15% 45% 15% v. if declared dividend or bonus share rate is less than 15% [section: 16B] Companies declaring dividend less then 10% or dividend not paid within the time xed by SEC ii. income from receipt of insurance. 37. NO. i. iv. vi. xi. Company shareholders of tax treaty countriy holding less than 10% of total shares of the company. Resident Assessee: Including nonresident Bangladeshi: Company Shareholders. 15% 15% 10 % 20% 10 % 15% 20% 20% 25% 15% 15% 25% 20% 10% 15% 10% 26 Bangladesh Tax Handbook 2008-2009 . vii. ix.Income Tax SL. NO. Payment of Dividend: Payment of Dividend by companies formed under Company Act. Individual. Assessees Summary in Taxation Laws 2008-2009 New Rate AY 2008-09 15% 10% 15% Previous Rate AY 2007-08 15% 10% 15% Company engaged in Diamond cutting and Polishing industry Readymade Export oriented Garments Industries Companies which manufacture of yarn related production of fabrics. 15% 15% 20% 15% 15% 20% xii. finishing and covering of yarn Textile Industries Jute Industries Industries set up between July 2002 and June 2005 and also not applying for tax holiday (This rate will continue for five years) Tax on Income Accrued from Research Institute under Trust Act. dying. viii. 1994 or by foreign companies (FED/702/2006/5743 and Finance Ordinance 2008) to: Non Resident Assessee: Other than non-resident Bangladeshi: Company shareholders of tax treaty country with more than 10% total shareholdings. x. Company shareholders of non tax treaty countries. Remittance of Pro t to/by a Foreign Company Person or Individual. xiii. xvi. Para # 2(b)] 15% (Concessional rate 10% has been withdrawn) At applicable At applicable Where the capital gain arises as result rate on total rate on total of a disposal after not more than 5 income including income including years from the date of acquisition. Nil Bangladesh Tax Handbook 2008-2009 27 . data processing. capital gain capital gain Where the capital gain arises as result of a disposal after 5 years from the date of acquisition. dated 13. Assessees Summary in Taxation Laws 2008-2009 New Rate AY 2008-09 [Second 15% Previous Rate AY 2007-08 Tax in respect of Capital Gain: In Case of Company: Schedule. etc.09. In Case of a person other than Company: [Second Schedule. call centre.04 Nil (6th SchedulePart A. Para # 2(a)] Capital gain will be taxed as a block of income separate from other income of the assessee company at flat rate. Nil Income from business of software and IT Enabled Services (ITES) including IT (6th ScheduleSupport & Software maintenance services. Para 33) data entry. Capital gain arising out of transfer of govt. securities and stock & shares of public companies listed with Stock Exchanges [Section 32(7)] Nil xvii. NO. Para 33) xv.09. if such income is brought into Bangladesh. BPO Services. At the rate applicable on total income including said income OR @ 15% on the capital gain whichever is lower Nil (SROAin/IT/2004. xiv. dated 13. Part A. Income accrued outside Bangladesh to any of her citizen.04 At the rate applicable on total income including said income OR @ 15% on the capital gain whichever is lower Nil (SROAin/IT/2004.Income Tax SL. the allowances are admissible under Third Schedule [Para # 1(viii)] Investment allowance for a passenger vessel or a fishing trawler. of buildings plant etc. x. under the stated circumstances and to the prescribed extent (Third Schedule. 28 Bangladesh Tax Handbook 2008-2009 . local rate. is allowable for the earlier year under the stated circumstances and with the consent of the assessee [Para # 1(xvii)] Provision for bad and doubtful debt and interest thereon made by a commercial bank including the Bangladesh Krishi Bank. iv. ii. 2005-06 and 2006-07. allowable during the assessment years 2001-2002. plants. ix. xiv. xi. which is established to have become irrecoverable. [Para # 1(xiii)] Bonus paid to employees including festival bonus [Para # 1(xiv)] The amount of bad debt. Allowable Deductions on income from Business or Profession [Section 29(1)]: The allowable deductions which have been specifically mentioned are the following: i. xii. which is entitled to special depreciation is allowable at 20% of the original cost subject to stipulated conditions (Third Schedule. xv. the amount which was established to be irrecoverable [Para # 1(xvi)] The amount for bad debt having been irrecoverable in an earlier year. demolished or destroyed. Rent for the business premises [Para # 1(i)] Repairs to hired business premises [Para # 1(ii)] 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)] Share of profit paid by a bank run on Islamic principles [Para # 1(iv)] An amount not exceeding 5% of the profit transferred to Special Reserve by financial institutions approved by the Government [Para # 1(v)] Repairs to own buildings. subject to the specified conditions. vii. viii. which has been discarded. plant or furniture being owned by the assessee and used for business or profession. etc. Para # 8) [Para # 1(ix)] Obsolescence allowance for building.Income Tax Changes in Taxation Laws 2008-2009 20 . furniture etc. 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. used in business or profession [Para # 1(vii)] Depreciation of building. machinery. Para # 10) [Para # 1(xi)] Obsolescence allowance and allowance on account of death or useless animals. whichever is less.2003-2004 and 2004-2005. under the stated circumstances [Para # 1(xv)] The amount of bad debt written off as irrecoverable but deduction not allowed on the ground that it was not then irrecoverable.20022003. [Para # 1(xii)] Land development tax or rent. v. machinery or plant. xiii. [Para # 1(vi) Insurance premium for insurance against risk of damage etc. vi. xvi. iii. xvii. machinery. accounting and related matters Implementation of Fixed Asset Management Systems Handholding of Company Secretarial functions and Formation of company branch and liaison office Design and development of Financial systems and Manuals Salary Surveys / Pay restructuring Headhunting / Executive Search / Recruitment and Work Permit for Expatriates Imparting Training on basic Accounting and Computer systems . and Benipack Our Value Added Services Employees Provident Fund & Gratuity Fund Accounting functions Due Diligence Review. Management & Financial Reviews IT Audit / Compliance Audit Business Advisory Services on corporate.Handholding of Accounting functions Handholding of Payroll functions Transaction / Payment Processing Employees and Corporate taxation matters Design and Implementation of Software like TaxTool. HR/Administration . tax. Paypack. Financial Modeling. Asset. 000. xix. 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)] Allowance in respect of expenditure on publicity and advertisement [Section 30. the amount so recovered shall be deemed to be profit of the year in which it is recovered [Para # 1(xviiiaa)] xviii. maintenance or running of any institute for the training of industrial workers will be similarly deductible [Para # 1(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)] Expenses incurred in connection with visits abroad in a Trade Delegation sponsored by Government [Para # 1(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)] Any expenditure. Ceiling of admissible expenditure has been prescribed in Rule 65 of Income Tax Rules. xxiv. : 2% 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. not being capital expenditure. Para # f(iii)] Any allowance in respect of expenditure on entertainment not in excess of the amount prescribed in this behalf. not oftener than once in every 2 years. is ultimately recovered. xxii. Expenditure incurred on the construction.Income Tax Summary in Taxation Laws 2008-2009 If any amount out of the provision for bad and doubtful debt and interest thereon.000 shall not be allowed as deduction unless such payment is made through bank. xx. which has been allowed. Any expenditure. 1984 [Section 30. 1984 [Section 30. xxvii. Para # f(ii)] The amount has been restricted upto 3 months basic salary or three-fourth of the actual expenditure whichever is less. subject to sum exceeding taka 10. xxviii. 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)] 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. Para # f(i)] On the first Taka 1. laid out or expected on scientific research related to the business [Para # 1(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)] Any sum paid to scientific research institute etc. xxi. xxvi. xxv. 30 Bangladesh Tax Handbook 2008-2009 . xxiii.000 of income from business or profession: 4% On the balance income xxix. subject to the stipulated conditions [Para # 1(xxi)] Any sum. 50% Turnover exceeding Taka 5 crore but not exceeding Taka 10 crore : 0. 12% The allowance is to be calculated on the original cost 12% 24% 24% Bangladesh Tax Handbook 2008-2009 31 . iron or steel flats for cargo. a) Building (general) b) Factory building Furniture and fittings Machinery and plant: a) General rate b) Special ratesShips1) Ocean-going ships (new) 2) Ocean-going ships (Second hand) age at the time of purchase • Less than 10 years • 10 years or more 3) Inland ships including steamers. (Section 30. Para # f(iv)} In respect of industry other than pharmaceutical industry: Turnover upto Taka 5 crore : 1.75% Turnover exceeding Taka 10 crore : 0. ii. Class of Assets NO.375% In respect of pharmaceutical industry: Turnover upto Taka 5 crore : 2.Income Tax xxx Summary in Taxation Laws 2008-2009 Allowable expenditure on distribution of Free-Sample {(Rule: 65C). Rate/percentage of Remarks the written down value except as otherwise indicated 10% 20% 10% 20% i.50% xxx Head Of ce Expenses for a Company not incorporated in Bangladesh. Para # 3): [section: 29(1) (viii) & (ix)] SL. motor launches and speed boats. allowable upto 10% the Pro t (Section 30g) Technical Assistance Fee / Royalty allowable upto 5% of the pro t (Section 30h) Incentive Bonus allowable upto 10% of the disclosed net pro t (Section 30j) 21.0% Turnover exceeding Taka 10 crore : 0.0% Turnover exceeding Taka 5 crore but not exceeding Taka 10 crore : 1. motor vessels. iii. Normal Depreciation Allowance (Third Schedule. wooden cargo boats. Initial depreciation: [Third Schedule. 22. 32 Bangladesh Tax Handbook 2008-2009 . Computer & Computer Equipments 20% 20% 24% 30% 30% 30% 30% 30% 30% In case of motor vehicles. well-head tanks and rigs. not plying for hire 4) Motor vehicles plying for hire 1) Professional and reference books 2) Aircraft. iv. 2) Machinery used in the production and exhibition of cinematographic films 3) Motor vehicles. being passenger vehicles or sedan cars.000. Mineral oil concerns 1) Below ground installations 2) Above ground installations. shall be allowed at the following rates: In the case of building . drilling tools. X-Ray and electrictherapeutic apparatus and accessories thereto. 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. In the case of machinery or plant other than ships or motor vehicles not plying for hire 25% of the cost.10% of the cost. whichever is later. Para # 5A] Where any building has been newly constructed or any machinery or plant has been in Bangladesh after 30th June 2002. not plying for hire cost for the purpose of depreciation is restricted to Taka 1.Income Tax SL.000. Class of Assets NO. portable boilers. an amount by way of initial depreciation allowance in respect of the year of construction or installation or the year in which such building. aero-engines and aerial photographic apparatus 3) Moulds used in the manufacture of glass or plastic goods or concrete pipe. that is to say. Summary in Taxation Laws 2008-2009 Rate/percentage of Remarks the written down value except as otherwise indicated 20% 1) Batteries. 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)]. 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. 1977 and the thirtieth day of June 2010 (both days inclusive) accelerated depreciation allowance shall be allowed and computed as follows: For the first year in which the undertaking starts commercial production For the next following second year For the next following third year 50% of the actual cost of plant and machinery to the assessee 30% of the actual cost of plant and machinery to the assessee 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. 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. Payment of interest. 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. 1991 [Para # 30(aa)] iii. 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.Income Tax Summary in Taxation Laws 2008-2009 23. 24. has been or is used in an industrial undertaking set up in Bangladesh between the first day of July. 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. salary. 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. 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. 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)] Bangladesh Tax Handbook 2008-2009 33 . Accelerated Depreciation: [Third Schedule. Board is to give decision on the application within 45 days [Section 46A (3) or 46B (6)]. Summary in Taxation Laws 2008-2009 Brokerage or commission paid to a non-resident if tax has not been deducted there from under section 56 [Para # 30(c)] 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. xii. technical know how fee or technical assistance fee exceeding 5% of the profit [Para # 30(h)] x. as defined under Section 2(45). Amount of perquisites or other benefits paid. 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 [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. 1984 which prescribes rates of income tax in certain special cases. 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. incurred for the improvement of asset are deductible from the sale value. 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. The amount of expenditure in excess of the prescribed rates and as is not. vii. to any employee in excess of Taka 200. In case of acquisition of asset: 34 Bangladesh Tax Handbook 2008-2009 . Para # 2 of the Income Tax Ordinance. 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. 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 Second Schedule. technical services fee.Income Tax iv. v.000 or more [Para # 30(i)] Any expenditure by way of incentive bonus exceeding 10% of the disclosed net profit [Para # 30(j)] xi. Any payment by way of royalty. in the case of sales and services liable to excise duty. if any. Any expenditure by way of overseas traveling exceeding 1% of the disclosed turnover [Para # 30(k)] 25. 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. bequest or will or under a transfer on a trust or distribution of capital asset on liquidation of company or dissolution of a rm or association of persons. 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. Where actual cost of the previous owner as reduced by depreciation allowance. 26. Capital gain arising out of transfer of Government Securities and Stocks & Shares of public companies listed with a stock exchange in Bangladesh is exempted from tax [Section 32(7)] iii. Where actual cost to the previous owner can not be ascertained.Income Tax Events i. 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. 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. ii. 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] Bangladesh Tax Handbook 2008-2009 35 . By purchase the actual cost of the asset. When capital gain is equal or less than the cost of new asset. ii. capital gain upto the extent of cost of acquisition of new asset shall be exempted and balance shall be charged to tax. Following are the cases of full or partial exemptions: i. fair market value of assets on the date on which it became the property of previous owner. 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. no tax shall be charged on the capital gain. the capital gain shall not be charged to tax as income of the year of transfer [Section 32(10)] iv. Summary in Taxation Laws 2008-2009 Value of cost capital assets Actual cost of the previous owner as reduced by depreciation allowance. Property acquired by gift. When capital gain is greater than the cost of new asset. shall be taken to be the cost of acquisition in the hand of present owner. 3. profits or gains under any other head in that year. Loss on Capital Gains can not be set-off against income from any other head. Royalties and Technical Services. 8. total income including total income including said income OR said income OR @ 15% on the capital gain whichever is lower @ 15% on the capital gain whichever is lower 28. 10. Such loss can be set-off only against the Capital Gains. profits or gains of that business. 4. Dividend. b. e. interest on securities. 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. Any loss from Business or Profession shall not be set off against income from House Property in the year such loss crop up. 9. 13. agricultural income and other sources. Set-Off of Losses: [Section 37] Whenever an assessee sustains a loss in any year under any of the following heads of income. 5. 12. Para # 2(a)] Capital gain will be taxed as a block of income separate from other income of the assessee company at flat rate In Case of a person other than Company: [Second Schedule. d. f. property. 11. business or profession. furniture. he is entitled to set-off the loss so sustained against his income. Deemed Income [Section 19 (1. plant. 7. c. building etc. Capital Gain Tax: [Second Schedule] New Rate AY 2008-09 Previous Rate AY 2007-08 Tax in respect of Capital Gain: In Case of Company: [Second Schedule. such as. 21 & 24)] Income of any kind which is not classifiable under any other heads specified in Section 20 29.Income Tax Assessee Summary in Taxation Laws 2008-2009 27. 36 Bangladesh Tax Handbook 2008-2009 . Income from letting of machinery. Interest. 2. Income from Other Sources: [Section 33] Following income of an assessee is assessable under the Income from Other Sources: a. Para # 2(b)] 15% 15% Applicable rate on Where the capital gain arises as result Applicable rate on total income including total income including of a disposal after not more than 5 capital gain capital gain years from the date of acquisition Where the capital gain arises as Tax payable at the Tax payable at the result of a disposal after 5 years rate applicable on rate applicable on from the date of acquisition. Loss cannot be carried forward for more than six successive assessment years. Carry forward of loss: [Section 38] Whenever an assessee sustains any loss under the head Business or Profession not being loss from speculation business and the loss cannot wholly be set-off against income under any other head i. On first Taka 180. unadjusted allowances or portion thereof as the case may be. On next Taka 375. agricultural income. On next Taka 275. On next Taka 325.5 or 37.000 (Assessee aged 70 & more). 52. shall be carried forward to the next year or so on for succeeding years and be part of allowance for that year.000. 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. 55 & 56] SL. 54. 31. 51. property. if any.000 (Female Assessee). On first Taka 180. / Rule # 1 50 Particulars Salaries and benefits: On first Taka 165. While setting-off loss on account of depreciation allowance.000 (Disabled Assessee).e. In case of Supply of goods or execution of contracts / subcontracts: Where the cumulative exceed Taka 100.5 or 45 whichever is applicable 10 2 50A 3 4 51 52 & Rule16 payment does not Nil 37 . Discount of the real value of Bangladesh Bank bills. On first Taka 180. Interest on securities excluding treasury bond or treasury bill issued by the government. Company. Withholding Tax / Tax Deducted at Source (TDS): [Section 50. Carry forward of Depreciation Allowance: [Section 42(6)] Depreciation allowance which cannot be given full effect of. Bangladesh Tax Handbook 2008-2009 Rate of deduction (%) Nil Nil Nil Nil 10 15 20 25 27. On the rest of the balance.000. Individual. salary. of the following year. 53.000 (Male Assessee). in any year. effect shall first be given to business loss (Section 38) including loss from speculation business (Section 39). interest on securities and income from other sources. because of there being no profits or of inadequate profits. Section No.000. 32.Income Tax Summary in Taxation Laws 2008-2009 30.000. 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. 000. Professional or Technical Services. (Rate shall be applicable for savings certificate purchased on 1st January.5 5 10 10 10 7.Income Tax SL.000.500. Interest on savings instruments. Where the cumulative payment exceeds Taka 1. Engineers & Consultants.500. Nil 0. 2004 or thereafter whose interest/profit accrued on 1st January. Commissioner shall collect for commission receivable by clearing and forwarding agents. private security service agency. No. Subject to Private Security Service TDS @ 1.5% of 15% profit) on bill amount.5 6 6 10 38 Bangladesh Tax Handbook 2008-2009 . Collection of tax from Cigarette Manufacturers.000. Shipping Agency Commission. 2007 or thereafter).500.5 4 Where the cumulative payment exceeds Taka 100. 5 52(1) & Rule 17 52A(1) 52A(2) 52A(3) 52AA Indenting Commission.125% (tax @ 7. Royalty or Technical Know How Fee.000 but does not exceed Taka 500.000.5 6 7 8 9 10 52AAA 11 52B 12 52C 13 52D 7. Accountants.5 3. Payments on certain services like stevedoring agency. Where the payment exceeds Taka 200. Section / Rule # Particulars Summary in Taxation Laws 2008-2009 Rate of deduction (%) 1 2.000.000 but does not exceed Taka 1. Compensation against Acquisition of Property.000. Fees for services rendered by Doctors.75 3. Where the cumulative payment exceeds Taka 2.000 but does not exceed Taka 2. Where the cumulative payment exceeds Taka 500.500. In the case of supplied by oil marketing company: Where the payment does not exceed Taka 200. Income Tax SL.000 5 Tk. 52N 20 53 & Rule 17A 21 53A & Rule 17B Monthly rent upto Taka 20. for one and half section brick field.015 0. Deduction from export cash subsidy.5 22 23 24 25 26 27 28 29 53AA 53B & Rule 17C 53BB 53BBB 53BBBB 53C & Rule 17D 53CC 53D & Rule 17E 53DD 53E Collection of tax from shipping business of a resident. No. Monthly rent from Taka 20.000. Deduction or collection of tax at source from courier business of a non resident. 12. Collection of tax from Member of stock exchanges. Commission of Letters of Credit. discount or fees on account of marketing or distribution of goods.25 5 7. Section / Rule # Particulars Summary in Taxation Laws 2008-2009 Rate of deduction (%) 14 52F Collection of the from brick manufacturers (at the time of permission for manufacture of bricks): for one section brick field.000.5 5 5 7.000.001 to Taka 40. Collection of tax on sale price of goods or property sold by public auction. Rental Power Company Collection of tax from Importers and Exporters. 500 per trade license 10 7. Payment of rent to Landlord: Tk. Collection of tax from export of knitwear and woven garments. for two section brick field. 30 31 Bangladesh Tax Handbook 2008-2009 39 . 10.25 0. 18.5 4% 3 15 52 I 16 52K 17 52L 18 52M 19. Payment to actors and actress.000 Tk. Collection of tax on account of Trustee Fee. Monthly rent exceeds Taka 40.000 in the aggregate in any income year. Nil 3 5 5 10 0. Collection of from freight forward agency commission.000 Tk. The Board shall specify from whom collection to be made. Subject to such payment exceeds taka 36. Commission. Collection of tax from export of any goods except knitwear and woven garments. Export of Manpower (Service charges). Collection of tax by City Corporation at the time of Renewal of Trade License. 150. Interest on deposit of Post Office Savings Bank Account. financial institutions.000 Payment of rental value of vacant land or plant or machinery: 38 53J & Rule 17BB Monthly rent upto Taka 15. Payment of fees / remuneration to surveyor of General Insurance Company. Deduction from Dividends: Company beneficiary for non-tax treaty countries. meter 5% of deed value 3 7.5 5 10 34 53G 35 53GG 36 53H 37 53 I Payment of insurance commission. 32 53F 10 33 53FF Tk 250 per sq. 20 10 20 Company beneficiary for tax treaty countries. leasing company or housing company. Company beneficiary for tax treaty countries having less than 10% shareholding 40 Bangladesh Tax Handbook 2008-2009 .000. deductible only when total interest exceeds Tk. etc. in case of land.Income Tax SL. Monthly rent from Taka 15. Interest on Savings and Fixed Deposits or any term deposit maintained with schedule bank including a corporation. Collection of tax on transfer. Nil 3 5 3 39 53K 40 54 Advertising bill of newspaper or magazine or private television channel. of property.000. No. bank or by way of profit on term deposits.000 and TDS applicable only on the interest in excess of Tk. Monthly rent exceeds Taka 30.001 to Taka 30. 31 Section / Rule # 53EE Particulars Summary in Taxation Laws 2008-2009 Rate of deduction (%) 4 Commission or remuneration paid to agent or representative of a foreign buyer as per terms of L/C or under any other instructions. 150.000. Collection of tax from persons engaged in real estate or land development business: in case of building or apartment. ii. iv. 2011 etc. 2008 to June. etc. Non resident Bangladeshi.5% 25 At applicable Rate for resident individual Resident Company with more than 10% shareholding. Bangladesh Tax Handbook 2008-2009 41 . Tourist industry as defined in the explanation to Section 46. Tourist Industry and Physical Infrastructure facility set-up between the period of July. Person other company & non resident Bangladeshi. jackets & suits). Condition for Tax Holiday: Period of tax holiday has been further extended for 3 years beyond 30th June. Para # 2] iii.Income Tax SL.000 on the date of commencement of commercial production. jute. Deduction from Income of non-residents: Company. high value garments (overcoats. 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. Individual: Resident 41 55 & Rule 17I 42 56 Income from lottery. The undertaking is set up in Bangladesh between 1st July. 2008 in respect of industrial undertaking. 37. ceramics.e. No. fertilizer. pharmaceuticals. Section / Rule # Particulars Summary in Taxation Laws 2008-2009 Rate of deduction (%) 20 10 Applicable rate or 20% whichever is lower Rate applicable to company i. Tax Holiday for newly established industrial undertaking. The undertaking is engaged in: [Section 46(B). 2008 and 30th June 2011. steel. Providing on commercial basis. 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. plastic. physical infrastructure facilities. melamine. in certain cases: [Section 46B] A. 33. sanitary. tourist industry and physical infrastructure facility subject to following conditions: i. computer and agriculture machinery etc. The Industrial Undertaking in the production of textile.000. 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. 2nd & 3rd year). but not beyond tax holiday period. B. excluding the hill districts of Rangamati. Bandarban. Period of Exemption: [Section 46(B). C. b. Loss shall be carried forward to be set off against income from same undertaking in the following years. and Khagrachari. For the next two years (3rd and 4th year). for a period of 7 years beginning with the month of commencement of commercial production or operation. e. shall be allowed. and hill districts of Rangamati. Any dividend distributed by a tax-holiday company to its shareholders out of its exempted profit shall not be exempt from tax. For the next three years (4th. Loss sustained in a tax holiday undertaking shall not be set off against profits of taxable units. and the undertaking must be approved by the Board. Khulna and Barisal divisions. and Khagrachari. Summary in Taxation Laws 2008-2009 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. If the said undertaking is set-up in Rajshahi. Period of Exemption For the first two years (1st and 2nd year). For the last one year (7thyear). 5th & 6th year). 42 Bangladesh Tax Handbook 2008-2009 . Income of the said undertaking resulting from disallowance made under section 30 shall not be exempted from tax. if any. Period of Exemption For the first three years (1st. 34. d. for a period of 5 years beginning with the month of commencement of commercial production or operation. A newly established private hospital will be eligible for exemption of income for another 5 years subject to the following conditions: The hospital is owned by a company registered under the Companies Act 1913 or 1994. Rate of Exemption 100% of Income 50% of Income 25% of Income Computation of Tax Holiday Income a. 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. Only normal depreciation allowance. The profit and gain shall be computed under the head income from business or profession (section 28) b. Para # 1] If the said undertaking is set-up in Dhaka and Chittagong divisions.Income Tax v. Bandarban. For the last one years (5th year). Tax Holiday for Hospitals: [SRO 204-Ain/IT/2005 dated 6th July 2005] a. c. Rate of Exemption 100% of Income 50% of Income 25% of Income vi. Capital gains earned by tax holiday undertaking shall not be exempt from tax. Income Tax c.Textile.Petro chemicals.Ceramics & sanitary ware. CNG terminal and transmission line. o. kidney and cancer patients.Residential hotel having facility of three star or more. g. Solar energy plant. e. The hospital is housed in a building constructed on the company s own land.Steel from iron ore. j. s. l. m. c. Physical Infrastructure Facility: a. Mono-rail & underground rail. Summary in Taxation Laws 2008-2009 The hospital is established between the period 1st July 1999 to 1st July 2008 in the private sector. c.Pharmaceuticals. The hospital has number of beds (i) 200 beds in case of general hospital (ii) 50 beds in case of specialized hospital for heart. l.Melamine. Textile machinery.Agricultural machine. i. f. e. jackets. d. r. g. 10% of the beds must be kept reserved for treatment of poor free of charge. Fertilizer. chemicals & Pharmaceuticals.Basic raw materials of drugs. Flyover. f. Boilers & compressors. Waste treatment plant. Gas pipe line. b. Sanitary ware. ii. b Jute goods. j. 35. suits). k. internal container depot (ICD) & container freight station (CFS). Sea or river port. Large water treatment plant & supply through pipe line. n. Insecticide & pesticide. Container terminals. Industrial Undrtaking a. h. Computer hardware. q. New List of eligible sectors for Tax Holiday: [Section 46B] i. Plastic products. High Value Readymade Garments (overcoat. LNG terminal and transmission line. Export processing zone. k. MS Rod & CI Sheet. h Telecommunication other than mobile phone i. p. d. d. e. f. Bangladesh Tax Handbook 2008-2009 43 . [Section 73] 37. is a member of club registered under VAT Act 1991. 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. Advance tax is payable in four equal installments on 15th September. 38. Where a person is not required to file a return under sub-section 1 of section 75. owns a more than one story building with an area of more than 1. 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. Because. 15th December. 77 & 78] Every person whose total income during an income year exceeds the exemption limit i. owns a motor car. subscribes a telephone. 76. pay the amount of tax payable by him on the basis of such return as reduced by the amount of any tax deducted from this income or paid by him. 15th March and 15th June. union parishad and operates a bank account. resides in a city corporation or pourashava. Filing of Return of Income and Statement: [Section 75. Advance Payment of Tax: [Section 64] The ceiling of the amount of income for payment advance tax is taka 300.Income Tax Summary in Taxation Laws 2008-2009 And any other category of industrial including as the government may be notification in to official Gazette specify. Bangladesh Tax Handbook 2008-2009 44 . on or before the date on which he files the return.000. [Section 64] The new assesses have been exempted from the payment of advance tax unless their income exceeds taka 300. runs a business or profession with trade license from a city corporation or pourashava. if the tax paid falls short he is liable for interest. he is to file a return if he: a. ii. 36. b. Payment on the Basis of Return: [Section 74(1)] Every person who is required to file a return under Section 75 shall.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 300. 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. or divisional head quarters or district head quarters and fulfils any of the following conditions: i. iii. iv.e. If one estimates that one s income during any financial year will be less than the last assessed income. on or before the date specified.600 sft. Every company shall file a return of its income or the income of any other person for whom the company is assessable. iii.000. Every individual shall furnish. along with the return or the certificate. dentist. has a tax payers identification number in accordance with the provision of section 184A. member of a club or a trade association. surveyor or any similar profession. and The amount of tax payable shall be paid on or before the date on which the return is Such return does not show any loss or lesser income than the last assessed ii. e. semi-government. engineer. Universal Self Assessment [Section 82 BB] Where an assessee furnish a correct and complete return of income. ITP. Summary in Taxation Laws 2008-2009 is registered with a recognized professional body as a doctor. autonomous body or local authority. as the case may be. Assessments: i. Bangladesh Tax Handbook 2008-2009 45 . or assessment on the basis of such return does not result in refund. his spouse and his minor children and dependants. g. without requiring the presence of the assessee or the production of any evidence. a statement in the prescribed form and verified in the prescribed manner giving particulars of the total assets and liabilities of himself. f. d. if it is filed in accordance with the provisions 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 in accordance with section 74. filed. 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. participant in a tender floated by government. 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. the DCT shall receive such return himself or cause to be received by any other official and issue a receipt of such return and. 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. 39. income.Income Tax c. In the case of a company the return will be accompanied by a statement of accounts audited by a chartered accountancy firm. is a candidate for an office of pourashava or a city corporation or a member of a parliament. 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. CA. CMA. architect. A return shall be taken to be complete. the receipt shall be deemed to be an order of assessment for the assessment year for which the return is filed. Transaction by a member of a stock exchange for which tax is collectible under section 53BBB. technical know-how fee. Payment on account of survey by surveyor of a general insurance company under section 53GG. Payment of royalty. 52B.53 not being goods imported by any industrial undertaking as raw materials for its own consumption. 46 Bangladesh Tax Handbook 2008-2009 .T. Import of Goods u/s. Manufacture of cigarettes u/s. Shipping business of a resident on which tax is collectible under section 53AA. for which tax is deductible under section 52A(2). 52. The provision of sub-section (1) shall not apply in the case of deduction of tax from sale proceeds of building or lands as mentioned in clause (d) with respect to any investment made under sub-section (10) of section 32. Export cash subsidy paid by the government for promotion of export under section 53DD. Certain incomes/receipts are treated as income under the scheme and taxes are collected or deducted at source from such incomes/receipts. Rules. Auction purchase on which-tax is collectible under section 53C. Interest on savings instruments on which tax is deductible u/s. The above rules shall NOT apply to: The provisions of sub-section (1) of section 82C shall not apply in the case of supply of goods or execution of contract as mentioned in clause (a). on which tax is deductible under section 53G. Summary in Taxation Laws 2008-2009 Final Settlement of Tax Liability: [Section 82C] The settled liability scheme under section 82C was introduced in 1998. Remuneration or reward. Commission from clearing & forwarding under section 52AAA. 53H. 52D. Income from courier business of a non resident under section 53CC. Export of manpower on which tax is deductible under section 53B.Income Tax iii. Taxes deducted or collected at source are treated as final settlement of tax liability on the deemed income under the scheme. with respect to a contractor of an oil company or a sub-contractor to the contractor of an oil & gas company as referred to in Rule-39 of the I. Amount on account of winnings referred to in section 19(13) on which tax is deductible under section 55. Real estate or land development business u/s 53FF. Following classes of incomes/receipts are referred to under the settled liability scheme in respect of which tax has been deducted or collected at source: Supply of goods or execution of contract on which tax is deductible u/s. Value of the property from which tax is collectible u/s. whether by way of commission or payable to an insurance agent. Income Tax Summary in Taxation Laws 2008-2009 An assessee shall not be allowed to take into account the full amount of income or receipts from which tax has been deducted or collected and considered as settled liability in explaining the nature and source.of any sum. pro ts and gains shall mean the net income. b. compensations or reimbursable costs as stipulated in the Bangladesh Tax Handbook 2008-2009 47 . investment. income. For the purposes of the Rule 39: a. geophysical survey. allowances and depreciation as allowed for the purposes of sections 28. iv. 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. pro ts and gains determined after considering all expenses. 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. In such case his income. 29 and 30 of the Ordinance. moneys. 2. pro ts and gains derived from such operations shall. The expression income. valuable articles. 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 for ascertainment of income. pro ts and gains from the operation of drilling of oil. under Rule 39. excess amount or expenditure referred to in section 19. 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. the Board may appoint a registered Chartered Accountant to examine the accounts of that assessee. marine seismic survey. the expression gross earnings shall include the total value of all fees. The income on payments or receipts represented by the tax deducted at source can only be allowed as a source of fund for explaining any investment. be deemed to be an amount equivalent to 10% of the gross earrings from such operations provided that: _ such option shall be exercised before the 30th day of September of the year of assessment in which such person is assessable for the rst time in Bangladesh. shallow water seismic survey and other activities relating to petroleum operations. etc. Assessment and computation of Income of Contractor of an Oil company (Rule 39) 1. v. money. _ the option once exercised shall be treated as nal and shall be applicable to all assessments thereafter. subject to the provision of this rule. Norway and Turkey. xii. South Korea. Poland. Idiots. 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. Assessment in the case of Deceased Persons u/s 92. Singapore. Philippines. Lunatics. Assessment in the case of departure from Bangladesh u/s 91. 40. Provisional Assessment u/s 81. Assessment in the case of discontinued business u/s 89. and amount constituting compensations or reimbursements exclusively for expenditures effected by the said person for the purpose of transporting or moving. Netherlands. u/s 95. as reduced by the following amounts(i) amount constituting compensations or reimbursements exclusively for expenditures effected by the said person for the purchase of equipment s for the oil company. Sri Lanka. whichever is the lower. Belgium. Best Judgement Assessment u/s 84.K. At present. Italy. Malaysia. 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. Germany.Income Tax Summary in Taxation Laws 2008-2009 agreement with the oil company. Government of Bangladesh has entered into agreement for the avoidance of double taxation with the following 24 countries: U. Assessment of Co-operative Societies u/s 47. Thailand. paid or payable on behalf of the said persons. Vietnam. 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 . 48 Bangladesh Tax Handbook 2008-2009 . Sweden. 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. etc. 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. Beneficiaries of any Trust. which are. Spot Assessment u/s 82D and Rule 38B. not his responsibility. vii. as specified in the agreement. 41. Assessment in the case of Minors. relief is available in respect of doubly taxed income. ix. China. 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. Relief in respect of Foreign Income: [Section 145] Where there is no reciprocal arrangement for avoidance of double taxation. drilling and other equipment s into and out of Bangladesh (ii) vi. Pakistan. viii. in fact. xi. India. Denmark. France. xiii. x. Canada. Under the agreement. if any. Romania. Japan. Bangladesh Tax Handbook 2008-2009 .5 15 15 4. Deduction of VAT at source: Summary in Taxation Laws 2008-2009 The authority for deducting VAT at source has been given to the Government. Sales Centre of Furniture: At the time of production. Nationalised Bank and Insurance Sector. Medical Centre. Construction Works/Firms ( Builders). Others 15 4. Land Development Organization. Private Bank & Insurance. Insurance or Limited Company.10 Goldsmith.00 S 007.5 1. Autonomous Body.5 15 4. Freight Forwards.00 Printing Press if value of material included. Photo Grapher. Bank. At the time of marketing.20 S 004 S 007 S 004. The services on which deduction at source applicable are listed below: Head # Service Code # S 003. Dockyard.5 4.20 S 024.00 S 029. Semi-Govt.00 Service Provider Rate of Deduction ( %) 4.5 4. Any Sangstha and Person. Survey Sangstha.5 15 15 1. Private Organisation. Film Studio.25 49 S 008 S 009 S 010 S 010 S 015 S 018 S 019 S 020 S 023 S 024 S 008.20 S 015..5 15 15 4.10 S 009. Building Construction Organization.5 15 9 S 003 Motor Garage & Workshop. S 026 S 028 S 029 S 026.10 S 010.10 S 003. Non-Government Organizations (NGOs).00 S 028. Sangstha (NGO). Non-Govt. Auction. Advertisement Organisation: Govt.00 S 019. Film Distributor. SemiGovernment.5 1. Limited Company. Autonomous Organizations. Silversmith and Gold & Silver trader.00 S 023. Printing Press if value of material not included.00 S 018. Courier & EMS Service.00 S 010..Value Added Tax Value Added Tax (VAT) 42.5 2.00 S 020. 00 S 059.5 4.00 Summary in Taxation Laws 2008-2009 Service Provider Rate of Deduction ( %) 2.5 4.00 S 048. Immigration Advisor. Pathological Laboratory. Picnic Spot and Shooting spot.00 S 060.25 4. Air Conditioned Tailoring Shop. Glass Sheet Manufacturer. Security Service Provider.00 S 066.00 S 056.5 4.5 2. Transport Fare or Rent-a-car.00 S 061.5 4. Engineering Firms.25 15 4.0025 4.00 S 064. Banking and non-banking service provider. Consultancy rm and Supervisory rm.00 S 045. Audit and Accounting Firm.5 5. Air-Conditioned Bus Service.00 S 044. Specialized Doctors.25 2.5 2.00 S 053.00 S 036.00 Bangladesh Tax Handbook 2008-2009 . Electricity Supplier.00 S 034.25 15 4.00 S 068.20 S 029. Buyer of Auction Goods.00 S 057.20 S 065. Amusement and Theme Park. Private Medical and Engineering College.00 S 069. Transport Contractor: For carrying petrol and related goods.00 S 050.00 S 051. Lottery ticket seller.00 S 062. Architect. Air-Conditioned Launce Service. Money Changer.10 S 036.00 S 032. S 049 S 050 S 051 S 053 S 056 S 057 S 059 S 060 S 061 S 062 S 063 S 064 S 064 S 065 S 066 S 067 S 068 S 069 S 070 50 S 049.30 S 031.00 S 067.5 4. English Medium School.25 4.00 S 040. Legal Advisors.5 15 15 4.5 15 15 15 5. Repairing or Servicing of Taxable goods.20 S 037.5 4.5 S 029 S 029 S 031 S 032 S 034 S 036 S 036 S 037 S 040 S 044 S 045 S 048 Dental Clinic.5 2. House clearing and Maintenance organization. Coaching Centre.10 S 064.5 4. Credit Card Supplying organization. Participant of Board Meeting.Value Added Tax Head # Service Code # S 029.0025 15 1.00 S 070.5 4.5 4.5 4.00 S 063. Others. Procurement Provider. Interior Designer or decorator. 100. 44. (ii) any hospital recognized or run by the Government or any local authority or any hospital aided by the Government or any Local Authority. to the Government or any local authority. The Gift Tax Act 1990. (iii) any flood or disaster management fund established or approved by the Government. recognized by the Education Board or recognized or run by the Government. The value of property under gift other than cash shall be the value which.000 whichever is less. In addition to the above exemptions. not being a private religious institution or fund which does not ensure for the benefit of the public. it would fetch if sold in the open market on the date of gift. 20. (iv) such institutions or funds for religious or charitable purposes. for charitable purpose: (i) any University established under the law in force in Bangladesh or any educational institution including polytechnic institute.000 are exempt from gift tax.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. 4) to dependent relative upto Tk. daughters.Gift Tax 43 Gift Tax: Summary in Taxation Laws 2008-2009 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. to the following funds or institutions. Methods of valuation of gift have been provided in the section 5 of the Gift Tax Act 1990. 6) 8) under a will. Bangladesh Tax Handbook 2008-2009 51 .20. father. 20. The Government may by notification exempt any class of gift or any class of person from gift tax. Gift means the transfer by one person to another of any immovable or moveable property voluntarily and without consideration of any money's worth. When a property is not saleable in the open market and its value cannot be determined according to the rules prescribed for the purpose. 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. 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) 2) 3) of property situated outside Bangladesh. in the opinion of the Deputy Commissioner of Taxes. upto 20% of the total income determined for the concerned year or Tk. to sons. gifts made in any financial year up to value of Tk.000. mother. his or her spouse. 7) under contemplation of death. own brothers and sisters. 000 of the value of all taxable gifts. 47. 1.000 of the value of all taxable gifts. On the next Tk. 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. Provisions of the Gift Act shall NOT apply to following gifts made by: [Section 20] a body corporate established or constituted by or under any law any institution or fund. 46.000. On the next Tk. On the balance of the value of all taxable gifts.000 of the value of all taxable gifts. 500. 2. Return of Gift Tax: [Section 3 & 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 to the Deputy Commissioner of Taxes a return in the prescribed form and in the prescribed manner.Gift Tax 1) 2) Summary in Taxation Laws 2008-2009 45. Tax on the basis of the return is payable on or before the date on which such return is furnished. Rates of Gift Tax: Particulars (Slab Amount of Taxable Gifts) On the first Tk.000. Percentage Rate (%) 5 10 15 20 52 Bangladesh Tax Handbook 2008-2009 .