Ranjan Sir Lecture - Details - (Updated in Light of FA 2014) (SECURED)

Updated (Finance Act 2014)
Study Material
Taxation
(Without VAT)
(with Finance Act 2014)
Initiated by:
Asif Ahmed
Assistant Manager
Finance & Accounts
Impress-Newtex Composite Textiles Ltd
Updated by:
Mohammad Ahsanullah
Md. Ibne Nayeem Hasan
Assistant, Audit and Advisory Services
KPMG in Bangladesh
Rahman Rahman Huq
Chartered Accountants
This study material is mainly an accumulation of the lectures of Mr. Ranjan Kumer Bhowmik,
FCMA with the update of Finance Act 2014. Note that, we tried our best to incorporate the
recent changes of the FA 2014, but some mistakes may be there and we are cordially sorry for
that. Mr. Ranjan Kumer Bhowmik, FCMA is not concern about this study material; hence do
not responsible for any mistakes or misrepresentation of laws (if any) mentioned here. So
reader awareness is advised.
.
Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Md. Ibne Nayeem Hasan, ibnenayeem@gmail.com, 01918431033
Page 1 of 137
Contents:
SL
01
Part
Part: One
Contents
Page
Income tax authority, Types of taxes, Some important
3 12
definitions, Tax rate, Reduced tax rate

02
Part: Two
Income from Salary
13 25
03
Part: Three
Income from Interest on Securities, Income from House
26 36
Property, Agricultural Income

04
Part: Four
Capital Gain
05
Part: Five
Income
37 39
Company
40 68
Income from Other Sources, Individual Assessment
69 78
from
Business
and
Profession,
assessment, Tax Holiday

06
Part: Six
(Math)
07
Part: Seven
Set off and carry forward losses, Advance Income Tax,
79 96
Deduction and Collection of Tax at Source

08
Part: Eight
Assessment of Partnership Firm
100 103
09
Part: Nine
Assessment
104 113
10
Part: Ten
Appeal, Penalty
114 122
11
Part: Eleven
Double Taxation Avoidance Agreement
123 125
12
Part: Twelve
Main Features of Finance Act, 2014 (Income Tax Portion)
126 - 137
Acknowledgement
Cordial gratitude goes to:
Aslam Hossain (RRH)
Md. Akter Hossain Masud (RRH)
Kawsar Bhuiyan (RRH)
Aurpa Saha (RRH)
Mamtazul Hqque (HFC)
If your have any suggestion to improve this study material, please contract with us:
Md. Ibne Nayeem Hasan
Assistant, Audit and advisory services
KPMG in Bangladesh
Rahman Rahman Huq
Mobile: 01918431033
E-mail:ibnenayeem@gmail.com
Mohammd Ahsanullah
Assistant, Audit and advisory services

KPMG in Bangladesh
Rahman Rahman Huq
Mobile: 01915185280
E-mail: ahsan.14143@gmail.com

Page 2 of 137
Part: One
Income tax authority, types of taxes, some important definitions, tax rate, reduced tax rate
Coverage:
1.
2.
3.
4.
5.
Income Tax Ordinance 1984

Income Tax Ordinance 1984
SRO (Statutory Regulatory Order)
Circular of NBR
Case References
a. ITR (Indian Tax Report)
b. BTD (Bangladesh Tax Decisions)
Direct Tax Vs Indirect Tax:

Impact and incidence of the direct tax are on the same people, but in case of indirect tax both of them can be shifted
to others which is ultimate bear by the final consumer.
Direct tax Income tax, travel tax, gift tax etc.
Indirect Tax VAT, turnover tax, SD
Income Tax Laws:
Section (sub section)

Section Clause (sub clause)
Rule (sun rule)
IT Ordinance Vs IT Rules:
Tax Ordinance made or changed by the parliament
Tax Rules made by NBR
Govt. can reduce tax burden through SRO but cannot imply tax. Power to impose new tax rested on the parliament.
Income Tax Authority (Section 3):

Section 3:
There shall be the following classes of income tax authorities for the purposes of this Ordinance, namely:1. (1) The National Board of Revenue,
2. [(1A)]Deleted. F.A. 1995
3. [(1B) Chief Commissioner of Taxes;]Added F. A. 2011
4. (2) Directors-General of Inspection (Taxes),
5. (2A) Commissioner of Taxes (Appeals),
6. (2B) Commissioner of Taxes (Large Taxpayer Unit),
7. (2C) Director General (Training);
8. (2D) Director General, Central Intelligence Cell ;
9. (3) Commissioners of Taxes,
10. (3A) Additional Commissioners of Taxes who may be either Appellate Additional Commissioner of
Taxes or Inspecting Additional Commissioner of Taxes,
11. (4) Joint Commissioner of Taxes who may be either Appellate Joint Commissioners of taxes or
Inspecting Joint Commissioner of Taxes,
12. (5) Deputy Commissioners of Taxes,
13. [(6) Tax Recovery Officers nominated by the Commissioner of Taxes among the Deputy
Commissioner of Taxes within his jurisdiction;] Subs F. A. 2011
14. (7) Assistant Commissioners of Taxes,
15. (8) Extra Assistant Commissioners of Taxes; and
16. (9) Inspectors of Taxes

Page 3 of 137

Income tax authority is as follows
1. NBR Supreme authority headed by the Chairman.
2. Chief Commissioner of Taxes (not yet appointed anyone)
3. Commissioner of Taxes (CT);
a. DG (Central Intelligence Cell, CIC);
b. DG (Inspection);
c. CT (Appeal);
d. DG (Training);
e. CT (Large Taxpayer Unit);
4. Additional Commissioner of Taxes (ACT);
a. Appellate Additional Commissioner of Taxes (AACT);
b. Inspecting Additional Commissioner of Taxes (IACT);
5. Joint Commissioner of Taxes (JCT);
a. Appellate Joint Commissioner of Taxes (AJCT);
b. Inspecting Joint Commissioner of Taxes (IJCT)
6. Deputy Commissioner of Taxes (DCT)
a. TRO Tax Recovery Officer;
b. TPO - Transfer Pricing Officer
7. Assistant Commissioner of Taxes;
8. Extra Assistant Commissioner of Taxes; and
9. Inspector of Taxes.
Why taxes???
Because they (officers) deal with
three taxes; income tax, gift tax
and travel tax.
Types of Taxes:
NBR
Income Tax
Income
Tax
Gift
Tax
Customs & VAT
Foreign
Travel Tax
Value
Added Tax
Turnover
Tax
Supplementary
Duty
Some Important Definitions:

Income; (section 2(34)):
Income" includes-1. (a) any income, profits or gains, from whatever source derived, chargeable to tax under any provision of
this Ordinance under any head specified in section 20;
2. (b) any loss of such income, profits or gains;
3. (c) the profits and gains of any business of insurance carried on by a mutual insurance association
computed in accordance with paragraph 8 of the Fourth Schedule;
4. (d) any sum deemed to be income, or any income accruing or arising or received, or deemed to accrue or
arise or be received in Bangladesh under any provision of this Ordinance:
5. []Deleted F.A. 1993
6. Provided that the amount representing the face value of any bonus share or the amount of any bonus
declared, issued or paid by any company registered in Bangladesh under , 1994 (1994
18 ) to its shareholders with a view to increase its paid-up share capital shall not be
included as income of that shareholder;
Page 4 of 137
TAX; (section 2(62)):

"Tax" means the income tax payable under this Ordinance and includes any additional tax, excess profit tax,
penalty, interest, fee or other charges leviable or payable under this Ordinance;"
Assessee; (section 2(7)):

"Assessee", means a person by whom any tax or other sum of money is payable under this Ordinance, and
includes 1. (a) every person in respect of whom any proceeding under this Ordinance has been taken for the
assessment of his income or the income of any other person in respect of which he is assessable, or of
the amount of refund due to him or to such other person;
2. (b) every person who is required to file a return under section 75, section 89 or section 91;
3. (c) every person who desires to be assessed and submits his return of income under this Ordinance; and
4. (d) every person who is deemed to be an assessee, or an assessee in default, under any provision of this
Ordinance; leviable or payable under this Ordinance;"
Person; (section 2(46)):
"Person" includes an individual, a firm, an association of persons, a Hindu undivided family, a local authority, a
company and every other artificial juridical person;
6th schedule, Part A, Local government are not taxable entity.
Income Year and Assessment Year:
Assessment Year; (section 2(9)):
"Assessment year" means the period of twelve months commencing on the first day of July every year; and
includes any such period which is deemed, under the provisions of this Ordinance, to be assessment year in
respect of any income for any period;
Income Year; (section 2(35)):
"Income year", in respect of any separate source of income, means-(a) the financial year immediately preceding the assessment year; or
(b) where the accounts of the assesses have been made up to a date within the said financial year and the
assesses so opts, the twelve months ending on such date; or
(c) in the case of a business or profession newly set up in the said financial year, the period beginning with the
date of the setting up of the business or profession and (i) ending with the said financial year; or
(ii) where the accounts of the assesses have been made up to a date within the said financial year and the
assesses so opts, ending on that date; or
(d) in the case of a business or profession newly set up in the twelve months immediately preceding the said
financial year-(i) if the accounts of the assessee have been made up to a date within the said financial year and the period
from the date of the setting up of the business or profession to the first-mentioned date does not exceed
twelve months, then, at the option of the assesses, such period, or
(ii) if any period has been determined under sub-clause (e), then the period beginning with the date of the
setting up of the business or profession and ending with the last day of that period, as the case may be; or
(e) in the case of any person or class of persons or any business or profession or class of business or
profession such period as may be determined by the Board or by such authority as the Board may authorise in
this behalf;
(f) in respect of the assessee's share in the income of a firm of which the assessee is a partner and the firm has
been assessed as such, the period determined as the income year for the assessment of income of the firm;
(g) where in respect of a particular source of income an assessee has once been assessed or where in respect of
a business or profession newly set up, an assessee has once exercised the option under sub-clause (b) or subclause (c) (ii) or sub-clause (d) (i) then, he shall not, in respect of that source, or, as the case may be, business
or profession, be entitled to vary the meaning of the expression "income year" as then applicable to him,
except with the consent of the Deputy Commissioner of Taxes upon such conditions as the Deputy
Commissioner of Taxes may think fit to impose;
Page 5 of 137

Income Year
July 1, 2013 June 30, 2014
January 1, 2013 December 31, 2013
August 1, 2012 July 31, 2013
1.
2.
3.
Assessment Year
2014 2015
2014 2015
2014 2015
If proper books of accounts maintained, income year can be started from any month, but cannot be changed
without prior notice to DCT.
If proper books of accounts not maintained (individual), income year must be the financial year.
Firms (partnership) income year and its partners income should be the same.
Resident and Non-Resident:

Resident; (section 2(55)):
"Resident", in respect of any income year, means 1. (a) an individual who has been in Bangladesh 1. (i) for a period of, or for periods amounting in all to, one hundred and eighty two days or more in that
year; or
2. (ii) for a period of, or periods amounting in all to, ninety days or more in that year having previously been
in Bangladesh for a period of, or periods amounting in all to, three hundred and sixty-five days or more
during four years preceding that year;
2. (b) a Hindu undivided family, firm or other association of persons, the control and management of whose
affairs is situated wholly or partly in Bangladesh in that year; and
3. (c) a Bangladeshi company or any other company the control and management of whose affairs is situated
wholly in Bangladesh in that year;
For Individual 182 days; or 90 days + 365 days in previous 4 years
For Company and Firm
Partial Control & Management

Full Control & Management
Firm
Resident
Resident
Company
Non-Resident
Resident
Resident
Global income
Allowable
Normal rate
Nonresident
Local income
Not allowable
Direct tax rate
Difference between resident and nonresident:
Taxed at
Investment allowance
Tax rate

Page 6 of 137
Resident Vs. Non-Resident:

Not only the rate of tax depends upon the residential status of the assessee but also the category of income to be
included in computing total income depends upon the residential status of the assessee. So, in income tax viewpoint
firstly the residential status of the assessee is to be determined. As per section 2(55) a person will be resident if he
fulfils the following conditions:Sl.
No
1.
2.
Category of person
Individual
(Bangladeshi or
foreigner)
(i) Hindu Undivided

Family (HUF)
(ii) Partnership firm
(iii) Association of
Persons (AOP)
Condition for being

resident
Stay in Bangladesh for at
least 182 days in aggregate
during the income year.
OR
Stay in Bangladesh for at
least 90 days in aggregate
during the income year
+
An aggregate stay of at least
365 days in Bangladesh in
the course of 4 years
preceding the income year.
The control and management
of its affairs is situated
wholly
or
partly
in
Bangladesh
during
the
income year.
Analysis
The test of residence here are alternative not
cumulative. Each of the 2 tests requires the personal
presence of the assessee in Bangladesh during the
income year. If the assessee is continuously out of
Bangladesh during the whole year, he must be
treated as non-resident in that year.
If the 1st criteria of 182 days has fulfilled he is
to be regarded as resident irrespective of any other
consideration. If anybody resides here for less than
90 days then obviously he is non-resident. Thus a
man may be resident in 2 different countries in the
same year, although he can have only one domicile.
If the control and management is situated
wholly outside Bangladesh only then an HUF, firm
or other AOP can be treated as non-resident. Since
partial control is sufficient for the purpose of
residence, a firm may have 2 places of residence;
The residence of partners or an individual member
of HUF is immaterial for the purpose of determining
the residence of a firm or family.
The place of control may be different from the
place where the actual trading is carried on. Control
of a business does not necessarily mean the carrying
on of the business and therefore the place where
trading activities or physical operations are carried
on is not necessarily the place of control and
management. Control and management signifies the
controlling and directive power and situated implies
the functioning of such power at a particular place
with some degree of performance.
Control and management means de facto
control and management and not merely the right or
power to control and manage. The absence of the
karta from Bangladesh throughout the year does not
by itself lead to the conclusion that the family is
non-resident in that year, since the business of the
family, though it is normally controlled by the karta,
may at a particular point of time be controlled by
some one else. The same principle applies equally to
cases of firms and other association of persons.

Page 7 of 137

Sl.
No
3.
Category of person
Company
Condition for being resident
Analysis
The control and management

of its affairs is situated
wholly in Bangladesh during
the income year.
A company whether a Bangladeshi company or

a foreign company whether it is registered at
Registrar of Joint Stock Companies of Bangladesh
or not is resident here in Bangladesh if the control
and management of its affairs is situated fully in
Bangladesh during the income year.
In the classical word, a company cannot eat or
sleep but it can keep house and do business and for
the purpose of income tax a company resides where
it really keeps house and does business, i.e. where
the central management and control actually abides.
While the location of control and management is the
sole test of residence for HUF, Firm and AOP, it is
also a test for companies.
Here controls mean de facto control not merely
de jure control. The control and management, the
head and brain, does not reside where there is some
ultimate power of control such as the power to alter
the articles of associations by a special resolution or
the power to interfere with fundamental finance.
A company may be resident in Bangladesh
even though its entire trading operations are carried
on abroad. If the management and control is situated
here, the company is resident here and it does not in
the least matter where the actual selling and buying
of the goods takes place.
Incidence of taxation on the basis of residential status:

Section 16 is the charging section where it was clearly mentioned that income tax is to be charged on the total income
of the assessee. The liability to tax arises by virtue of the charging section. The assessment order only quantifies the
liability which is finally created by the charging section.
Here total income as per section 2(65) means total amount of income as referred to in section 17 and includes any
other income which is to be included in the total income of the assessee as per provision of The Income Tax
Ordinance, 1984. The principle underlying section 17 is to make the chargeability of income depending upon the
locality of receipt or accrual. Section 43 also deals with the computation of total income by inclusion, in some cases,
of other person's income. Assesses can be divided into 2 categories:(i) Resident; and
(ii) Non-resident.
The basic difference between resident and non-resident is tabulated below:Sl.
No
1.
Area
Income
point of
view
Resident
Non-resident
Analysis
The
entire
income
accruing or arising in
any part of the world,
irrespective of whether it
is
received
in
The income accruing or

arising in Bangladesh
only is taxable.
(a) A non-resident, unlike a resident, is

not chargeable in respect of income
accruing or arising outside Bangladesh
and not received in Bangladesh.
(b) If an income is taxed on the ground

Page 8 of 137

Bangladesh or not is
taxable.
2.
Tax point
of view
General tax
applicable.
rate
is
Maximum tax rate is

applicable.
Investment
Tax Credit
Point of
view
Investment tax credit

facility is applicable
Investment tax credit

facility is not applicable
of accrual or deemed accrual, it can not

be taxed again on the ground of receipt
either in the same year or in a different
year.
(c) As per S.R.O. No. 216-Law/ Income
tax/2004 dated 13/07/2004 foreign
income of a Bangladeshi national,
irrespective of resident or non-resident,
is exempt from payment of tax if it
comes through official channel.
(a) The only exception is non-resident
Bangladeshi where general tax rate is
applicable.
(b) If any resident assessee proves to the
satisfaction of the DCT that, he has paid
tax at foreign country by deduction or
otherwise on any income which has
accrued or arisen to him outside
Bangladesh with which there is no
reciprocal tax treaty, the DCT may
deduct from the tax payable by the
assessee a sum equal to the tax
calculation on such doubly taxed income
at the average rate of tax of Bangladesh
or the average rate of tax of the foreign
country whichever is less.
The only exception is non-resident
Bangladeshi where investment tax credit
facility is applicable like resident.
Thus, the incidence of tax depends upon and is determined by the question whether the assessee is resident in
Bangladesh. A non-resident entitles partial exemption from chargeability to which resident is not entitled to.
Generally speaking, the incidence of tax is higher in the case of persons who are resident and lower in the case of
persons who are non-resident.
Avoidance of tax through transactions with non-residents (Sec.104 read with rule-34 and 35)
Business may be carried on between a resident and a non-resident and owing to the close connection between them,
the course of business may be so arranged that the resident makes either no profit or less than the ordinary profit in
that business. Such an arrangement might deprive Bangladesh Govt. from tax which would otherwise be payable by
the resident. In such cases the resident may be charged in respect of the profits which he has not in fact made but
which he might reasonably be expected to have made had he done the business on ordinary commercial terms.
Rule-35 read with rule-34 prescribes the method of determining the amount of notional income in respect of which
the resident may be charged under section 104.

Page 9 of 137
Tax Rate:
Study References:
1. Finance Act
2. Section 16 (16B, 16C, 16CCC) of ITO
3. Second Schedule of ITO
4. SRO (Reduced tax rate)
Other than Company:

Entity other than the company (individual, HUF, firms etc) are taxed at progressive rate as below
On the 1st tk. 220,000
On next tk. 300,000
On next tk. 400,000
On next tk. 500,000
On next tk. 3,000,000
Balance amount
Nil
10%
15%
20%
25%
30%
Minimum tax;
Resident in City Corporation; BDT 3,000
Resident in District town; BDT 2,000
Resident in Upazilla; BDT 1,000
For women and senior citizen (65+) first slab will be of tk. 275,000; for handicapped, it is of tk. 300,000 and for
gazetted war-wounded freedom fighters, it is of tk. 400,000.
As per second schedule, in case of non-resident non-Bangladeshi tax rate is 30% direct.
Surcharge is payable by an individual assessee on total tax payable if the total net worth exceeds tk. 2 crore as stated
below:
Total net worth
Over Tk 2 to 10 crore
Over Tk 30 crore
Rate
10%
15%
20%
25%
Company:
Company tax rate is direct on its assessment income at following rate
1. Listed company
27.5% (15% dividend shall be declared)
2. Non listed or non-resident company
35%
3. Bank, insurance & NBFI (except merchant banks)
42.5%
4. Mobile Phone
a. If listed
40%
b. If not listed
45%
5. Cigarette
a. If listed
40%
b. If not listed
45%
6. Merchant Bank
37.5%
Income from any dividend received from any other company (where the company hold shares) tax on such
dividend will be 20%.
Tax on capital gain of the company will be 15%.
If any non-publicly traded company distribute 20% of its share through IPO, 10% tax rebate will be given.
(if tax rate is 37.50%, it will be 33.75% for the respective assessment year)
Income other than these two will be taxed as above.

Page 10 of 137
Listed Company
Declared dividend
(cash or bonus) more
than 20%
Declared dividend
less than 10%
Tax rate will be

24.75%
Tax rate will be

35%
Section 16:
Section - 16B; Charge of additional tax:
1. Notwithstanding anything contained in section 46A, where a public limited company, not being a
banking or insurance company, listed with any stock exchange in Bangladesh, has not issued, declared
or distributed dividend or bonus share equivalent to at least fifteen percent of its paid up capital to its
shareholders within a period of six months immediately following any income year, the company shall
be charged additional tax at the rate of five per cent on the undistributed profit in addition to tax payable
under this Ordinance.
2. Explanation.- For the purpose of this section, "undistributed profit" means total income with
accumulated profit including free reserve.
Section - 16C; Charge of excess profit tax:
1. Where a banking company operating under
, 1991 (1991 14 ) shows
profit in its return of income for an income year at an amount exceeding fifty per cent of its capital as
defined under the said Act together with reserve, the company, in addition to tax payable under the
Ordinance, shall pay an excess profit tax for that year at the rate of fifteen per cent on so much of profit
as it exceeds fifty per cent of the aggregate sum of the capital and reserve as aforesaid.
Section - 16CCC; Charge of minimum tax:
1. Notwithstanding anything contained in any other provisions of this Ordinance, every company shall,
irrespective of its profits or loss in an assessment year for any reason whatsoever, including the
sustaining of a loss, the setting off of a loss of earlier year or years or the claiming of allowances or
deductions (including depreciation) allowed under this Ordinance, be liable to pay minimum tax at the
rate of zero point three zero (0.30%) per cent of the amount representing such company's gross receipts
from all sources for that year.
2. Explanation: For the purposes of this section, 'gross receipts' means1. (a) all receipts derived from the sale of goods;
2. (b) all fees or charges for rendering services or giving benefits including commissions or
discounts;
3. (c) all receipts derived from any heads of income.] Added F.A. 2011
Section - 16E; Charge of tax on sale of share at a premium over face value:
Notwithstanding anything contained in any other provisions of this Ordinance or any other law, where a company
raises its share capital through book building or public offering or rights offering or placement or preferential
share or in any other way, at a value in excess of face value, the company shall be charged, in addition to tax
payable under this Ordinance, tax at the rate of three (3) percent on the difference between the value at which the
share is sold and its face value. Added F.A. 2010 and omitted F.A. 2013

Page 11 of 137

Capital Gain (Second Schedule):
Capital Gain
Company:
15%
Other than Company:
After 5 yrs of purchase:

1. Slab rate on total
income; or
2. Tax on cap. Gain 15%
and on other income,
normal slab rate
Whichever is lower
Within 5 yrs of purchase:

normal rate
Example, salary income tk. 520,000 and capital gain tk. 1,000,000 = total income tk. 1,500,000, tax
On 1st tk. 220,000
Nil
Next tk. 300,000
30,000
Next tk. 400,000
60,000
Next tk. 500,000
100,000
Next tk. 300,000
75,000
Total tk. 1,520,000
265,000
Or
(300,000*10%) + (1,000,000*15%) = tk. 180,000
Lower one (which is Tk. 180,000)
In case of gain of winning any lottery tax are deducted @ 20% at source though it can be computed with total
income, but no further tax rebate can be claimed.
Tax on the capital gain of the non-resident non-Bangladeshi shall be @ 25%.
Reduced Tax Rate (SRO):

1.
2.
3.
4.
Jute, Textile
Private University, Private College
Local authority (RAJUK, BRTA, CDA, KDA etc)
Cattle feed, fish feed, shrimp feed (from AY 2014-15)
15%
15%
25%
3%

Page 12 of 137
Part: Two
Income from Salary
Income from Salary:
Study Reference:
Definition: Section 2(58), 2(45), 2(50), 2(27), 2(28) read with rule 33(2)(b)
Section 21, 50, 50B read with rule 21 and 22
108 read with rule 23
124(2), 165 and 172
Exemption: Rule 33 read with Sixth Schedule (Part A) para 5
Provident Fund:
1st schedule (Part B) read with Rule 43, 44
6th Schedule (Part A) Para 4,6, 21, 25
6th Schedule (Part B) Investment allowance
SRO 454 (Serial 19) date 31/12/1980
SRO 310, dated: 27 June 1984
Definition of Salary:
There is no exhaustive definition of salary at Income Tax Ordinance, 1984. Only an inclusive definition is given at
section 2(58) where salary includes the following:a) Wages (or pay)
b) Annuity
c) Pension Totally exempted as per 6th Schedule (Part-A) Para-8
d) Gratuity Totally exempted as per 6th Schedule (Part-A) Para-20
e) Fees
f) Commission
g) Allowances
h) Perquisites (Indirect benefits)
i) Profits in lieu of salary or wages
j) Profits in addition to salary or wages
k) Advance Salary
l) Leave encashment
However, the term Basic Salary has been defined at Rule 33(2) as well as at Rule 65A (1) where basic salary
means the pay and allowances payable monthly or otherwise but does not include the following:
a)
Dearness allowance (unless it enters into the computation of Superannuation or retirement benefits of the
employee)
b) Employers contribution to Recognised Provident Fund and interest credited on the accumulated balance
c) Allowances which are tax exempted
d) Allowances, perquisites, annuities and other benefits
Section 2(58) contains definitions within the definition. Salary includes perquisites and profits in lieu of salary, which
again defined at section 2(45) and 2(50) respectively.
Perquisite is defined in the Oxford English Dictionary as "any casual emolument, fee or profit attached to an
office or position in addition to salary or wages. There is an exclusive definition of perquisite at section 2(45)
where perquisite means any payment or benefit made to an employee in the form of cash or any other form but
excluding the following:
a) Basic Salary
b) Festival bonus
c) Incentive bonus
Page 13 of 137

d)
e)
f)
g)
h)
i)
Arrear Salary
Advance Salary
Leave encashment
Leave Fare Assistance (LFA)
Overtime
Contribution by the employer to1) Recognized provident fund.
2) Approved Pension Fund.
3) Approved Gratuity Fund and
4) Approved Superannuation Fund.
There is an inclusive definition of "Profits in lieu of salary" at section 2(50) where profits in lieu of salary include: a) The amount of compensation in connection with the termination / modification of any terms and
conditions relating to employment.
b) Any payment from a provident or other fund to the extent to which it does not consist of contributions
by the employee and the interest on such contributions.
Classification of Salary (Section: 21)

The following 3 (three) categories of income of an assessee is classified and computed under the head salaries,
namely;a) Salary due from an employer to an employee in the income year, whether paid or not ;
b) Salary paid or allowed to an employee in the income year though not due before it become due to him; and
c) Arrears of salary paid or allowed to him in the income year, if not charged to income tax for any earlier
income year.
Salary once included in any year on due basis or advance payment basis is not includible again in salary income of an
employee of any other year. No payment can fall and to be taxed under the head salary unless the relationship of
employer and employee exists between the payer and the payee. Salary can be taxed not only on payments made by
an employer during employment, but also on payments by a former employer after the employment has come to an
end. The definition of employee is given at section 2(28) where employee includes a director also. It has been
provided that an employee, in relation to a company, includes the managing director or any other director or other
person, who irrespective of his designation performs any duties or functions in connection with the management of
the affairs of the company. So a director who is not connected with the management of affairs of the company may
not be called employee. For the purpose of determining the value of perquisites of an employee under rule-33,
employee includes a shareholder director. If the shareholder director is director of more than one company then he
shall be entitled to the benefits under rule - 33 for one company only.
In order to be classified under salary, there must be an employment contract. Such as consultancy fee will be
income from business and profession unless and until there is an employment contract.
Apportionment of salary over the years due to arrear or advance salary (sec.172)
Where the salary is assessable at a rate higher than that at which it would otherwise have been assessed by reason of(a) Any portion of salary being received in arrear or in advance;
(b) Salary received in the year for more than 12 months;
(c) Received a payment, which is a profit in lieu of salary;
The DCT may, on the basis of application to him by the assessee, allocate salary over the year or years to which it
relates and may refund the amount of tax, if any, paid in excess. According to section 21, salary is taxable in the year
in which it is due or is paid. Where salary is paid in arrear or in advance, or where a retirement benefit or salary for
more than 12 months is received in any one year, the income for that year may be liable to assessment at a rate higher
than that at which it would otherwise have been assessed. Section 172 authorises the DCT to grant appropriate relief
for income tax in the above situation.
Page 14 of 137
Pay and Allowances totally exempt from Tax: (Sixth Schedule, Part-A)
The following pay and allowances shall be exempted from payment of tax and shall not be included in the
computation of salary income:a) Interest accrued on PF on which Provident Fund Act, 1925 applies (Para 4(1)).
b) Interest accrued on Workers Profit Participation Fund established under the Companies Profit (workers
participation) Act, 1968 (Para 4(2)).
c) Any special allowances, benefits, or perquisites granted to meet expenses incurred for official duties (Para-5)
d) Remuneration of Ambassadors/High Commissioner/Charge daffairs etc. of Embassies of foreign states and their
non-Bangladeshi employees (Para-7).
e) Pension (Para-8).
f) Gratuity (Para-20).
g) Any payment from provident fund to which PF Act. 1925 applies or from a recognized provided fund, an
approved superannuation fund or workers profit participation fund (Para-21).
h) Interest credited on accumulated balance of a recognized provident fund. The exemption limit is 1/3rd of salary
[here salary means basic salary and dearness allowance (if any)] or interest credited @ 14.5% whichever is
higher (Para-25, definition of salary as per 1st Schedule (Part -B) and S.R.O.no 310 dated 27/06/1984).
i) Any amount received at the time of voluntary retirement in accordance with any scheme approved by the Govt.
(Para-26).
Salaries exempt from payment of tax (as per S.R.O.):

Salaries of the following categories are exempted as per Govt. S.R.O. and notification: (a) As per Private Sector Power Generation Policy of Bangladesh, income of any foreigner employed in a private
power generation company of Bangladesh is tax-free for 3 years from the date of his arrival in Bangladesh.
(S.R.O. no 114/1999); [not applicable for quick rental power generation company]
(b) Any salary drawn by any foreigner from the contracting state or agency as per bilateral agreement between the
Govt. of Bangladesh and Govt. of the contracting state or agency from any foreign aided development project is
fully exempt from payment of tax. (S.R.O. NO 207/1997)
(c) Salaries of categorized personnel of United Nations and its agencies are tax free as per provision of schedule-1
(Article-V) Section-17 and schedule-2 (Article-VI) section-18 of United Nations and Specialized Agencies
(Privileges and Immunities) Act, 1975. (NBR Circular No: NBR/Tax-7/Tax Policy/02/2006, dated. 29/4/2007.)
(d) When in any year an assessee has ceased to be an employee participating in a recognised Provided Fund and
has been declared by the employer maintaining the Fund not to be eligible to receive the whole for the
accumulated balance due to him, so much of his income as is assessable for that year shall be exempted from
income tax and shall be excluded from the computation of his total income and if such amount exceeds the
amount of his income in that year, so much of his income in the following year or years as is equal to the
amount of such excess shall be so exempted and excluded is such year or years. [S.R.O.no 454(serial no19)
dated:31/12/1980]
(e) Festival bonus and all other allowances and benefits (except basic salary or remuneration) of Govt. employees,
Ministers, MP and Judges of Supreme Court are exempted from payment of tax [SRO No:226,227 and 228
dated 04/7/2011]
Information regarding payment of salary (Section 108 read with rule 21, 22 and 23)
Every employer shall furnish salary statement of employees in the form prescribed at rule-23 to the DCT before 1st
September each year. The DCT may however extend this date. This section requires information to be given
regarding accrual and actual payment of salary in order to help detection of any avoidance of tax. In case of non-govt.
employees every person responsible for making deduction before payment of salaries to them shall send forthwith a
statement prepared in the form prescribed in rule-21 to the concerned DCT.
The Commissioner of Taxes may under rule-22 permit an employer to pay tax on the income of his employees in a
lump sum every month based on the average amount of tax deductible from such income from salaries and submit at
the end of the year the statement in the form prescribed in rule-23(3) Such statement must show not only the salary
which is paid but also the salary due. Because salary due is chargeable under section 21, whether paid or not.
Failure to furnish statement is punishable under section 124(b) and for making a false statement under section 165.
Page 15 of 137
Tax on Tax
If salary tax is borne by the employer, than tax will not be treated as perquisite in the hand of the employee and
therefore there is no tax on tax issue in this case. (S.R.O. no 182/1999 dated 01-07-1999)
Salary Income Computation (rule 33)

As per income tax law the following pay and allowances will be included in computing salary income:a) Full basic salary;
b) Full festival bonus;
c) Full incentive bonus;
d) Full dearness allowance.
e) Full entertainment allowance;
f) Any allowance where there is no exemption limit
g) Employers contribution to Recognised provident fund;
h) Cash house rent allowance if it exceeds 50% of basic salary or Tk. 20,000/- per month whichever is lower;
(If job is for 9 months, exemption will also be for 9 months)
Example:
Basic Salary (50,000*12)
600,000
House Rent (30,000*12)
360,000
960,000
Less: Exampted House rent

(20,000*12)
(240,000)
Acutal Total Income
720,000
If actual HR is less than tk. 240,000 than

actual one is allowable
i)
Rental value of the rent-free accommodation or 25% of basic salary of the employee whichever is less.
Example:
600,000
Free accomodation
(25% of Basic Salary)
150,000
Acutal Total Income
750,000
If rental value is not given, 25% of BS should be
(Where the accommodation is provided at a concessionary rate, the rent actually paid by him shall be deducted);
Example:
House Rent (25% of BS)
Less: House rent given
(2,000*12)
600,000
150,000
(24,000)
126,000
Acutal Total Income
726,000

Page 16 of 137

j)
Cash conveyance allowance if it exceeds Tk. 30,000/ per year.

Example:
November 2012 - June 2013
Received
Exempted
-
Net
400,000
400,000
House Rent (20,000*8)
160,000
160,000
Coveyance Allowance
30000
30,000
590,000
190,000
400,000
House Rent: (20,000*8) = 160,000 or 50% of BS = 200,000; lower one

Coveyance Allowance is allowable upto tk. 30,000 irrespective of months
k) 5% of basic salary if conveyance is provided by the employer for the use of the employee exclusively for
personal or private purpose; If any additional allowance is given along with the car facility, both will be
added to the salary income.
l) Medical allowance if it exceeds 10% of basic salary or Tk. 60,000/- per year, whichever is lower.
m) The value of any benefit provided free of cost or at a concessionary rate;
n) Any sum paid by an employer in respect of any obligation of an employee.
o) In case of leave fares assistance; if it is mentioned in the job contract than it is exempted up to actual
expenditure. If not mentioned in the job contract than fully taxable. But if the travel is outside the country the
exemption is only applicable for every alternative year. If within the country, than exemption is for every time
of travel.
Investment Tax Rebate:

According to section 44(2) and Part-B of the 6th schedule, the following investments and donations are eligible for
tax rebate:a) Life insurance premium (Para-1); (up to 10% of the policy value)
b) Employees contribution to provident fund to which P.F. Act, 1925 applies (Para-3)
c) Both employees and employers contribution to Recognized Provident Fund (Para-5)
d) Employees contribution to approved superannuation fund in which the employee is a participant (Para-6)
e) Contribution to benevolent fund and group insurance scheme (Para 17)
f) Contribution to any DPS up to Tk.60,000 per year at any scheduled bank. (Para-11)
g) Investment in the following instruments1. Savings Certificates
2. ICB Unit Certificates
3. ICB Mutual Fund Certificates
4. Government Bonds and Securities (Para-10)
h) Purchase of 1 computer (desktop) within Tk. 50,000/ or1 laptop within Tk.1,00,000/(Para-23).
i) Donation to:
1. Rural charitable hospital approved by the Govt (Para- 11A)
2. Organisation for the welfare of the retarded people approved by the Social Welfare Department and NBR
(Para 11B)
3. Donation to Jakat Fund (Para 13)
4. Donation to an institution of Aga Khan Development Network (Para 21)
5. Donation to Govt. approved philanthropic and educational institutions (Para-22)
6. National level institution set up in memory of the liberation war (Para-24)
7. National level institution set up in memory of Father of the Nation. (Para-25)
8. Prime Minister's Higher Education Fund (Para-26)
j) Investment at shares, debentures or mutual fund (both IPO and secondary market). (Para-27)
k) Investment at Govt. Treasury bond (Para-28)

Page 17 of 137

GPF Vs RPF Vs UPF:
SL
Subject
1
Employees contribution
2
Employers contribution
GPF
Automatic taxable*
N/A
RPF
Automatic taxable*
Taxable
Yes (both)
**Tax free up to a
certain limit
Allowable
expenditure on Profit
and loss account
***Employee can
adjust in subsequent
years.
No treatment
3
4
Investment allowance
Interest on PF
Yes
Tax free
Treatment on the hand of employer
N/A
Pre-mature termination / leave the job
***
Payment at retirement
No treatment
UPF
Automatic taxable*
Taxable but at the
end of the service
No
Fully taxable
Not allowable
***
Taxable (employer
portion and interest)
*Automatic Taxable = deduction of contribution to PF cannot be considered. Total basic salary are added to the total
income
**
One third (1/3) of the basic salary (Basic + Dearness allowance)
Or
Interest @ 14.5%
(Para 25)
(SRO 310)
Whichever is higher is exempted
(due to the fact that, in favour of assesse)
For example, a person received interest on his PF @ 16% which is tk. 230,000 and his basic salary is tk. 600,000.
Than exemption will be
1. 1/3 of his BS, which is tk. 200,000 or
2. Interest @ 14.5% = ((230,000/.16)*.145) = 208,438
Lower one is exempted, that is tk. 200,000 is exempted.
So his total income = (600,000+(230,000 -200,000)) = 630,000
But this interest should be excluding from the total income in time of calculating investment allowance.
***
(SRO 454)
In case of pre-mature job leave and where employees received nothing from the PF, on which the employee has
already pay tax should be deducted from his total income in the subsequent years.

Page 18 of 137
1. Allowable Investment Allowance:

The allowable investment allowance is the lower amount of the following three:
30% of total income excluding
(1)employers contributions to
recognized provident fund (RPF)
(2) taxable portion of interest on RPF
(3) any income u/s 82C
Whichever is lower is to
be treated as investment
allowance
Tax rebate @ 15% is

applicable on such
allowable investment.
OR
TK. 15,000,000/=
OR
Actual Investments
After rebate, minimum tax is Tk. 3,000 (or tk. 2,000 or tk. 1,000) if total income exceeds the minimum taxable limit.
2. Income tax rate for the assessment year 2013-2014
Rates
i.
ii.
iii.
iii.
v.
vi.
On the First Tk. 2,20,000/- of total income =

On the next Tk. 3,00,000/- of total income =
On the balance of total income
=
nil
10%
15%
20%
25%
30%
However, the threshold limit for woman and senior citizen ageing 65 years or more is Tk. 275,000/ and for
physically handicapped persons Tk. 350,000/- and for gazetted war-wounded freedom fighter is Tk.
4,00,000/-.
After rebate, minimum tax for individual taxpayer is Tk. 3,000 (for city corporation area), Tk. 2,000 (for
pourashava at district town) and Tk. 1,000 (for other areas including upazilla) if total income exceeds the
minimum taxable limit.
Deduction of tax at source from salaries (Section 50+Rule-13)
The employer including Govt. (govt. Employees are taxed only on their basic salaries) shall deduct tax at source at
the time of paying salaries at an average rate applicable to the estimated total income of the employee. At the time of
making such deductions, the amount to be deducted may be increased or decreased for the purpose of adjusting any
excess or deficiency arising out of any previous deductions or failure to make deductions. The employers liability to
deduct tax is absolute and is not affected by any private arrangement whereby the employee has undertaken to
discharge his own tax liability.
The amount deducted shall be deposited to the credit of the Govt. within 2 weeks from the end of the month of
deduction. However DCT can, with the prior approval of the IJCT, permit an employer to pay the tax deducted at
source under the head salaries quarterly on: a)
b)
c)
d)
15th September
15th Decembe
15th March; and
15th June

Page 19 of 137

Practical Problem -1:
Mr. X (50 years old) is the Managing Director of ABC Co. Ltd. He has been given the following monthly
salary and allowances for the year ending on 30th June, 2012.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Basic Salary
Dearness Allowance
Entertainment Allowance
Employers Contribution to P.F. (Recognized)
Lunch Allowance
School fee for the Children of Mr. X
Utility Allowances
Fee for Golf Club (yearly)
Medical Allowance
(Actual expenditure during the year was Tk. 30,000/-)
10.
11.
Festival Bonus Equal to basic pay (got two bonus during the year)
Other Particulars:(1) He has purchased 5 years savings certificates amounting to Tk. 1,00,000/-.
(2) Employer provided him a free accommodation. (Rent of the house is roughly Tk.
35,000p.m.)
(3) Employer also provided him a full time car.
(4) He has been given a servant from his office whose monthly salary is Tk. 1,200/-.
(5) He paid L.I.P. Tk. 50,000/-. (Policy value is Tk. 4,00,000/-).
(6) He contributed Tk. 2,500/- per month to the recognized provident fund (RPF).
Employer also contributed the same.
(7) During the year he received bank interest amounting to Tk. 1,80,000/-( net of tax)
(8) He purchased secondary shares of Tk.75,000/- of a public ltd. company which is
listed in DSE.
Compute the total income and determine the tax liability of Mr. X for the assessment year
2013-2014.

Page 20 of 137

Computation of Total Income of Mr. X
Mr. X
Calculation of total income for the year ended June 2013
Income year- 2013-14
Assessment Year-2014-15
1. Income from Salary (Section-21)
(1) Basic Salary (25000 X12)
(2) D.A. (5000X12)
(3) Entertainment Allowance (1000 X12)
(4) Employers Contribution to R.P.F (2500 X12)
(5) Lunch Allowance (1000 X12)
(6) School Fee (5000 X12)
(7) Utility Allowance (3000 X12)
(8) Notional income for full time car for private use (5% of
Basic Salary as per Rule: 33D,IT Paripatra 2014)
(9) Fee for Golf Club
(10) Medical Allowance (3000 X 12)
Less: lower of 60000 and 10% of Basic Salary
(30,0000 (IT Pariptra 2014)
(11) Festival Bonus (25000 X 2)
(12) Full Free Accommodation:
Rental value of accommodation (35000 X 12)
25% of basic Salary (whichever is less)
(13) Servants Salary (1200 X 12)
Tk.
Tk.
3,00,000
60,000
12,000
30,000
12,000
60,000
36,000
15,000
5,000
36,000
30,000
6,000
50,000
4,20,000
75,000
Salary Income
75,000
14,400
6,75,400
2. Income from Other Sources [Section-33]
Bank Interest (1,80,000 x
100
)
100 10
2,00,000
Total Income
Computation of Investment Allowance

1. Savings Certificate
2. LIP (10% of sum assured)
3. Contribution to R.P.F. (Self + Employer)
4., Investment in shares
Total investment allowances claimed
8,75,400
1,00,000
40,000
60,000
75,000
2,75,000
As per Section 44(3) of the I.T. Ordinance, allowable investment allowance comes to 30% of total income
[excluding employers contribution to R.P.F.] = (8,75,400 - 30,000) x 30% = 2,53,620

Page 21 of 137

TAX CALCULATION
On 1st Tk. 2,20,000/- of Total Income
On Next Tk. 3,00,000/- of Total Income
On Next Tk. 3,55,400/- of Total Income
Tax on Total Income of Tk. 8,82,900
Less: Tax Rebate on Investment Allowance
(2,53,620 X 15%)
Tax
Tax @ 10%
Tax @ 15%
Nil
Tk. 30,000
Tk. 53,310
Tk.83,310
38,043
Total Tax:
Less:- Tax deducted at source from bank interest
45,267
20,000
Net tax liability
25,267
Answer: (1) Total Income: - Tk. 8,75,400

(2) Net tax liability: - Tk. 25,267

Page 22 of 137

Practical Problem -2:
From the following particulars compute the total income and tax liability of Mr. X for the income year ending 30 June
2014.
(a) Salary Income:
Basic salary Tk. 20,000 p.m.
Dearness allowance 20% of basic salary
Bonus 1 months basic salary
House rent allowance 55% of basic salary
Medical allowance Tk. 500 p.m.
Conveyance allowance Tk. 1,200 p.m.
Posting allowance Tk. 5,000 p.m. to meet extra cost of living for posting at Hill District
Subscription to RPF 10% (Employers contribution also same)
Interest accrued Tk. 96,000 on P.F. balance calculated @ 16% p.a.
(b) Interest on Securities:
Interest on SEC approved debenture Tk. 35,000/Interest on Govt. Bond Tk. 70,000/- (TDS @ 10%, Tk. 7,000/- at upfront system 3 years before)
(c) Income from House Property:
Mr. X has one residential house one-half of which is let out at a monthly rent of Tk. 10,000/- and the other half is
self-occupied.
Mr. X incurred following actual expenditures for the full house:
Municipal tax
Repairs and maintenance
Insurance premium
Salary of caretaker
Interest on house building loan
Taka
20,000
60,000
12,000
30,000
1,47,000
(d) Income from Business:

rd share income form a partnership business firm Tk. 73,000 (after tax).
Firms income Tk. 2,25,000/(e) Capital Gain:
Gain from sale of listed companies share Tk. 10,00,000/(f) Income from other sources:
Cash dividend (net) from a listed company Tk. 45,000/Stock dividend of 100 shares (face value Tk. 10 but market price on that day Tk. 1,500 per share)
Interest (net) on savings bank account Tk. 5,400/During the year Mr. X made the following investments:
1. Life insurance premium at the name of his father Tk. 60,000 (Policy value Tk. 5,00,000/-)
2. Investment in shares of a listed company Tk. 1,00,000/3. Contribution to monthly pension scheme of Islami Bank Tk. 5,000/- p.m.

Page 23 of 137

Solutions:
Mr. X
Calculation of Total Income for the year ended June 2013
IY: 2013-14
AY: 2014-15
a)
b)
c)
d)
e)
f)
Description
Salary Income:
Basic Salary (BS)
Dearness allowance
Bonus
House rent allowance (55% of BS)
Less: 50% of BS or 20,000 p.m. lower one
Medical Allowance
Workings
Amount (BDT)
20,000*12
20% of BS
1 months BS
1,32,000
(1,20,000)
6,000
2,40,000
48,000
20,000
Less: Exempted-up to lower of 60,000 or 10% of BS (Rule 33I)

Conveyance Allowance
6,000
14,400
Less: Allowable up to 30,000 (Rule 33D)

Posting Allowance (it can also be allowable fully under sixth
schedule (part A) Para 5)
Employers' contribution to PF
Interest accrued
Less: Allowable @ 14.5% or 1/3 of BS (BS+DA), lower one
(14,400)
60,000
12,000
24,000
96,000
(87,000)
Total Salary Income
9000
4,13,000
Interest on Securities:
Interest on SEC approved debenture
Interest on Govt. bond
Total income from interest on securities
35,000
70,000
1,05,000
Income from House Property:

Annual value
Less: Repair and maintenance
Municipal tax
Insurance premium
Interest on HP loan
Total income from house property
Income from business:
Partnership income
Total income from business
Capital gain:
Sale of share of listed company
Less; Exempted (SRO no. 217, 18.08.2014)
Total capital gain
Income from other sources:
Cash dividend (45,000/.90)
Less: Exempted up to 20,000 ( 6th schedule, Part A, Para 11A)
Interest on savings bank account
Total income from other sources
Total income for Mr. X
25% of AV
225,000*1/3
10,00,000
(10,00,000)
1,20,000
(30,000)
(10,000)
(6,000)
(73,500)
500
75,000
75,000
50,000
(20,000)
30,000
5,400/.90
6,000
36,000
6,29,500

Page 24 of 137

Investment Allowance:
Employees contribution to RPF
Employers' contribution to RPF
Investment in share
Pension scheme (5000*12)
24,000
24,000
1,00,000
60,000
2,08,000
or, 30% of total income excluding Employers

contribution to RPF and taxable portion of
interest on RPF [(6,29500-24000-9000)*30%]
or,
Lower one (1,78,750).
1,78,950
1,50,00,000
So, investment allowance will be on tk. 1,78,950 @ 15%

=Tk.26,843
Calculation Tax Liability:

On the first
Next
Balance
2,20,000
3,00,000
1,09,500
6,29,500
Less: Investment allowance

Less: Tax rebate on partnership income*
Less: TDS (5,000+600)
Net Tax Liability
0%
10%
15%
0
30,000
16,425
46,425
(26,843)
19,582
(2,333)
17,249
(5,600)
11,649
(as per sixth schedule (part b) Para - 16)

= (19,582/6,29,500)*75,000
=2,333
Note: Assuming Mr. X is below 65 years old.

Answer:
Total income Taka 6,29,500
Net Tax Liability Taka 8,450

Page 25 of 137
Part: Three
Income from Interest on Securities
Income from Interest on Securities:
Study Reference:
Section; 22, 23, 51, 172(d), 106
Sixth Schedule (part A); Para 24 and Para 40
Types of Securities:
1.
2.
3.
Government Securities
Government Approved Securities
Securities/Debentures issued by company or local authority.
Income from savings certificate will be

treated as other income.
Sixth Schedule (part A):

Para 24: Interest on tax free government securities are totally tax free.
Para 40: Interest on Zero Coupon Bond (ZCB) is tax free
Section 22:
Section 22; Interest on securities:
The following income of an assessee shall be classified and computed under the head "Interest on securities",
namely:(a) interest receivable by the assessee on any security of the Government or any security approved by
Government; and
(b) interest receivable by him on debentures or other securities of money issued by or on behalf of a
local authority or a company.
But Supreme Court says tax should be deducted when it is received or withdrawn (case ref: Lal Bhai Dolpat Bhai Vs
CIT Bombay, 1952)
Section 23:
Section 23; Deductions from interest on securities:
(1) In computing the income under the head "Interest on securities", the following allowances and deduction
shall be made, namely:(a) any sum deducted from interest by way of commission or charges by a bank realising the interest
on behalf of the assessee;
(b) any interest payable on money borrowed for the purpose of investment in the securities by the
assessee:
Provided that no allowance or deduction on account of any interest or commission paid under
clause (a) or (b), as the case may be, in respect of, or allocable to the securities of
Government which have been issued with the condition that interest thereon shall not be
liable to tax, shall be made in computing the income under section 22;
[(c)]Deleted F.A. 1995
(2) Notwithstanding anything contained in sub-section (1), no deduction shall be allowed under this section in
respect of any interest payable outside Bangladesh on which tax has not been paid or deducted in accordance
with the provisions of Chapter VII.

Page 26 of 137
Section 51:
Section 51; Deduction at source from interest on securities:
1. (1) In the case of the security of the Government, or security approved by the Government, unless the
Government otherwise directs, the person responsible for issuing any security, income of which is
classifiable under the head "Interest on securities", shall collect income tax at the rate of five percent
(5%)Subs by F.A. 2014 upfront on interest or discount, receivable on maturity, from the purchaser of the
securities:
2. Deleted F.A. 2014
3. [(2)]Deleted F.A. 2005
4. [(3)]Deleted F.A. 2014
Example (Upfront Systems);
A person purchase securities of tk. 10,000,000 @ 6% simple interest matured after 3 years.
So, interest income after 3 years = tk. (10,000,000*6%*3) = tk. 1,800,000.
But TDS @ 5% on tk. 1,800,000 (which is tk. 90,000) should be deducted today.
Section 172(d):
Section 172(d); Relief:
His (person) having received in arrears in one income year any portion of his income from interest on securities
relatable to more income years than one; the Deputy Commissioner of Taxes may, on an application made to him
in this behalf, determine the tax payable as if the salary, payment or interest had been received by the assessee
during the income year or years to which it relates and may refund the amount of tax, if any, paid in excess of the
tax so determined.
Section 106; Avoidance of tax by transactions in securities:

(1) Where the owner of any securities sells or transfers those securities and buys them back or reacquires them, or
buys or acquires similar securities, and the result of the transactions is that any interest becoming payable in respect
of the original securities sold or transferred by the owner is not receivable by the owner, the interest payable as
aforesaid shall be deemed, for all purposes of this Ordinance, to be the income of such owner and not of any other
person, whether the interest payable as aforesaid would or would not have been chargeable to tax apart from the
provisions of this sub-section.
2) Where any person has had for any period during an income year any beneficial interest in any securities and the
result of any transactions within that year relating to such securities or the income thereof is that no income is
received by him, or that the income received by him is less than the sum which the income would have amounted to
had the income from such securities accrued from day to day, and been apportioned to the said period, then the
income from such securities for the said period shall be deemed to be the income of such person.
(3) Where, any person carrying on a business which consists wholly or partly in dealing in securities buys or acquires
any securities from any other person and either sells back or re-transfers those securities, or sells or transfers similar
securities, to such other person, and the result of the transactions is that the interest becoming payable in respect of
the securities bought or acquired by him is receivable by him but is not deemed to be his income by reason of the
provisions of sub-section (1), no account shall be taken of the transactions in computing for any of the purposes of
this Ordinance any income arising from, or loss sustained, in the business.
(4) The Deputy Commissioner of Taxes may, by notice in writing, require any person to furnish him, within such
time, not being less than twenty-eight days, as may be specified in the notice, such particulars in respect of all
securities of which such person was the owner, or in which he had beneficial interest at any time during the period
specified in the notice, as the Deputy Commissioner of Taxes may consider necessary for the purpose of ascertaining
whether tax has been borne in respect of the interest on all those securities and also for other purposes of this section.
Page 27 of 137
Explanation.- For the purposes of this section,(a) "interest" includes dividend;

(b) "securities" includes stocks and shares; and
(c) securities shall be deemed to be similar if they entitle their holders to the same right against the same persons as
to capital and interest and the same remedies for the enforcement of these rights, notwithstanding any difference in
the total nominal amounts of the respective securities or in the form in which they are held or in the manner in which
they can be transferred.
Income from House Property:

Study References:
Section; 2(3), 24, 25, 19(22), 33(c), 53A
Sixth Schedule (Part A); Para 1, Para 38
SRO 454 (Serial No. 18) Date 31/12/1980
Introduction:As per Income Tax Ordinance, 1984 house property means any building (including furniture, fixture, fittings etc.) and
land appurtenant thereto owned by the assessee and rented for commercial or residential purposes. Property
situated outside Bangladesh should also be assessed according to the same provision of section 24 of the Income Tax
Ordinance, 1984. Rental income derived from vacant plots of land will not be treated as house property income rather
it will be treated as income from other sources u/s 33.If an assessee let out his machinery, plant or furniture along
with building and the letting out building is inseparable from the letting of machinery, plant or furniture, the income
must necessarily be assessed as income from other sources and in such a case there is no room for disintegrating the
rent or assessing a part of the rent as income from house property.
Section 24; Income from House Property:

Ownership of the property:The tax on house property income is upon the owner (either legal or beneficial) and not upon the occupant. The mere
existence of a dispute regarding the title to ownership of a certain property cannot of itself hold up an assessment
even if a suit has been filed, otherwise it would be open to an assessee to delay assessment indefinitely. The DCT has
prima facie the power to decide whether the person sought to be taxed is the owner of the property.
For example, if a person (a government employee) give rent to his government quarter and received rent @
tk. 10,000 per month. This house property income will not be added to his HP income as he does not possess the
ownership of the house. Rather it can be added to his income from other sources.
Assessment of Co-owner:As per section 24(2), where property is owned by two or more persons and their respective shares are definite and
ascertainable, the co-owners should not be assessed in respect of their income from such property as an association of
persons (AOP), but each co-owner must be assessed individually in respect of his share of house property income.
Though the property may be possessed jointly by co-heirs under the Muslim law, the shares of co-heirs under that law
are definite and ascertainable, and therefore each of the heirs must be separately assessed u/s 24 in respect of his
share of house property income.
For example, Mr. A having been a building at Motijhel C/A received rent @ tk. 1,000,000 per month. But
after his death the property is divided among his 4 sons (B, C, D and E) and they received tk. 250,000 each from this
building. But according to income tax law they cannot be assessed for tk. 1,000,000 aggregately as an AOP, rather
portion of their receipt will be added up with their individual income and they will assessed individually.
Page 28 of 137
Self-occupied property:In respect of house property, no tax is payable if the owner occupies the property for his own residence or for the
purpose of his business or profession the profits of which are assessable to tax u/s 28.
Section 2(3); Annual Value:

Income tax is levied not upon the actual income from the property but upon the notional income based an annual
value. Annual value is defined in section 2(3) as The sum for which the property might reasonably be expected
to let from year to year and any amount received by letting out furniture, fixture, fittings etc. That is, the sum for
which the owner could let the premises having regard to all the prevailing circumstances such as local conditions and
the demand for house in that particular locality. Where the property is let out and the rent is received by the owner,
the annual value may be more or less than the actual rent received as the annual value is only a hypothetical sum. In
case where the actual consideration received by the owner from his tenant does not represent the annual value,
evidence of such annual value may be afforded by the rents paid for similar and similarly situated properties in the
locality.
Grossing-up when the owners burden borne by the tenant:

It is necessary to take into account the whole of the consideration exacted by the owner for the right to use and
occupy the property. For example, where the tenant agrees to pay the service charge which is actually payable by the
owner, the total consideration paid by the tenant is the house rent plus the service charge and that is the figure which
may be taken as evidence of the annual value by grossing-up.
Treatment of advance when it is not adjustable against house rent:

In case the advance received by the owner is not adjustable against house rent then such advance will be treated as
house property income as per section 19(22) of the Income Tax Ordinance, 1984. However, such advance may be
allocated into 5 years including 1st year in equal proportion if the assessee opts so. Where such advance or part
thereof is refunded by the owner then the amount so refunded shall be deducted if it is taken as income as per section
19(22).
Maintenance of separate bank account by the owner of the house property (Rule 8A)
Where any person having ownership or possession of any house property, whether used for residential or commercial
purpose, receives any rent exceeding Tk. 25,000/- per month shall have to operate a separate bank account for the
purpose of depositing rent and advance (if any) received from such house property. He shall also maintain a separate
register for recording particulars of tenants and amount received or receivable from the tenants.
Penalty can be imposed by the DCT as per section 123(2) for any violation of this rule. The maximum penalty is 50%
of tax payable on house property income or Tk. 5,000/-, whichever is higher.
Deduction of tax at source from house rent (Section 53A):

Tax is to be deducted at source by the following tenants from the payment of house rent at @ 5% by any Govt.
organization, NGO, Company, Bank (including co-operative bank, University, Medical/Dental/Engineering College,
Any school and college, and Hospital/clinic/diagnostic center.

Page 29 of 137

For Example, P Bank let a house @ tk. 50,000 per month with advance of tk. 500,000 which is adjustable with rent @
tk. 10,000 per month, so
TDS on rent = tk. (50,000*5%) = tk. 2,500
Payment in each month = tk. (50,000 10,000, - 2,500) = tk. 37,500
Annual Value = tk. (50,000*12) = tk. 600,000
TDS on tk. 500,000 (at the time of payment) = 0
Exemption from payment of tax (Sixth Schedule):

Income from house property held under trust or other legal obligation wholly for religious or charitable purpose is
exempt from payment of tax as per 6th schedule (part-A) paragraph-1(1). However, this provision will not be
applicable for NGO. (Rent income of FBCCI or MCCI is also tax free as per SRO-210 dated 01 July 2013)
Sixth Schedule (Part A), Para 38:
Any income derived from any building situated in any area of Bangladesh, not less than five storied having at
least ten flats, constructed at any time between the first day of July, 2009 and the thirtieth day of June, 2014
(both days inclusive), for ten years from the date of completion of construction of the building, except the
buildings situated in any areas of City Corporation, Cantonment Board, Tongi Upazilla, Narayanganj
Paurashava, Gazipur Paurashava and any Paurashava under Dhaka District are excluded from the total income.
House property income of any chamber of commerce and industry is completely tax free as per SRO no 210,
dated 01/07/2013.
Allowable deductions from annual value to derive income from house property (Section 25):In computing house property income, the following allowances are deductible from the annual value:(1) Repairs and maintenance:The following expenditure relating to repairs, maintenance and provision of basic services is granted as a deduction
even if no evidence for such expenditure is produced. Where the property is let out for residential purposes the
allowable deduction is 1/4th of the annual value and where it is let out for commercial purpose the allowable
deduction is 30% of the annual value:
(a)
Repairs;
(b)
Expenditure relating to collection of rent;
(c)
Water and sewerage;
(d)
Common electricity;
(e)
Salary of darwan, security guard, pump-man, lift-man, caretaker
(f)
All other expenditure related to maintenance and provision of basic services.
(2) Land development tax*;

(3) Municipal tax*;
(4) Ground rent*;
(5) Insurance Premium*,
(6) Vacancy allowance (if the property remain vacant during a part of the year);
(7) Where the let out property is acquired, constructed, repaired, renewed or reconstructed with loan then the
interest payable for the year on such loan*;
(8) Where the let out property has been constructed with borrowed capital and there was no house property income
during the period of construction, the interest payable during the period of construction will be allowable in 3
equal installments from first 3 years of letting out*;
Page 30 of 137
(9) Irrecoverable rent:Relief in respect of irrecoverable rent has been granted through S.R.O. No:-454-L/80 dated 31-12-1980 if the
following conditions are fulfilled:
(a) The tenancy is bona-fide;
(b) The defaulting tenant has vacated, or steps have been taken to compel him to vacate the property;
(c) The defaulting tenet is not in occupation of any other property of the assessee;
(d) The assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid
rent or satisfies the Deputy Commissioner of Taxes that legal proceedings would be useless and;
(e) The annual Value of the property to which the unpaid rent relates has been included in the assessed
income of the year during which that rent was due and income tax has been duly paid on such assessed
income;
The concession given here appears to be an exemption but it is actually a deduction as that part of rent which
will be irrecoverable and which has already been charged in the preceding year will be deducted from the
total income in the subsequent year.
*If the full house is not rented (partly used by owner or his dependent) than all of these deduction shall be made
proportionately.
Problem 1:
Mr. Alam a retired govt. officer owns a two-stored house in Dhanmondi, Dhaka. He along with his family occupies
the ground floor while the first floor has been let out October 1, 2011 for a monthly rental of tk. 60,000 and before
than it was vacant for about 3 months. He has constructed the house with a loan of tk. 25 lac from National Bank
Limited and paid interest of tk. 321,000 during the construction period from January 2010 to June 2010. During the
financial year 2009-10 he has paid tk. 5 lac to the bank. His other expense relation to the property for 2011-12 FY are
Repair and maintenance

tk. 50,000
Insurance premium
tk. 5,000
Municipal tax
tk. 20,000
Bank interest
tk. 50,000
Salary of security guard
tk. 10,000
Municipal value of the property
tk. 300,000
Compute the house property income for Mr. Alam for the assessment year 2012-13.
Solution:
Mr. Alam
Calculation of House Property Income
AY: 2012-13
Description
Workings
Annual Value (AV)*
60,000*12
Less: Repair and Maintenance
1/4 of AV
Municipal Tax
1/2
Insurance
1/2
Bank interest
1/2
Vacancy allowances
60,000*3
Interest at construction stage
1/2 of 1/3
Net House Property Income
Amount (BDT)
7,20,000
(1,80,000)
(10,000)
(2,500)
(25,000)
(1,80,000)
(53,500)
2,69,000
*As no reasonable rent is given, total rent is assumed as annual value.

** Assumed that house was rented for residential purpose.
Page 31 of 137

Problem 2:
Mr. Azim owns a house the municipal value of which is tk. 220,000. Half of the house has been let out at tk. 25,000
per month. The rest of the house is used by his son in law who pays nothing for the use. Following were the expenses
for the house in FY 2011-12;
White wash and repair
Insurance premium
Municipal tax
Water and sewerage charges
Interest on mortgage
Service charges
Land revenue tax
Cost of alteration
tk. 6,000
tk. 4,000
tk. 5,000
tk. 7,000
tk. 4,000
tk. 6,000
tk. 2,000
tk. 15,000
He has a residential house situated at Uttara, Dhaka. The city corporation for tax purpose valued its annual value at
tk. 200,000. He spent tk. 6,000 for its repair and paid city corporation tax at tk. 5,000. He also paid interest on a loan
taken from Agrani bank for alteration and expansion of the house for which interest payable was tk. 20,000 per year.
Compute the house property income for Mr. Azim for the assessment year 2012-13.
Solution:
Mr. Azim
Calculation of House Property Income
AY: 2012-13
Description
Annual Value (AV)*
Less: Repair and Maintenance
Municipal Tax
Insurance
Land revenue tax
Interest on mortgage
Workings
25,000*12
1/4 of AV
1/2
1/2
1/2
1/2
Amount (BDT)
3,00,000
(75,000)
(2,500)
(2,000)
(1,000)
(2,000)
Net House Property Income
2,17,500
*As no reasonable rent is given, total rent is assumed as annual value.

* Assumed that house was rented for residential purpose.
* white wash and repair, water and sewerage and service charges are within
1/4 statutory deduction of repair and maintenance.
* Cost of alteration is capital expenditure which is not cover u/s 25. so it is
not considered in computing HP income.
* As the full house was not let out and annual value is determined on 50% of
the property, so all related expenditure allowed proportionately.

Page 32 of 137
Agricultural Income:
Study References:
Section; 2(1), 26, 27, 35, 19(17), 19(19)
Rule: 31 and 32
Third Schedule
Sixth Schedule (Part A); Para 27, Para 29 and Para 45
Section 2(1) & 26; Agricultural Income:

Section 2(1):
Agricultural income means (a) any income derived from any land in Bangladesh and used for agricultural purposes (i) by means of agriculture; or
(ii) by the performance of any process ordinarily employed by a cultivator to render marketable the
produce of such land; or
(iii) by the sale of the produce of the land raised by the cultivator in respect of which no process, other
than that to render the produce marketable, has been performed; or
(iv) by granting a right to any person to use the land for any period; or
(b) any income derived from any building which (i) is occupied by the cultivator of any such land as is referred to in sub-clause (a) in which any
process is carried on to render marketable any such produce as aforesaid;
(ii) is on, or in the immediate vicinity of such land; and
(iii) is required by the cultivator as the dwelling house or store-house or other out-house by reason of his
connection
such land; income:
Section 26;with
Agricultural
(1) The following income of an assessee shall be classified and computed under the head "Agricultural income",
namely:(a) any income derived by the assessee which comes within the meaning of "agricultural income" as defined
in secion 2(1);
(b) the excess amount referred to in section 19(17);
(c) the excess amount referred to in section 19(19).
(2) Agricultural income derived from the sale of tea grown and manufactured by the assessee shall be computed in
the prescribed manner.
(3) Where the Board, by notification in the official Gazette, so directs, agricultural income from the sale of rubber,
tobacco, sugar or any other produce grown and manufactured by the assessee may be computed in the manner
prescribed for the purpose.

Page 33 of 137
Section 27; Deduction Agricultural Income:

Section 27; Deduction Agricultural Income:
(1) In computing the income under the head "Agricultural income", the following allowances and deductions shall
be made, namely:(a) any land development tax or rent paid in respect of the land used for agricultural purposes;
(b) any tax, local rate or cess paid in respect of the land used for agricultural purposes, if such tax, rate or
cess is not levied on the income arising or accruing, or deemed to accrue or arise, from agricultural
operations or is not assessed at a proportion or on the basis of such income;
(c) (i) subject to sub-clauses (ii) and (iii), the cost of production, that is to say, the expenditure incurred
for the following purposes, namely:(a) for cultivating the land or raising livestock thereon;
(b) for performing any process ordinarily employed by a cultivator to render marketable the
produce of the land;
(c) for transporting the produce of the land or the livestock raised thereon to the market; and(d)
for maintaining agricultural implements and machinery in good repair and for providing upkeep
of cattle for the purpose of cultivation, processing or transportation as aforesaid;
(ii) where books of accounts in respect of agricultural income derived from the land are not
maintained, the cost of production to be deducted shall, instead of the expenditure mentioned in
sub-clause (i). be sixty per cent of the market value of the produce of the land;
(iii) no deduction on account of cost of production shall be admissible under this clause if the
agricultural income is derived by the owner of the land from the share of the produce raised through
any system of sharing of crop generally known as adhi, barga or bhag;
(d) any sum paid as premium in order to effect any insurance against loss of, or damage to, the land or
any crop to be raised from, or cattle to be reared on, the land;
(e) any sum paid in respect of the maintenance of any irrigation or protective work or other capital assets
; and such maintenance includes current repairs and, in the case of protective dykes and embankments, all
such work as may be necessary from year to year for repairing any damage or destruction caused by flood
or other natural causes;
(f) a sum calculated at the rate as provided in the Third Schedule on account of depreciation in respect of
irrigation or protective work or other capital assets constructed or acquired for the benefit of the land
from which agricultural income is derived or for the purpose of deriving agricultural income from the
land, if the required particulars are furnished by the assessee;
(g) where the land is subject to a mortgage or other capital charge for purposes of reclamation or
improvement, the amount of any interest paid in respect of such mortgage or charge;
(h) where the land has been acquired, reclaimed or improved by the use of borrowed capital, the amount
of any interest paid in respect of such capital;
(i) where any machinery or plant which has been used by the assessee exclusively for agricultural
purposes has been discarded, demolished or destroyed in the income year, the amount actually written off
on that account in the books of accounts of the assessee,(i) subject to the maximum of the amount by which the written down value of the machinery or
plant exceeds the scrap value thereof if no insurance, salvage or compensation money has been
received in respect of such machinery or plant; and
(ii) subject to the maximum of the amount by which the difference between the written down value
and the scrap value exceeds the amount of insurance, salvage or compensation money received in
respect of such machinery or plant;
(j) where any machinery or plant which has been used by the assessee exclusively for agricultural
purposes has been sold or transferred by way of exchange in the income year, the amount actually written
off on that account in the books of accounts of the assessee, subject to the maximum of the amount by
which the written down value of the machinery or plant exceeds the amount for which it has been actually
sold or transferred; and
(k) any other expenditure, not being in the nature of capital expenditure or personal expenditure, laid out
wholly and exclusively for the purpose of deriving agricultural income from the land.
(2) Notwithstanding anything contained in sub-section (1), no deduction shall be allowed under this section in
respect of any interest on which tax has not been paid or deducted in accordance with the provisions of Chapter
VII.
Page 34 of 137
Section 35 - Method of accounting:

Books of accounts shall be maintain in
1. Income from Business and Profession
2. Agricultural Income
3. Income from Other Sources
Rule 31 and 32: Sale of Tea and Rubber

Rule 31; Computation of income derived from the sale of tea:
1. Income derived from the sale of tea grown and manufactured by the seller in Bangladesh shall be computed as if
40% of such income was derived from business and 60% of such income was derived from agriculture:
Provided that in computing, such income from business, an allowance shall be made in respect of the cost of
planting bushes in replacement of bushes that have died or become permanently useless in an area already
planted, unless such area has previously been abandoned:
Provided further that in computing such income an allowance shall be made in respect of the expenditure incurred
in the income year by the assessee in connection with the development of the new areas for bringing them under
tea cultivation.
Rule 32; Computation of income derived from the sale of rubber:

1. Income derived from the sale of rubber grown and manufactured by the seller in Bangladesh shall be computed
as if 40% of such income was derived from business and 60% of such income was derived from agriculture.
Provided that in computing such income an allowance shall be made in respect of the expenditure incurred in the
income year by the assessee in connection with the development of the new areas for bringing them under rubber
cultivation.
Section 19 (17) and 19(19):

Section 19(17):
Where any machinery or plant exclusively used by an assessee for agricultural purposes has been disposed of in
any income year and the sale proceeds thereof exceeds the written down value, so much of the excess as does not
exceed the difference between the original cost and the written down value shall be deemed to be the income of
the assessee for that income year classifiable under the head "Agricultural income".
For example, an agricultural machinery
Cost price
Tk. 100
Less: Depreciation
(30)
WDV
Tk. 70
Now, if machine is sold @ tk. 78 or tk. 68 or tk. 114 treatment of gain will be as follows;
Case 1: Tk. 8 is agricultural income
Case 2: Tk. 2 is agricultural loss
Case 3: Tk. 30 is agricultural income and tk. 14 is capital gain
Section 19(19):
Where any insurance, salvage or compensation moneys are received in any income year in respect of any
machinery or plant which having been used by the assessee exclusively for agricultural purpose is discarded,
demolished or destroyed and the amount of such moneys exceed the written down value of such machinery or
plant, so much of the excess as does not exceed the difference between the original cost and the written down
value less the scrap value shall be deemed to be the income of the assessee for that income year classifiable under
the head "Agricultural income".
Page 35 of 137

For example, an agricultural machinery
Cost price
Tk. 100
Less: Depreciation
(30)
WDV
Tk. 70
Now, if machine is destroyed and insurance claim and sale of scrap generate tk. 78 or tk. 68 or tk. 114 treatment of
such gain will be as follows;
Case 1: Tk. 8 is agricultural income
Case 2: Tk. 2 is agricultural loss
Case 3: Tk. 30 is agricultural income and tk. 14 is capital gain
Sixth Schedule (Part A):

Para - 27:
Notwithstanding anything contained in any order or regulation for the time being in force, any income of an
individual, being an indigenous hillman of any of the hill districts of Rangamati, Bandarban and Khagrachari,
which has been derived solely from economic activities undertaken within the said hill districts.
Para - 29:
Any income, not exceeding two lakh taka, chargeable under the head "Agricultural income" of an assessee, being
an individual, whose only source of income is agriculture.
Para - 46:
Any income derived from production of corn, mize, sugarbeet are exempted upto fifty (50) percent.
Third Schedule; Computation of Depreciation Allowance:

Para 1; Depreciation allowance on assets used for agricultural purposes
Para 2; Allowance for depreciation
See the details from the Income Tax Ordinance 1984. [No change in F. A. 2014]

Page 36 of 137
Part: Four
Capital Gain
Capital Gain:
Study References:
Section; 2(15), Capital Asset
31, Capital Gain
32, Manner of computing capital gain; read with rule - 42
Second Schedule; Tax rate on capital gain
Sixth Schedule (Part A), Para 18, Para 43
Share Market: SRO No. 269; date 01/07/2010.
Section 2(15) & 31:

Section 2(15); Capital Assets:
"Capital asset" means property of any kind held by an assessee, whether or not connected with his business or
profession, but does not include-(a) any stock-in-trade (not being stocks and shares), consumable stores or raw materials held for the purposes of
his business or profession; and
(b) personal effects, that is to say, movable property (including wearing apparel, jewellery, furniture, fixture,
equipment and vehicles), which are held exclusively for personal use by, and are not used for purposes of the
business or profession of the assessee or any member of his family dependent on him;
[(c) agricultural land in Bangladesh, not being land situated
(i) in any area which is comprised within the jurisdiction of Dhaka, Narayanganj and Gazipur districts,
Chittagong Development Authority (CDA), Khulna Development Authority (KDA), Rajshahi
Development Authority (RDA), a City Corporation, Municipality, Paurashava, Cantonment Board; or
(ii) in any area within such distance not being more than five miles from the local limits of Rajdhani Unnayan
Kartripakya (RAJUK), Chittagong Development Authority (CDA), Khulna Development Authority (KDA),
Rajshahi Development Authority (RDA), a City Corporation, Municipality, Paurashava, Cantonment Board
referred to in paragraph (i), as the Government may having regard to the extent of, and scope for, urbanisation of
that area and other relevant considerations, specify in this behalf by notification in the official Gazette;]F.A. 2011. [
Sub-clause (c) inserted by F.A. 2011 and subsequently omitted by F.A. 2014]
Section 31; Capital gains:
1. Tax shall be payable by an assessee under the head "Capital gains" in respect of any profits and gains
arising from the transfer of a capital asset and such profits and gains shall be deemed to be the income of
the income year in which the transfer took place[.]Subs F. A. 2011
[Proviso] Deleted F.A. 2011
Section 32; Computation of capital gains:

Capital gain computed as follows;
1.
If capital gain is from purchased property:

Capital gain = Sales price Acquisition price
Acquisition price = actual cost + other expenses to make it useable
2.
If capital gain is from gifted property:

Capital gain = Sales price Acquisition price of the person gifted the property.
If that person, who gifted the property, also received the property as gift, than the fair market value at the
time of his receipt.

Page 37 of 137
For example, Mr. A gifted a land by Mr. X, which have a fair market value to Tk. 10 lac. Few years later Mr.
A gifted it to Mr. B. B sales the land for tk. 25 lac. Than capital gain for B is,
Capital gain = tk. 10 lac tk. 25 lac = tk. 15 lac.
3.
If capital gain is from inherited property:

Capital gain = Sales price Acquisition price.
Acquisition price = fair market value when the seller received the land.
For example, Mr. A has some land. Few years later Mr. A became dead and all of his land goes to his son
Mr. B, which has a fair market value of tk. 20 lac at that moment. 2 years later B sales the land for tk. 25
lac. Than capital gain for B is,
Capital gain = tk. 20 lac tk. 25 lac = tk. 5 lac.
TDS: Tax shall be deducted at 2% on the sale price and this deduction is final for tax settlement of capital
gain.
Capital gain on sale of property of business and profession is tax free if another property is purchased within
one (1) year (before or after).
For example,
A Capital machinery with cost of tk. 1,000
Sales price
(1,600)
Capital Gain
tk. 600
Purchase another building within one year (before or after) by this capital gain than this tk. 600 is tax free. But,
Sl
Situation
Consequences
If purchase price is tk. 600
No gain tax and tax depreciation is not allowable for that property.
Gain tax on tk. 100 and tax depreciation is not allowable for that
property.
No gain tax, but tax depreciation is allowable for tk. 300.
Gain on sale of govt. securities is tax free.
Second Schedule; Para 2 (Tax rate on capital gain):

Where the total income of an assessee includes any income chargeable under the head "Capital gains" (hereinafter
referred to as the "said income"), the tax payable by him on his total income shall be(a) in the case of a company(i) tax payable on the total income as reduced by the said income had such reduced income been the total
income; plus
(ii) tax at the rate of fifteen per cent on the whole amount of the said income;
(b) in the case of a person other than a company(i) where the said income arises as a result of disposal by the assessee of his capital assets after not more
than five years from the date of their acquisition by him, tax payable on the total income including the said
income; and
(ii) where the said income arises as a result of disposal by the assessee of his capital assets after five years
from the date of their acquisition by him, tax payable on the capital gains at the rate applicable to his total income
including the said capital gains, or tax at the rate of fifteen per cent on the amount of the capital gains whichever
is the lower.

Page 38 of 137
Sixth Schedule (Part A); (Exclusion from income):

1.
2.
3.
4.
5.
Para 11 A -- income from dividend amounting to twenty thousand (20,000 ) taka [change in F.A. 2014].
(Ten thousand (10,000) taka was inserted by F.A. 2013).
Para 18; share of capital gain from partnership.
Para 29 -- when agriculture is the only source of income,an assessee is allowed to get an exemption of a
maximum amount of Tk. 2,00,000 [change in F.A. 2014].
Para 32A -- Any sum or aggregate of sums received as interest from pensioners' savings certificate or wage
earners bond where the total accumulated investment at the end of the relevant income year in such
certificate or bond does not exceed taka five lakh. [ change in F.A. 2014]
Para 43; capital gain from sale of share of non-resident non-Bangladeshi shareholders F.A. 2011.
In case of non-resident no-Bangladeshi shareholders, if this gain is tax free in his country, than it will also
tax free in Bangladesh.
If property is sold (and capital gain is also happened) in exchange of share (not in cash) than this gain is
totally tax free. For example, Mr. X sold his land @ tk. 1 crore to ABC Co. which has a cost price of tk. 60
lac. But he receives share of tk. 1 crore from the company instead of cash. Than his capital gain of tk. 40 lac
is tax free.
SRO 269; (Tax on Capital Gain from sale of share);

1.
2.
3.
4.
In case of company @ 10%.

In case of placement shareholder or sponsor shareholders @ 5%.
If any person holds more than 10% of share of a company than gain on sale of such share is taxable @ 5%.
In case of individual, tax free.

Page 39 of 137
Part: Five
Income from Business and Profession
Income from Business and Profession:
Study References:
Section; 2(34), Income
2(14), Business
2(49), Profession
2(61), Speculative Business
Definitions
Section; 19(15) a, aa, b, c

19(16) with 3rd schedule Para 10
19(18) with section 29(1)(xii)
19(20)
19(23) read with rule 30A
Deemed Income
Section; 28 read with rule - 19(6)

29
30 read with rule 65
35
46B + 46C
Main Section
Sixth Schedule (Part A), Para 1A, Para 33, Para 35, Para 37, Para 39, Para42, Para 44, Para
45.
Third Schedule; tax depreciation
SRO; CSR; 229 of 2011 and 223 of 2012
SRO CSR: No. 223 dated 27 June 2012 and No. 186 dated 01 July 2014
Rule 30, 31, 32
Definitions:
Section 2(34); Income:
Income includes(a) any income, profits or gains, from whatever source derived, chargeable to tax under any provision of this
Ordinance under any head specified in section 20;
(b) any loss of such income, profits or gains;
(c) the profits and gains of any business of insurance carried on by a mutual insurance association computed in
accordance with paragraph 8 of the Fourth Schedule;
(d) any sum deemed to be income, or any income accruing or arising or received, or deemed to accrue or arise
or be received in Bangladesh under any provision of this Ordinance:
[]Deleted F.A. 1993
Provided that the amount representing the face value of any bonus share or the amount of any bonus declared,
issued or paid by any company registered in Bangladesh under , 1994 (1994 18 ) to
its shareholders with a view to increase its paid-up share capital shall not be included as income of that
shareholder;
Section 2(14); Business:
Business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade,
commerce or manufacture.
Section 2(49); Profession:
Profession includes a vocation
Page 40 of 137
Section 2(61); Speculative Business:

Speculation-business means business in which a contract for the purchase or sale of any commodity, including
stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the
commodity or scripts, but does not include business in which (a) a contract in respect of raw materials or merchandise is entered into by a person in the course of his
manufacturing or mercantile business to guard against loss through future price fluctuations for the purpose of
fulfilling his other contracts for the actual delivery of the goods to be manufactured or the merchandise to be
sold by him;
(b) a contract in respect of stocks and shares is entered into by a dealer or investor therein to guard against loss
in his holdings of stocks and share through price fluctuations; and
(c) a contract is entered into by a member of a forward market or a stock exchange in the course of any
transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of
his business as such member;
Rules:
Rule 30; Determination of income from business when such income is also partially agricultural:
In the case of income which is partially "agricultural income" and partially income from "business", in
determining that part of income which is from "business", the market value of any agricultural produce which
has been raised by the assessee or received by him in kind and which has been utilised as raw material in such
business or the sale proceeds of which are included in the accounts of the business shall be deducted, and no
further deduction shall be made in respect of any expenditure incurred by the assessee as a cultivator or receiver
of the produce in kind.
Rule 31; Computation of income derived from the sale of tea:

1.
Income derived from the sale of tea grown and manufactured by the seller in Bangladesh shall be
computed as if 40% of such income was derived from business and 60% of such income was derived
from agriculture:
Provided that in computing, such income from business, an allowance shall be made in respect of the
cost of planting bushes in replacement of bushes that have died or become permanently useless in an
area already planted, unless such area has previously been abandoned:
Provided further that in computing such income an allowance shall be made in respect of the
expenditure incurred in the income year by the assessee in connection with the development of the new
areas for bringing them under tea cultivation.
Rule 32; Computation of income derived from the sale of rubber:

1. Income derived from the sale of rubber grown and manufactured by the seller in Bangladesh shall be
computed as if 40% of such income was derived from business and 60% of such income was derived
from agriculture.
Provided that in computing such income an allowance shall be made in respect of the expenditure
incurred in the income year by the assessee in connection with the development of the new areas for
bringing them under rubber cultivation.

Page 41 of 137
Deemed Income:
Section 19(15); Deemed Income:
Where, for the purpose of computation of income of an assessee under section 28, any deduction has been made
for any year in respect of any loss, bad debt, expenditure or trading liability incurred by the assessee, and-(a) subsequently, during any income year, the assessee has received, except as provided in clause (aa) whether in
cash or in any other manner whatsoever, any amount in respect of such loss, bad debt, or expenditure, the
amount so received shall be deemed to be his income from business or profession during that income year
(example -1);
(aa) such amount on account of any interest which was to have been paid to any commercial bank or the
Bangladesh Development Bank ltd or on account of any share of profit which was to have been paid to any
bank run on Islamic principles and which was allowed as a deduction in respect of such expenditure though such
interest or share of profit was not paid by reason of the assessee having maintained his accounts on mercantile
basis, within three years after expiry of the income year in which it was allowed, shall, to such extent as it
remains unpaid, be deemed to be income of the assessee from business or profession during the income year
immediately following the expiry of the said three years (example -2);
(b) the assessee has derived, during any income year, some benefit in respect of such trading liability (discount),
the value of such benefit, if it has not already been treated as income under clause (c), shall be deemed to be his
income from business or profession during that income year;
(c) such trading liability or portion thereof as has not been paid within three years of the expiration of the income
year in which deduction was made in respect of the liability, such liability or portion, as the case may be, shall
be deemed to be the income of the assessee from business or profession during the income year immediately
following the expiry of the said three years; and the business or profession in respect of which such allowance or
deduction was made shall, for the purposes of section 28, be deemed to be carried on by the assessee in that
year:
Provided that where any interest or share of profit referred to in clause (aa) or a trading liability referred to in
clause (c) is paid in a subsequent year, the amount so paid shall be deducted in computing the income in respect
of that year.
Example 1: Salary charged in the Income Statement and allowed by the tax authority in AY 2011-12. But
subsequently the salary was not withdrawn by the employee. Than this expenditure will be treated as income in AY
2012-13.
Example 2: Interest on loan was incurred (but not paid) in IY 2011. But if it is not paid in the subsequent 3 years
than it will be treated as income in the following year (IY 2015). But if the interest paid subsequently in 2016 it will
deducted from the income of 2016.
Section 19(15)(c) is like Section 19(15)(aa) but for trading liability.
Section 19(16):
Where any building, machinery or plant having been used by an assessee for purpose of any business or profession
carried on by him is disposed of during any income year and the sale proceeds thereof exceeds the written down
value, so much of the excess as does not exceed the difference between the original cost and the written down
value shall be deemed to be the income of the assessee for that income year classifiable under the head "Income
from business or profession (see below example).

Page 42 of 137

For example, a machinery
Cost price
Less: Depreciation
WDV
Tk. 100
(30)
Tk. 70
Now, if machine is sold @ tk. 78 or tk. 68 or tk. 114 treatment of gain will be as follows;
Case 1: Tk. 8 is Business income
Case 2: Tk. 2 is Business loss
Case 3: Tk. 30 is Business income and tk. 14 is capital gain
Section 19(18):
Where any insurance, salvage or compensation moneys are received in any income year in respect of any building,
machinery or plant which having been used by the assessee for the purpose of business or profession is discarded,
demolished or destroyed and the amount of such moneys exceed the written down value of such building,
machinery or plant, so much of the excess as does not exceed the difference between the original cost and the
written down value less the scrap value shall be deemed to be the income of the assessee for that income year
classifiable under the head "Income from business or profession (see below example).
For example, a machinery
Cost price
Less: Depreciation
WDV
Tk. 100
(30)
Tk. 70
Now, if machine is destroyed and insurance claim and sale of scrap generate tk. 78 or tk. 68 or tk. 114 treatment of
such gain will be as follows;
Case 1: Tk. 8 is business income
Case 2: Tk. 2 is business loss
Case 3: Tk. 30 is business income and tk. 14 is capital gain
Section 19(20):
Where an asset representing expenditure of a capital nature on scientific research within the meaning of section
29 (1) (xx) is disposed of during any income year, so much of the sale proceeds as does not exceed the amount of
the expenditure allowed under the said clause shall be deemed to be the income of the assessee for that income
year classifiable under the head "Income from business or profession.
Section 19(23):
Where during any income year an assessee, being an exporter of garments, transfers to any person, the export
quota or any part thereof allotted to him by the Government, such portion of the export value of the garments
exportable against the quota so transferred as may be prescribed for this purpose shall be deemed to be the income
of the assessee for that income year, classifiable under the head "Income from business or profession".
Sixth Schedule (Part A); Exclusion from income;

Income from the following business is totally tax free
1. Para - 1A; Any income derived from operation of micro credit by a non-government organization registered
with NGO Affairs Bureau.
2. Para 33; Any income derived from the business of software development or Nationwide
Telecommunication Transmission Network (NTTN) or Information Technology Enabled Services (ITES)
for the period from the first day of July, 2008 to the thirtieth day of June, [2019]Subs. F.A. 2014
3. Para 35; Any income derived from the export of handicrafts for the period from the first day of July, 2008
to the thirtieth day of June, 2015.
4. Para 37; Income of any private Agricultural College or private Agricultural University derived from
agricultural educational activities.

Page 43 of 137

Para 39; Income derived from any Small and Medium Enterprise (SME) engaged in production of any
goods and having an annual turnover of not more than taka 30 lakh:
6. Para 42; Any income from poultry farming for the period from the first day of July , 2011 to the thirtieth
day of June, 2015 subject to the following conditions :
a. If such income exceeds taka 1,50,000/- an amount not less than 10% of the said income shall be
invested in the purchase of bond or securities issued by the Government within six months from the
end of the income year;
b. The person shall file return of his income in accordance with the provisions of clause (c) of subsection (2) of section 75 of this Ordinance; and
c. No such income shall be transferred by way of gift or loan within five years from the end of the
income year.
7. Para 44; Cinema Hall or Cineplex has been given exemption facility which starts exhibition between the
first day of July, 2012 and thirtieth day of June, 2019
a. Dhaka and Chittagong areas for five years
Other than Dhaka and Chittagong areas ten years [Change in F.A. 2014]
5.
For 5 Years
For 2 Years
100% tax-free
For 2 Years
50% tax-free
For 1 Year
25% tax free
For 3 Years
100% tax-free
For 3 Years
50% tax-free
For 4 Years
25% tax free
Exemption
For 10
Years
8.
Para 45; Exemption facility for Production of rice bran oil has been given up to 2019
a. Dhaka and Chittagong areas for five years
b. Other than Dhaka and Chittagong areas for ten years [Change in F.A. 2014]
For 5 Years
For 2 Years
100% tax-free
For 2 Years
50% tax-free
For 1 Year
25% tax free
For 3 Years
100% tax-free
For 3 Years
50% tax-free
For 4 Years
25% tax free
Exemption
For 10
Years

Page 44 of 137
[Para --- 48. Any income earned in abroad by an individual assessee being a Bangladeshi citizen and
brought any such income into Bangladesh as per existing laws applicable in respect of foreign remittance.
Para --- 49. Income of an assessee donated in an income year by a crossed cheque to any girls' school or
girls' college approved by the Ministry of Education of the government.
Para --- 50. Income of an assessee donated in an income year by a crossed cheque to any Technical and
Vocational Training Institute approved by the Ministry of Education of the government.
Para --- 51. Income of an assessee donated in an income year by a crossed cheque to any national level
institution engaged in the Research & Development (R&D) of agriculture, science, technology and
industrial development.] [ Para 48-51 Newly inserted in F.A. 2014]
Section 46B and 46C; Tax Holiday:

This is a period (5 years or 10 years depending on location of the industry) for which the company is allowed
exemption of tax on its income from business and profession
(a) Dhaka and Chittagong division (excluding Dhaka,
Narayanganj, Gazipur, Chittagong districts , also the
hill districts Rangamati, Bandarban and Khagrachari)
1st & 2nd years100%

5 Years
for 3rd year........60%

for 4th year............................40 %
for 5th year.......20%
(b) Rajshahi, Khulna, Barisal, Sylhet and Rangpur

divisions excluding city corporation area (including
the hill districts Rangamati, Bandarban and
Khagrachari)
1st 2 years100%
10 Years
3rd year..70%
4th year..55%
5th year..40%
6th year..25%
7th, 8th, 9th and 10th year.........20%
Section 35; Method of accounting:

Accounts shall be maintained for
1. Income from business and profession.
2. Income from agriculture
3. Income from other sources.
Section 28; Income from business or profession:

The following income of an assessee shall be classified and computed under the head "Income from business or
profession", namely :(a) profits and gains of any business or profession carried on, or deemed to be carried on (see below
example), by the assessee at any time during the income year;
(b) income derived from any trade or professional association or other association of like nature on account
of specific services performed for its members;
(c) value of any benefit or perquisite, whether convertible into money or not, arising from business or the
exercise of a profession;

Page 45 of 137

Example, X corporation have made a bridge in Bangladesh (in 2008) and kept its instruments here in hope of getting
another project but did not operate any liaison office. But in the last four (4) years they did not get any project and
sold their machine this year, which become scrap, more than WDV. Though their office is not active in Bangladesh at
this time, their business deemed to be carried on and tax is imposed as the business is in operation.
In a summary, the following incomes are treated as Income from Business and Profession:
(a) Profits and gains of any business or profession
(b Value of the benefit and the unpaid trading liability referred to in section 19(15)
Recovery of any loss, bad debt or expenditure which was previously allowed as deduction
Any amount of interest on loan to any commercial bank, BSB,BSRS, or any bank run on Islamic
principles allowed as deduction but remains unpaid for three years
Trading liability if remains unpaid for three years
(c) Excess amount referred to in section 19(16);
Gains on disposal of building, plants used for business
(d) Excess amount referred to in section 19(18);
Insurance, salvage or compensation received for building, plant being discarded, demolished.
(e) Sale proceeds referred to in section 19(20)
Gains on disposal of capital asset on scientific research
(f) The amount of income under section 19 (23)]

(g) Sale of export quota by garments exporter
Section 29; Deductions from income from business or profession;

Any expenditure, not being in the nature of capital expenditure or personal expenses of the assessee, laid out or
expended wholly and exclusively for the purpose of the business or profession of the assessee (Omnibus clause at
the end of the section 29) .
Rent
Interest payable on borrowed capital
Tax depreciation and amortization of certain fees
Any expenditure incurred wholly & exclusively for the purpose of business or profession
Section 30; Deduction not admissible in certain circumstances;

30(a); if salary paid without deducting TDS
30(aa); any other payment without deducting TDS or VDS
30(b); firms (partnership) partners cannot be provided with
1. Salary
2. Remuneration
3. Commission
4. Interest
30(c); payment of brokerage fee or commission to non-resident without deducting TDS u/s 56.
30(d); if payment from unrecognized provident fund without deducting TDS.
30(e); excess perquisite (over tk. 3,50,000 per employee per year)
Page 46 of 137

30(f) (with rule 65); entertainment, free sample, publicity & advertisement, holidaying & recreation. These
expenditures are allowable under rule 65.
1.
Entertainment:
Entertainment expense is only allowable if the company is make profit. Not profit no entertainment! And
expense is allowable at
On the 1st tk. 10 lac of assessed profit 4%
And on the balance profit over tk. 10 lac 2%
Or
The actual entertainment expense charged in the profit and loss account, whichever is lower.
profit should be assessed after disallowing charged entertainment expenses in profit and loss a/c.
2.
Free Sample (Rule 65 c):

Pharmaceuticals
Others
On the first 5 crore of disclosed turnover
2%
1.5%
On the next 5 crore of disclosed turnover
1%
0.75%
0.50%
0.375%
On the balance
Or, the actual free sample given whichever is lower.
3.
Holidaying & Recreation:

of the actual expenditure or 3 months basic salary of the employee (who enjoyed the opportunities)
whichever is lower is allowable and such foreign travels shall not be oftener than once in every 2 years.
For example, Mr. X is an employee of ABC ltd. the company given him an holiday opportunity of tk.
100,000 which was also his actual expenditures. His basic salary is tk. 20,000 per month. So allowable
expenditure will be of actual expenditure (tk. 75,000) or basic salary of 3 months (tk. 60,000) lower one,
which is tk. 60,000 other tk. 40,000 will add back with the companys profit.
However, the company has to fulfill the following conditions
a. If expense is more than tk. 10,000, it should be given in crossed cheque or through bank transfer.
b. Same employee cannot be provided with foreign holidaying opportunity for subsequent year.
If the company did not fulfill the above condition full expense will disallowed.
30(g); Headquarter expenditures of foreign companies are allowable up to 10% of net profit disclosed in the
statement of accounts (or actual, lower one).
Expenses allowable on assessed profit
1. Head office expenses
2. Technical knowhow fee
3. Incentive bonus
30(h); Royalty and technical knowhow fee is allowable up to 8% of net profit disclosed in the statement of accounts
(or actual, lower one).
30(i); monthly gross salary over tk. 15,000 shall be given in cheque or bank transfer.
30(j); incentive bonus allowable up to 10% of net profit disclosed in the statement of accounts before tax.
30(k); overseas travelling allowable up to 1% of disclosed turnover.
30(l); Any commission, discount paid by any company to its shareholder director.
30(m); any payment over tk. 50,000 should be in cheque or bank transfer, but not applicable in salary, raw material
purchase and payment to government.
30 (n); any house/office rent paid without crossed cheque or bank transfer.

Page 47 of 137

(c). Restriction on Disallowance by the DCT [Section 30 A]
The DCT shall not make any disallowance or deduction for any year from any claim made by an assessee in the
trading account or profit or loss account without specifying reason for such disallowance or deduction.
(d). Other Issue
i.
Allowance of depreciation as per Third Schedule of I.T Ordinance, 1984, if charged beyond the allowable
limit, the excess is to be disallowed
Applicability of provision of section 19 of the I.T Ordinance, 1984 regarding deemed income.
ii.
(e). Set-off and Carry-forward of losses [Section 37-42]

Where loss is assessed in any head of income, the assesse is entitled to set off the loss against his income assessed in
other heads of that year. However, loss on speculation business and loss on capital gain cannot be set off against
income from any other head. Such loss can be set off only against the income of respective speculative business or
capital gains. When loss cannot be wholly set off, then the unabsorbed loss under the following four heads shall be
carried forward but for not more than 6 successive assessment years.
Speculation business loss

Business loss
Capital loss and
Loss at agricultural income
Important notes
Loss from business or profession shall not be set off against house property income.
In case of capital loss, it cannot be carried forward if the loss does not exceed Taka 5,000/Unabsorbed depreciation loss can be carried forward for unlimited period
Loss so carried forward is to be set off against income of the respective head
If there is any loss at any exempted income it cannot be set off against any other income.
Third schedule; Tax Depreciation:

There five types of depreciation mentioned in the IT Ordinance
1. Normal depreciation:
According to the chart in third schedule of ITO, tax depreciation is allowable on written down value (cost in
the first year) at the following rate
Building (factory)
Building (office)
office equipment
Plant and machinery
Furniture
Computer
Road/bridge/flyover
Car*
20%
10%
10 %
20%
10%
30%
2%
20%
Unabsorbed depreciation (due to loss) can be carry

forwarded for unlimited time.
Business loss can be carry forwarded for 6 years.
* in case of car depreciation is allowable up to tk. 20 lac. If the cars price is over tk. 20 lac, depreciation
should be calculated as if the price in tk. 20 lac. (Not applicable for rent-a-car or similar company)
In case of financial lease, assessee will get the depreciation not the leasing company.
In the year of acquisition, full depreciation is allowable but in the year of disposal no depreciation is
allowable.

Page 48 of 137

For example, Car price tk. 3,000,000. After 2 years sold at tk. 2,400,000. Compute gain.
Notional cost price
tk. 2,000,000
Less: Depreciation (Y 1)
(400,000)
WDV after Y 1
tk. 1,600,000
Less: Depreciation (Y 2)
(320,000)
WDV after Y 2
tk. 1,280,000
Proportionate sales price = (Notional cost price / actual price) * actual sales price
= (2,000,000 / 3,000,000) * 2,400,000
= tk. 1,600,000
Gain (business income) = (tk. 1,600,000 tk. 1,280,000) = tk. 320,000
2.
Accelerated Depreciation:
In case of machinery or plants set up in Bangladesh between 01/07/2014 and 30/06/2019 and not having
been previously used in Bangladesh, accelerated depreciation subject to some conditions will be allowed as
follows:-[paragraph 7B of 3rd Schedule]
First Year:.50% of actual cost
Second Year:30%of actual cost
Third Year:.20%of actual cost
Conditions:o Applicants must be a Bangladeshi company
o Applicant is an industrial undertaking
o Application is made to NBR within 6 months from the end of the month of commercial production
o Declaration not to enjoy any other tax exemption benefit
o Any other depreciation allowance will not be allowable
3.
Initial Depreciation:
Only applicable for Building and Plant & machinery. But the property should be new and given only in the
first year of addition along with normal depreciation.
Rate of depreciation:
Building
10%
Plant and machinery
25%
For example, a machinery coats tk. 100 lac. In first year depreciation allowance is
Initial depreciation (25%)
tk. 25 lac
Normal depreciation (20%)
tk. 20 lac
Depreciation allowance (year 1)
tk. 45 lac
WDV after 1st year
tk. 55 lac.
4.
5.
6.
7.
Extra depreciation
Other Tax Exemption
Industries set up in EPZ will enjoy tax exemption from the moth of commercial production.
Income from computer software business run by Bangladeshi resident is tax exempted up to 30/06/2019
[para-33]
Income from private power generation company up to 15 years from its commercial production [SRO no.
36-ain/97 dated 03/02/1997]
Any income from the export of handicrafts for the period from 1st day of July, 2008 to the 30th day of June,
2015 (para-35)
Special depreciation
General Export Incentives:
50% 0f income of an assessee derived from the business of export is exempted from tax. This is not
applicable for a company registered outside Bangladesh, enjoying exemption of tax or reduction in rate by
any notification made under the ordinance.

Page 49 of 137

Tax Holiday
Introduction:
Tax holiday has been started to allow as a tax incentive for industrialization in this region since 1959 by introducing
new section 15BB in the then Income Tax 1922. In 1972, the tax holiday system was withdrawn by repealing section
15BB. But the incentive was re-introduced by incorporating section 14A in the Income Tax 1922 by the Finance Act
1974 with effect from the assessment year 1974-75 for industrial undertakings (established on or after 1 st July 1973
having subscribed and paid up capital not less than Tk. 1,00,000 and not more than Tk. 35,00,000) and also for tourist
industries (established on or after 1st January 1976 having subscribed and paid up capital not less than Tk. 1,00,000
and not more than Tk. 10,00,00,000) with the tax holiday period of 9 years for the prescribed areas and of 5 years for
other areas.
With the introduction of the Income Tax Ordinance 1984, the provision of the tax holiday has been maintained under
section 45 and 46 primarily. The provision was applicable for industrial undertakings (established between 01 July
1974 and 30 June 1985) and tourist industries (established between 01 July 1976 and 30 June 1985) having
subscribed and paid up capital not less than Tk. 1,00,000 for any industries. The tax holiday incentive was first
extended for the industries up to 30 June 1990 by Finance Act 1985, then up to 30 June 2000 by the FA 1989. But
subsequently through FA 1991 the incentive was restricted for the industries established within 30 June 1995 with an
apparent intention of withdrawing the tax holiday incentive since 1995-96.
New section 46A has been introduced through FA 1995 allowing the tax holiday incentive for industrial undertakings,
tourist industries and physical infrastructure facilities established between 01 July 1995 and 30 June 2008 with having
subscribed and paid up capital not less than Tk. 1,00,000. It is extended for another 3 years through inserting section
46B with some minor changes and again for 2 years through inserting section 46C with having subscribed and paid
up capital not less than Tk. 20,00,000. Tax holiday facility has further been extended up to 30 June 2019 through the
FA 2014.
(1) Type of Industries eligible for tax holiday
Two types of industries are eligible to apply for tax holiday
1. Industrial undertaking
2. Physical infrastructure facility
The following categories of industries are eligible for the definition of Industrial Undertakings:
01.
02.
03.
04.
05.
06.
07.
08.
09.
10.
11.
12.
13.
14.
15.
16.
Active ingredient industry and radio pharmaceuticals industry

Barrier contraceptive and rubber latex
Basic chemicals or dyes and chemicals
Basic ingredients of electronic industries (e.g. resistance, capacitor, transistor, integrator, circuit)
Bio-fertilizer
Biotechnology
Boilers
Brick made of Automatic Hybrid Hoffmann Kiln Technology
Compressors
Computer hardware
Energy efficient appliances
Insecticide or pesticide
Petro-chemicals
Pharmaceuticals
Processing of locally produced fruits and vegetables
Radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or preservation of
food or disinfecting medicinal equipment)
17. Textile machinery
18. Tissue grafting
19. Any other category of industries as the Govt. may notify in the official Gazette.
Page 50 of 137

The following categories of industries are within the meaning of Physical Infrastructure Facility:
01.
02.
03.
04.
05.
06.
07.
08.
09.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Deep sea port

Elevated expressway
Export processing zone
Flyover
Gas pipe line
Hi-tech park
ICT village or software technology zone
IT park
Large water treatment plant and supply through pipe line
Liquefied Natural Gas terminal and transmission line
Mono-rail
Rapid transit
Renewable energy (e.g. energy saving bulb, solar energy plant, windmill)
Sea or river port
Toll road or bridge
Underground rail
Waste treatment plant
Any other category of industries as the Govt. may notify in the official Gazette.
(2) Conditions for Eligibility:

Some conditions are required to be fulfilled for tax holiday under section 46B and 46C of the Income Tax Ordinance,
1984. These are as follows:
a)
The undertaking must be owned and managed by either a body corporate established by or under an act of
parliament with its head office in Bangladesh;
or
a company as per Companies Act 1913/1994 with its registered office in Bangladesh having subscribed and paidup capital of not less than Tk. 20,00,000 on the date of commencement of commercial production or operation.
b) The undertaking is not formed by splitting up or by reconstruction or reconstitution of business already in
existence or by transfer to a new business of any plant and machinery used in business, which was being carried
on in Bangladesh at any time before the commencement of the new business.
c) The undertaking must be approved by the NBR for the purpose of tax holiday.
d) The undertaking shall have to obtain clearance certificate from the Directorate of Environment for the relevant
income year.
(3) Application procedure and its disposal by the NBR:
a)
Tax holiday application is to be submitted to the NBR within 6 months from the end of the month of commercial
production or operations in the form prescribed in Rule 59A, in duplicate, duly signed and verified by the MD or
Director of the company.
b) NBR shall give its decision within 45 days from the date of receipt of the application by the Board. Otherwise,
the undertaking shall be deemed to have been approved.
c) NBR shall not reject any application unless the applicant is given a reasonable opportunity of being heard.
d) If NBR rejects any tax holiday application, the undertaking can submit a review application to the Chairman of
the Board within 4 months from the date of the receipt of the rejection letter. The Chairman then will either
review himself or will constitute a committee consisting of 3 members of the NBR who will review its previous
decision and pass such order as it thinks fit. There is no time limit for disposal of the review application. The
decision of the review committee of the NBR as final and conclusive and there is no scope to submit further
review application.

Page 51 of 137

(4) Withdrawal and Cancellation of tax holiday:
a)
Any undertaking after getting tax holiday from the NBR can write to the NBR for cancellation of tax holiday
within 1 year from the date of granting such tax holiday.
b) NBR may also cancel/suspend fully/partly any tax holiday in the public interest.
c) The DCT in the course of assessment may also withdraw the tax holiday from the relevant assessment year if he
is satisfied that one or more of the required conditions are not fulfilled.
d) Tax holiday shall be deemed to have been withdrawn for the assessment year in which the following transaction
are made:
i. If the company is engaged in any commercial transaction with another company having one or more sponsor
shareholders.
ii. If the DCT finds that the company has purchased or sold goods at higher/lower price than the normal market
price with the intention to reduce the income of another undertaking/company.
(5) Period of tax holiday for industrial undertaking:
Years
(a) Dhaka and Chittagong division

(excluding Dhaka,
Narayanganj,
Gazipur and Chittagong district and
also the hill district of Rangamati,
Bandarban and Khagrachari)
(b) Rajshahi, Khulna, Sylhet, Rangpur
and Barisal division (excluding City
Corporation area) and the hill district
of Rangamati, Bandarban and
Khagrachari
10
Rate of exemption
If it is established Established from 01 July
within 30 June 2013
2013 to 30 June 2019
1st 2 years.100%
1st 2 years.. 100%
nd
2 2 years.50%
3rd year . 60%
Last year..25%
4th year 40%
5th year 20%
1st 3 years. 100%
2nd 3 years. 50%
Last year 25%
1st 2 years. 100%

3rd year . 70%
4th year 55%
5th year 40%
6th year 25%
7th to 10th year.. 20%
Provided that bio-fertilizer industry and petro-chemical industry will get tax holiday for 5 years even if it is set up in
the district of Dhaka, Narayanganj, Gazipur and Chittagong.
(6) Period of tax holiday for physical infrastructure facility irrespective of the location:
Established within 30 June 2013

1st 5 years. 100%
2nd 3 years. 50%
Last 2 years.. 25%
Rate of exemption
Established from 01 July 2013 to 30 June 2019
1st 2 years. 100%
3rd year .. 80%
4th year.. 70%
5th year 60%
6th. 50%
7th year .. 40%
8th year 30%
9th year 20%
10th year. 10%
(7) Conditions to be fulfilled after getting tax liability:

a.
b.
c.
The profits and gains of the tax holiday company shall be computed separately.
Any loss during the tax holiday period cannot be carried forward beyond the tax holiday period.
Only normal depreciation is applicable for tax holiday enjoying companies.

Page 52 of 137

d.
e.
30% + 10% = 40% year wise tax holiday income is to be reinvested. 30% is to be reinvested in the same
company or in a new industry within the tax holiday period or maximum within 1 year from the end of the tax
holiday period. Another 10% is to be reinvested in the shares of listed company in each year within 3 months
from the end of the income year.
Otherwise income of the year or years will subject of tax. However, the quantum of reinvestment will be reduced
by the amount of dividend if declared by the company.
The income of the tax holiday company under the following heads are taxable:
(i) Capital gain
(ii) Any income arising from the disallowance u/s 30
(iii) Dividend is taxable at the hand of shareholders.
(8) Documents to be submitted with tax holiday application:

The following documents are to be submitted along with tax holiday application:
a. An attested copy of certificate of incorporation;
b. An attested copy of the Memorandum of Association and Articles of Association of the company;
c. A certificate of commencement of business;
d. In case the company has already commenced business, certified copy of the audited balance sheet and profit
and loss accounts for the period for which accounts have been prepared;
e. In case of industrial undertaking/physical infrastructure facility for which approval is sought has been
acquired for another party, an attested copy of the agreement between the applicant company and the seller
enter into for the acquisition of the industrial undertaking/physical infrastructure with list and value of assets
acquired;
f. A certificate to the effect that the industrial undertaking/physical infrastructure facility has not applied or
shall not apply for accelerated depreciation allowance under paragraph 7 or 7A of the Third Schedule to the
Ordinance.
(9) Tax exemption on income of cinema hall/Cineplex and industry producing rice bran oil [6 th Schedule (PartA) Para 44 and 45]:
Income of cinema hall/Cineplex and income from industry producing rice bran oil will also be tax free like tax
holiday but without any tax holiday application to NBR if it starts commercial exhibition/production within 01 July
2012 to 30 June 2019. Time and condition of tax exemption is tabulated below:
Area
(a) Dhaka and Chittagong division (excluding the hill
district of Rangamati, Bandarban and Khagrachari)
Years
5
(b) Rajshahi, Khulna, Sylhet, Rangpur and Barisal

division (including the hill district of Rangamati,
10
Rate of exemption
1 2 years. 100%
2nd 2 years. 50%
Last year 25%
1st 3 years. 100%
2nd 3 years. 50%
Last 4 years.. 25%
st
(10) Tax exemption on income of industry set up at EPZ:

Industries set up at EPZ (including private EPZ) from 01 January 2012 onward will automatically get tax exemption
as per SRO 219 dated 04 July 2011. The area and period of tax exemption is tabulated below:
Area
(a) Dhaka and Chittagong division (excluding the hill
district of Rangamati, Bandarban and Khagrachari)
Years
5
(b) Rajshahi, Khulna, Sylhet, Rangpur and Barisal

division (including the hill district of Rangamati,
Rate of exemption
1 2 years. 100%
2nd 2 years. 50%
Last year 25%
1st 3 years. 100%
2nd 3 years. 50%
Last year 25%
st

Page 53 of 137

Company Tax Assessment
01. Introduction:
In the income tax ordinance, 1984, there is no separate status for taxation of a corporate body, But in the context of
Bangladesh, Corporate Taxation means charging of tax on income or profit of companies. So, Corporate Tax can be
termed as company tax which differs from the tax levied on individuals. Both companies and individuals are assessed
and taxed under the same I.T. Ordinance 1984.
02. Definition of Company:
Under Section 2 (20) of the income Tax Ordinance 1984, Company" means a company as defined in the Company
Act, 1913 (VII of 1913) or Company Act, 1994 (Act No. 18 Of 1994) and includes(a) A body corporate established or constituted by or under any law for the time being in force;
(b) Any nationalized banking or other financial institution, insurance body and industrial or business enterprise;
(bb) Any association or combination of persons, called by whatever name, if any of such persons is a company as
defined in the Companies Act, 1913 (VII of 1913) or Company Act, 1994 (Act No. 18 Of 1994);
(bbb) any association or body incorporated by or under the laws of a country outside Bangladesh, and"
(c) Any foreign association or body, not incorporated by or under any law], which the Board may, by general or
special order, declare to be a company for the purposes of this Ordinance;
03. Classification of Company:
For preferential tax purpose, Companies are classified into following groups:
1) Bank, insurance and Financial institutions;
2) Merchant Bank;
3) a) Publicly traded company
b) Non- Publicly traded company
4) Mobile Phone Operator company
5) Cigarette manufacturing company
6) Non Resident Company
04. Publicly traded Company:
Publicly traded company means a company which fulfills the following conditions:
a) The company is registered in Bangladesh under the Companies Act 1913 or 1994;
b) The company is enlisted with the Stock Exchange before the end of the concerned income year in which
income tax assessment will be made.
05. Obligations of a Corporate Taxpayer under Income Tax laws:
Following the corporate tax compliance obligations as per various sections the Income Tax Ordinance 1984:
1) Obligations of a corporate entity as an assessee (taxpayer);
2) Obligations of a corporate entity as a Tax collector on behalf of tax authority;
3) Obligations of related persons of a corporate entity.

Page 54 of 137

(1) As an assessee (taxpayer):
Collection of TIN (Taxpayer Identification Number) certificate u/s 184B, 184A

Displaying of TIN certificate u/s 184C
Advance income tax payment u/s 64
Preparation of tax return u/s 75
Payment of tax as per tax as per tax return u/s 74
Filling of tax return and statement in prescribed forms u/s 75
Filing of revised return if any omission or incorrect statement in previously filed return discovered before
the assessment is made u/s 78
Maintenance of accounts and documents u/s 35
Production of accounts and documents on receipts of a notice from the DCT u/s 79
Compliance with various notice
Notice of demand u/s 135
Notice of file return u/s 77
Notice to produce accounts, statements and documents u/s 79
Notice to attend hearing u/s 83(1) in case of assessment after hearing
Notice to file return for reassessment u/s 93(1)
Notice to attend hearing u/s 130 in case of imposing penalty u/s 123-128
Notice calling for information u/s 113
(2) As a tax collector on behalf of tax authority:
Collection of Tax Collection A/C Number u/s 184BB

Tax deduction /collection at source if applicable and deposit to the treasury u/s 48-63
Giving documents of TDS with necessary information u/s 58 and
Furnishing annual returns in case of payment of salary before 1 st September (u/s 108 and rule 23), interest
(u/s 109 and rule 20) and dividend (u/s 110 and rule 19)
(3) Obligations of related persons of corporate entity:
Filling a return of any other person for whom the company is assessable [u/s 75 (1B)]
Joint liability in case of director of a private limited company (u/s 100)
Joint liability in case of Liquidator of a private limited company (u/s 101)
06. TIN (Tax payers Identification Number) Certificate for a Company:

Every company requires 12 digit Tax payers Identification Number (TIN) to mention it in the income tax return. As
per Section 184B, TIN Certificate is mandatory at the time of registration of a company under the Companies Act,
1994 and also in respect of sponsor shareholder directors [Section 184A (1)]. Besides these, in the following cases, a
company requires mandatory submission of 12 digit TIN Certificate under various clauses of section 184A:
1)
2)
3)
4)
5)
6)
7)
8)
Opening a letter of credit for the purpose of import; [Clause(a)];

Submitting an application for the purpose of obtaining an import registration certificate (IRC) [Clause(aa)];
Renewal of trade license in the area of a city corporation or of a paurashava [Clause(b)];
Submitting tender documents for the purpose of supply of goods, execution of a contract or for rendering
services [Clause(c)];
Purchase of a land, building or an apartment situated within any city corporation area [Clause(f)];
Registration, change of ownership or renewal of fitness of a car, jeep or microbus [Clause(g)];
giving ISD connection to any kind of telephone [Clause(k)];
Registration of company under Companies Act , 1994
Under section 184C, a company shall display 12 digit TIN Certificate Number at a conspicuous place of the
companys business premises.

Page 55 of 137

07. Submission of Income Tax Return:
As per section 75 (2) (c), the return must be filled , unless the date is extended, by the fifteenth day of July next
following the income year or where the fifteen day of July falls before the expiry of six months from the end of the
income year, before the expiry of such six months However, u/s 75(3), on application from the company, the
assessing officer [DCT] may extend the return submission date up to 3 months at his own capacity and further 3
months after taking prior permission from the IJCT.
In case of company though 15th July is the last date of submission of return but every company will get at
least 6 months time from the end of the accounting year to submit tax return . Some examples are tabulated below:
SL. No.
Income Year Ending
1
2
3
4
5
6
31.12.2013
30.06.2014
31.03.2014
30.09.2013
30.07.2013
15.07.2013
Last date of submission of

Return
15.07.2014
31.12.2014
30.09.2014
15.072014
15.07.2014
15.07.2014
Assessment Year
2014-15
2014-15
2014-15
2014-15
2014-15
2014-15
The return should be signed by the principal officer of the company [75(2)(b)(iii)]. As per section 2(48), Principal
Officer, meansa)
Managing director, manager, secretary, treasurer, agent or accountant (by whatever designation known), or
any officer responsible for management of the affairs, or of the accounts, of the authority, company, body or
association; and
b) Any person connected with the management or the administration of the company upon whom the Deputy
Commissioner of Taxes has served a notice of his intention to treat him as principal officer.
However, revised return can be filed before the assessment is made if any omission or incorrect statement in the
previously filed return discovered [u/s78].
08. Universal self-assessment (Sec: 82BB):
Universal self-assessment system has been introduced in our country from the assessment year 2007-2008. Every
assesse (including company) is eligible to submit return under this system. In this system assesse has to tick the box
Universal self-assessment at the top of the return form. DCT will issue a receipt of such return and that receipt will
mean that assessment is complete. It is hassle free in the sense that assessment has been done on the basis of return
and without any physical presence. Meanwhile, due to this simplicity, it become very popular method of submitting
return. But, it should be kept in mind that return must be correct and complete.
Procedure to submit return under Universal self-assessment system:
The procedure is very simple. Assesse has to prepare his return either by himself or with the help of other and then it
is to be signed and verified. Assesse has to tick the box Universal self-assessment at the top of the return form and
after paying tax (if applicable) submit the return. However, the assesee should keep in mind the following:
a)
Such return must be submitted within the last date of submission of return or within the extended time
allowed by the DCT.
b) Tax as per return (if any) is to be paid before submission of return.
c) No question is to be raised by the DCT as to the source of initial capital investment in case of new assesse
showing new business if at least 25% of initial capital is shown as income. Initial capital formed in such way
is not transferable from that business within the year or within 5n years from the end of the assessment year
in any manner.

Page 56 of 137

Tax audit:
The return submitted at this system may, afterwards, be selected by the NBR or its subordinate authority (if
so authorized by the Board) for audit. The Board will determine the manner of such selection.
If return filled under the Universal self-assessment scheme showing at least 20% higher income than the income
assessed or shown in the immediate preceding assessment year, then it shall not be selected for tax audit by the
NBR,but the conditions are:
1.
2.
3.
4.
5.
Return is to be accompanied by proper evidences in support of tax free income (if any).
Return is to be accompanied by bank statement in support of taking loan (if any) exceeding taka 5 lac.
Return does not show any receipt of gift.
Return does not show any income on which reduced tax rate is applicable.
Return does not show any refund.
If the return is selected for audit, then DCT will proceed to make fresh assessment by issuing notice under section
83(1) for hearing and he will make assessment within 2 years from the end of the assessment year. Otherwise it will
be barred by time limitation. Assessment can be done under section 83(2) or under section 84 as the situation permits.
Re-open the universal self-assessment under section 93:
If any concealment has been detected in the return submitted by the assesse under universal self-assessment
scheme within 6 years from the end of the assessment year, then the DCT may re-open the case and proceed to assess
further.
Documents to be attached with the return:
Audited statements of accounts

Income computation sheet if shown income differ from income shown at audited statement of accounts
[section -75]
Separate statement for:
Any income from other sources e.g. interest, dividend, etc.

Tax exempted income [Rule 24]
Information regarding name, address and TIN of the directors of the company [Rule 24]
Evidence of tax payment on the basis of income disclosed in the return.
09. Methods of Accounting and maintenance of Accounts [Sec 35]
All income classifiable under the head Agricultural income, Income from business or profession or
Income from other sources shall be computed in accordance with the method of accounting regularly
employed by the company [sec 35(1)]
Every public or private company as defined in the Companies Act, 1913 (VII of 1913) or 1994 shall, with
the return of income required to be filed under this Ordinance for any income year, furnish a copy of the
trading account, profit and loss account and the balance sheet in respect of that income year certified by a
chartered accountant to the effect that the accounts are maintained according to the BAS and reported in
accordance with BFRS [sec 35(3)]
Where no method of accounting has been regularly employed, or if the method employed is such that, in the
opinion of the DCT the income of the assessee cannot be properly ascertained, the income of the company
shall be computed on such basis and in such manner as the Deputy Commissioner of Taxes may think fit
[sec 35(4)]

Page 57 of 137

11. Corporate Tax Rate
The income tax rates for companies are as follows:
Types of Company
Head /sources of Income
Bank,
Insurance,
Financial Institutions
(1) Capital Gain (2nd schedule)

(2) Capital Gain from sale of shares of listed
companies
(3) Dividend Income
(4) other income
Both publicly traded and not
publicly traded company
Merchant Bank
nd
(1) Capital Gain (2 schedule)

companies
(3) Dividend Income
(4) other income
For
publicly
Traded
Company
(a) Dividend declared by less
than 10% or failure to pay
declared dividend within 6
months
(b) Dividend declared more
than 20% will get
10 % tax rebate
Other Company
Mobile
Company
Phone
Cigarette
Manufacturing
Company
Excess profit tax (u/s

16C)
Additional tax
(u/s
16B)
Minimum
16CCC)
tax(u/s
Tax Rate for Assessment Year

2013-2014
2014-2015
15%
15%
10%
10%
20%
42.5%
20%
42.5%
37.5%
15%
10%
37.5%
15%
10%
20%
27.5%
20%
27.5%
37.5%
35%
24.75%
24.75% (if
dividend
declared more
than 30%
(c) Newly listed companies

in case of declaring more
24.75%
24.75%
than 20% shares through IPO
For non-publicly Traded
37.5%
35%
Company (including nonresident company)
(1) Capital Gain (2nd schedule)
15%
15%
10%
10%
companies
(3) Dividend Income
20%
20%
(4) other income
For
publicly
Traded
40%
40%
Company
Other than publicly Traded
45%
45%
Company
Income
from For
publicly
Traded
40%
40%
Cigarette
Company
Manufacturing
Other than publicly Traded
45%
45%
business
Company
If any bank shows profit exceeding 50% of the aggregate sum of capital and reserve, shall
have to pay excess profit tax @ 15% on such excess profit.
If listed company other than a bank and insurance has not issued, declared or distributed
dividend of bonus share equivalent to at least 15% of paid up capital within six months
immediately following any income year, shall have to pay additional tax @ 5% of
undistributed profit (accumulated profit + free reserve)
Minimum tax @ 30% on gross receipt is to be paid irrespective of profit or loss.

Page 58 of 137

12. Special Reduced Corporate Tax Rates
a)
b)
c)
d)
e)
f)
Textile Industries: 15%

Private University: 15%
Fish farming: 3%
Jute Industries: 15%
Selected autonomous bodies:25%
National level Research institute:15%
13. Tax Withholding Function: u/s 48-63

According to the provision of Chapter VII (section 48-63), tax is to be deducted or collected at source at the
prescribed rate/ rates.
(a) Deposit of Deducted /Collected tax: [Rule-13]
All sums deducted or collected at sources shall be deposited to the credit of the Government within 2 (Two)
weeks from the end of the month of such deduction or collection
The Deputy Commissioner of Taxes may, in a special case and with the approval of the Inspecting
Additional Commissioner of Taxes or Joint Commissioner of taxes, permit an employer to pay the tax
deducted from Salaries quarterly on September 15, December 15, March 15 and June 15.
(b) Procedure of Deposit of Deducted /Collected tax: [Rule-14]

The amount of tax deducted or collected shall be deposited to the credit of the Government by remitting it into the
Bangladesh Bank or the Sonali Bank, as the case may be, accompanied by an income tax challan. [Rule 14(1)]
14. Payment of Advance Tax: u/s 64-73
In case of first year income is likely to exceed Tk. 4,00,000/- or

In case of old assessee, last assessed income if exceeds Tk. 4,00,000/Advance tax is to be paid in 4 equal installments 15 thSeptember, 15thDecember, 15th March and 15th June.
15. Fiscal Incentives:

Following Fiscal incentives are available for a company:
(1) Tax Holiday: u/s 46B and 46C
This is a period (5 years or 10 years depending on location of the industry) for which the company is allowed
exemption of tax on its income from business and profession
(a) Dhaka and Chittagong division (excluding Dhaka,
Narayanganj, Gazipur, Chittagong districts , also the
hill districts Rangamati, Bandarban and Khagrachari)
(b) Rajshahi, Khulna, Sylhet and Rangpur divisions
excluding city corporation area (including the hill
districts Rangamati, Bandarban and Khagrachari)
10
1st 2 years100%
2nd 2 years.50%
Last year.25%
1st 2 years100%
3rd year..70%
4th year..55%
5th year..40%
6th year..25%
7th,8th,9th and 10th year.........20%

Page 59 of 137

(2) Other Tax Exemption
Industries set up in EPZ will enjoy tax exemption from the moth of commercial production.
Income from computer software business run by Bangladeshi resident is tax exempted up to 30/06/2019
[para-33]
Income from private power generation company up to 15 years from its commercial production [SRO no.
36-ain/97 dated 03/02/1997]
Any income from the export of handicrafts for the period from 1 st day of July, 2008 to the 30th day of June,
2015 (para-35)
(C) Accelerated Depreciation

In case of machinery or plants set up in Bangladesh between 01/07/2014 and 30/06/2019 and not having been
previously used in Bangladesh, accelerated depreciation subject to some conditions will be allowed as follows:[paragraph 7B of 3rd Schedule]
First Year:.50% of actual cost
Second Year:30%of actual cost
Third Year:.20%of actual cost
Conditions:
Applicants must be a Bangladeshi company

Applicant is an industrial undertaking
Application is made to NBR within 6 months from the end of the month of commercial production
Declaration not to enjoy any other tax exemption benefit
Any other depreciation allowance will not be allowable
(d) Initial Depreciation

In case of machinery or plants set up in Bangladesh after 30/06/2002 and not having been previously used in
Bangladesh, initial depreciation subject to some conditions will be allowed as follows:-[paragraph 5A of 3rd
Schedule]
In the case of building10% of actual cost

In the case of plant, machinery25% of actual cost
(e) General Export Incentives:

50% 0f income of an assessee derived from the business of export is exempted from tax. This is not applicable for a
company registered outside Bangladesh, enjoying exemption of tax or reduction in rate by any notification made
under the ordinance.

Page 60 of 137
Corporate Social Responsibility
SRO No. 223 dated 27 June 2012

SRO No. 186 dated 01 July 2014
Corporate Social Responsibility (CSR) is defined as the integration of business operations and values, whereby the
interests of all stakeholders including investors, customers, employees, the community and the environment are
reflected in the companys policies and actions. CSR is about how businesses align their values and behavior with the
expectation of stakeholders not just customers and investors, but also employees, suppliers, communities,
regulators, special interest groups, and society as a whole. It is the companys commitment to be accountable to its
stakeholders. CSR demands that businesses manage the economic, social, and environmental impacts of their
operations.
The Government sees CSR as the business contribution to its sustainable development goals. Essentially, it is about
how business takes account of its economic, social and environmental impacts in the way it operates maximizing
the benefits and minimizing the downsides. However, CSR is still considered as the voluntary action that business can
take, over and above the compliance with minimum legal requirements, to address both its own competitive interests
and the interests of wider society. Key CSR issues include good governance, labor standards, responsible sourcing,
eco-efficiency, environmental management, stakeholder engagement, employee and community relations, social
equity and human rights. It is not only about fulfilling a duty to society, it can bring competitive advantage.
The corporate sector in Bangladesh spend a big amount outside their business for the betterment of the society and the
people. But any expenditure for this purpose does not qualify for allowable deductions as this is not business related
expenditure. To encourage the companies to contribute towards the society, CSR provision has been introduced in
2009 through an SRO and thereafter the area has been expanded in 2010 and further modified in 2011. In the year
2012 two new areas have been included and one area shifted to 6 th Schedule (Part - A), Para 47. One new area of
CSR has been added in the year 2014.
Conditions to qualify for CSR
1.
2.
3.
4.
5.
6.
7.
8.
Regularity in payment of salary to staff

Having waste treatment plant in industry
Regularity in payment of Income tax, VAT, duty and loan
CSR only through govt. approved institutions
Compliance with Labor Law
Amount spent for CSR will not be considered as business expenditures
Documents in support of actual CSR expenditure to be submitted to the concerned DCT
Submit CSR plan to NBR and obtain exemptions certificate
The companies will get 10% tax rebate on the lower amount of the following three:
Allowable Investment Allowance:
The companies will get 10% tax rebate on the lower amount of the following three:
20% of total income

OR
Whichever is lower is to
be treated as allowable
CSR
TK. 12,00,00,000/=
Tax rebate @ 10% is

applicable on such
allowable CSR.
OR
Actual money spent for CSR

Page 61 of 137

Areas of CSR:
The tax provision clearly specified 22 areas where the companies can perform their corporate social responsibility for
availing the benefit of tax rebate:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Natural calamities
Old home
Welfare of retarded persons
Education of poor children
Accommodation of slum dwellers
Awareness program of anti-dowry and women rights
Rehabilitation of poor and orphan children
Research on liberation war related subject
Sanitation in Chittagong hill tracts
Treatment of cataract, cancer, leprosy
Treatment of acid victims
Free medical treatment to the poor by specialized hospital
Public university
Technical and vocation education
Computer and information technology
Vocation training to unskilled workers for man power export
Infrastructure of national level sports
Donation to national level institution set up in memory of the liberation war
Donation to national level institution set up in memory of Father of the Nation
Donations made to non-profit voluntary social welfare organizations engaged for running rehabilitation
center, creation of awareness and treatment of HIV, AIDS and Drug addicted
21. Donations made to non-profit voluntary social welfare organizations engaged for running rehabilitation
center for recovered children/women of cross boarder trafficking
22. Donation to Govt. approved fund for helping victims of natural disaster or for any tournament or for any
national level program.

Page 62 of 137

Company Assessment - 1:

Page 63 of 137
Solutions of Problem:

Page 64 of 137

Page 65 of 137

Company Assessment 2:
The following adjusted accounts appeared in the records of ABC Ltd. For the year ended December 31, 2013.
Numbers in brackets refer to the items in additional information.
Revenues and gains

Tk.000
126,500
1,000 (1)
2,500 (2)
1, 30,000
Net Sales
Interest
Gains on sale of shares
Total
Costs and expenses
Cost of goods sold
Salaries and wages
Security services
Audit and taxation services
Office rent
Donations
Board meetings attendance fee
Other expenses
Depreciation
Corporate income tax
Total
Net profit
Dividends Paid
65,300
26000 (3)
300 (4)
500
600
1,800 (5)
300 (6)
3,000 (7)
8,000 (8)
4,500 (9)
110,300
19,700
9,000
Additional Information
(1) Interest revenue comprises interest on government bonds issued in 2013 and purchased by ABC Ltd. In 2013.
(2) Gain on sale of shares arose from the following purchase and sale of shares of a company listed with DSE and
CSE:
Bought in 2010
Tk. 12,00,000
Sold in 2013 proceeds of sale
Tk. 37,00,000
(3) Salaries and wages include inter alia salary of Finance Manager tk.6,00,000 (consolidated) paid in cash (not by
cheque or bank transfer ), Gratuity (unapproved) provision of tk.15,00,000 and gratuity payment of tk.10,00,000
(4) Security services include payments to a private security company. No VAT was deducted at source from such
payments.
(5) Donations were all paid in 2013 to ICAB, Specially designed for the purchase of library books, computers and
training materials.
(6) No income tax and VAT was deducted at source from board meeting attendance fee paid to 10 (ten) directors.
(7) Others expenses include inter alia:
(a) Entertainment expenses of Tk.5,00,000 spent on MDs birthday party ; and
(b) Four foreign travels of MD, each costing Tk.2,00,000. All foreign trips were for business purposes.
(8) ABC Ltd. Has always used written down value depreciation and same depreciation rates for both accounts and tax
purposes.
(9) Corporate income tax is the amount estimated before preparation of the tax return 60% of the estimated amount of
tax has been paid as advance tax during the year 2013.
(10) Dividend has been paid at the rate 35%.
The company has a capital loss of Tk.10, 00,000 carried forward from the assessment year 2011-1012.
ABC limited is a public limited company.
Required:
Compute the total income and the total income tax liability of ABC Ltd. while making the above computations, any
non-compliance of the relevant provisions of the tax laws (income tax as well as VAT) by the company are to be
considered strictly in accordance with the legal provisions for such non-compliances. If considered necessary, you
may make assumptions in the light of the relevant tax provisions.
Page 66 of 137
Solution:
Computation of total income
Particulars
Net income
Less: Interest to be shown separately
Gain on sale of Shares
Amount
Add: Inadmissible expenses

Salary and wages
Gratuity provision
Gratuity payment
Security services
Donation
Board meeting attendance fee
Entertainment expenses
Corporate income tax
600,000
1,500,000
1,000,000
300,000
1,800,000
300,000
500,000
4,500,000
10,500,000
26,700,000
1,000,000
Income from business

Income from interest on securities
Income from capital gain
Previous loss carry forwarded and set off
(1000,000-5,000)
2,500,000
(995,000)
1,505,000
29,205,000
Total taxable income
Tax liability:
Total income less capital gain (29,205,000 1,505,000)
Tax@ 24.75% x 27,700,000
Add: tax on capital gain tk.1, 505,000 @10%
(+) simple interest u/s 75: 7,00@75%

(-) advance tax paid
Considering two years
Amount
19,700,000
(1,000,000)
(2,500,000)
16,200,000
= Tk.27,700,000
= Tk.6,855,750
= Tk.150,500
Tk. 7,006,250
5,254688
2,700,000
2,554,688 @10%
510,938
7,517,188
Less: Advance tax paid

Tax payable
2,700,000
4,817,188
Minimum Tax:
130,000,000 @ .30 % = 390,000

Page 67 of 137

Page 68 of 137
Part: Six
Income from other sources
Income from other sources:
Study References:
Section; 2(26) Dividend; read with rule 19(7)
2(56) Royalty; 2(34)
2(31) Fees for technical services
Section; 33, 34, 35, 36
Section; 19(1) 19(5)
19(8) 19(13)
19(21), 19(21B) read with section 82BB(5)
19(24), 19(26), 19(27), 19(28)
6th schedule (Part A); Para 11A, 22A
Section 33; Income from other sources; (relevant with section 2(26))
The following income of an assessee shall be classified and computed under the head "Income from other sources",
namely:(a) dividend and interest;
(b) royalties and fees for technical services;
(c) income from letting of machinery, plants or furniture belonging to the assessee, and also of buildings
belonging to him if the letting of buildings is inseparable from the letting of the machinery, plant or furniture;
(d) any income to which section 19 (1), (2), (3), (4), (5), (8), (9), (10), (11), (12), (13), (21), ), (21B), (24), (26),
(27 (21A) or (24) applies;
(e) any other income of any kind or from any source which is not classifiable under any of the other heads
specified in section 20.
Section 34; Deductions from income from other sources;

(1) The amount of interest paid in respect of money borrowed for the purpose of acquisition of shares of a
company.
(2) Any expenditure, not being in the nature of capital expenditure or personal expenses of the assessee, incurred
solely for the purpose of making or earning the relevant income.
(3) Where the income is derived from letting on hire of machinery, plant or furniture belonging to the assessee and
also of building belonging to him if the letting of the building is inseparable from the letting of such machinery,
plant or furniture, the same allowances as are admissible under section 29(1) (vi), (vii) and (xi) to an assessee in
respect of income under the head "Income from business or profession" subject to the same conditions and
limitations as if the income from such letting on hire were income from business or profession:
Provided that the provisions of section 19(16) shall also be applicable for the determination of any profits where
the sale proceeds of such machinery, plant, furniture or building exceeds the written down value thereof.
(4) Notwithstanding anything contained in this section, no allowance shall be made on account of(a) any interest chargeable under this Ordinance which is payable outside Bangladesh on which tax has
not been paid and from which tax has not been deducted at source under section 56; or
(b) any payment which is chargeable under the head "Salaries" if tax has not been paid thereon or
deducted there from under section 50.

Page 69 of 137

Section 35; Method of accounting:
All income classifiable under the head Agricultural income, Income from business or profession or Income from
other sources shall be computed in accordance with the method of accounting regularly employed by the company
[sec 35(1)]
Every public or private company as defined in the Companies Act, 1913 (VII of 1913) or 1994 shall, with the return
of income required to be filed under this Ordinance for any income year, furnish a copy of the trading account, profit
and loss account and the balance sheet in respect of that income year certified by a chartered accountant to the effect
that the accounts are maintained according to the BAS and reported in accordance with BFRS [sec 35(3)]
Where no method of accounting has been regularly employed, or if the method employed is such that, in the opinion
of the DCT the income of the assessee cannot be properly ascertained, the income of the company shall be computed
on such basis and in such manner as the Deputy Commissioner of Taxes may think fit [sec 35(4)]
Section 2(26); Dividend:
1.
2.
3.
Any distribution of assets, whether capitalized or not, will be treated as dividend.

Subsidiary of a foreign company want to remit money to its parent company will be treated as dividend.
If director of a private company take loans from the company, such loan will be treated as dividend.
Stock dividend is not a dividend at all.
6th Schedule (Exemption);

11A; For individual (or person) Tk. 20,000 will be exempted from dividend income.
22A; For mutual fund Tk. 25,000 will be exempted from dividend income.
Section 36; Allocation of income from royalties, literary works, etc:

Where the time taken by the author of a literary or artistic work in the making thereof exceeds twelve months, the
amount received or receivable by him during any income year in lump sum on account of royalties or copyright fees
in respect of that work shall, if he so claims, be deemed to be the income of(a) the income year in which it is received and the immediately preceding income year if the time taken in
making such work exceeds twelve months but does not exceed twenty-four months ; and
(b) the income year in which it is received and the two immediately preceding income years if the time taken
in making such work exceeds twenty-four months, and shall be allocated in equal proportions to each such
income year and the income of the assessee in respect of an income year shall be computed accordingly.
Explanation.- For the purposes of this section, the expression "author" includes a joint author and the expression
"lump sum" in regard to royalties or copyright fees includes an advance payment on account of such royalties or
copyright fees which is not returnable.
Section 19; Un-explained investments, etc., deemed to be income;

(1) Where any sum is found credited in the books of an assessee maintained for any income year and the assesses
offers no explanation about the nature and source thereof, or the explanation offered is not, in the opinion of the
Deputy Commissioner of Taxes, satisfactory, the sum so credited shall be deemed to be his income for that income
year classifiable under the head "Income from other sources".
(2) Where, in any income year, the assessee has made investments or is found to be the owner of any bullion,
jewellery or other valuable article and the Deputy Commissioner of Taxes finds that the amount expended on making
such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this
behalf in the books of account maintained by the assessee for any source of income and the assessee offers no
explanation about the excess amount or the explanation offered is not, in the opinion of the Deputy Commissioner of
Taxes, satisfactory, the excess amount shall be deemed to be the income of the assessee for such income year
classifiable under the head "Income from other sources".
Page 70 of 137

(3) Where, in any income year, the assessee has incurred any expenditure and he offers no explanation about the
nature and source of the money for such expenditure, or the explanation offered is not in the opinion of the Deputy
Commissioner of Taxes, satisfactory, the amount of the expenditure shall be deemed to be the income of the assessee
for such income year classifiable under the head "Income from other sources".
(4) Where, in the financial year immediately preceding the assessment year, the assessee has made investments which
are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers
no explanation about the nature and source of fund for the investments, or the explanation offered is not, in the
opinion of the Deputy Commissioner of Taxes, satisfactory, the value of the investments shall be deemed to be the
income of the assessee for such financial year classifiable under the head "Income from other sources".
(5) Where, in the financial year immediately preceding the assessment year, the assessee is found to be the owner of
any money, bullion, jewellery or other valuable article which is not recorded in the books of account, if any,
maintained by him for any source of income, and the assessee offers no explanation about the nature and source of
fund for the acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered is not, in
the opinion of the Deputy Commissioner of Taxes, satisfactory, the money or the value of the bullion, jewellery or
other valuable article, shall be deemed to be the income of the assessee for such financial year classifiable under the
head "Income from other sources".
(8) Where any assets, not being stock-in-trade or stocks, and shares, are purchased by an assessee from any company
and the Deputy Commissioner of Taxes has reason to believe that the price paid by the assessee is less than the fair
market value thereof, the difference between the price so paid and the fair market value shall be deemed to be income
of the assessee classifiable under the head "Income from other sources".
(9) Where any lump sum amount is received or receivable by an assessee during any income year on account of
salami or premia receipts by virtue of any lease, such amount shall be deemed to be income of the assessee of the
income year in which it is received and classifiable under the head "Income from other sources":
Provided that at the option of the assessee such amount may be allocated for the purpose of assessment
proportionately to the years covered by the entire lease period, but such allocation shall in no case exceed five years.
(10) Where any amount is received by an assessee during any income year by way of goodwill money or receipt in
the nature of compensation or damages for cancellation or termination of contracts and licences by the Government or
any person, such amount shall be deemed to be the income of such assessee for that income year classifiable under
the head "Income from other sources".
(11) Where any benefit or advantage, whether convertible into money or not, is derived by an assessee during any
income year on account of cancellation of indebtedness []Deleted F.A. 1999, the money value of such advantage or benefit
shall be deemed to be his income for that income year classifiable under the head "Income from other sources":
Provided that the provisions of this sub-section shall not apply in case of a loan or interest waived in respect of an
assessee by a commercial bank including Bangladesh Krishi Bank, Rajshahi Krishi Unnyan Bank, Bangladesh
Development Bank Ltd. or a leasing company or a financial institution registered under , 1993
(1993 27 )
(12) Any managing agency commission including compensation received during any income year by an assessee for
termination of agencies or any modification of the terms and conditions relating thereto shall be deemed to be his
income for that income year classifiable under the head "Income from other sources".
(13) Any amount received by an assessee during any income year by way of winnings from lotteries, crossword
puzzles, card games and other games of any sort or from gambling or betting in any form or of any nature whatsoever
shall be deemed to be his income for that income year classifiable under the head "Income from other sources".
(21) Where any sum, or aggregate of sums exceeding taka five lakh is claimed or shown to have been received as
loan by an assessee during any income year from any person, not being a banking company or a financial institution,
otherwise than by a crossed cheque drawn on a bank, and has not been paid back in full within three years from the
end of the income year in which it is claimed or shown to have been received, the said sum or part thereof which has
not been paid back, shall be deemed to be the income of the assessee for the income year immediately following the
expiry of the said three years and be classifiable under the head "Income from other sources":
Page 71 of 137

Provided that where the loan referred to in this sub-section is paid back in a subsequent income year, the amount so
paid shall be deducted in computing the income in respect of that subsequent year.
[(21B) Where any sum, shown as initial capital of business or profession in return of income filed under section
82BB, is transferred by a person partly or fully within the period of limitation stipulated in the said section, the sum
so transferred shall be deemed to be his income of the year in which such sum was transferred and shall be
classifiable under the head "Income from other sources".] Added F.A. 2011
[(24) Where an assessee, being a private limited company or a public limited company not listed with a stock
exchange, increases its paid up capital by issuing shares in an income year, the amount so received as increased paid
up capital, not being received by crossed cheque or bank transfer, shall be deemed to be the income of such assessee
for that income year classifiable under the head "Income from other sources.]Subs. F.A. 2010
[(25)]Deleted F.A. 2007
[(26)Where an assessee, being a company, receives any amount as loan from any other company otherwise than by a
crossed cheque or by bank transfer, the amount so received shall be deemed to be the income of such assessee for that
income year in which such loan was taken and shall be classifiable under the head "Income from other sources".] Added
F.A. 2011
Provided that where the loan or part thereof referred to in this sub-section is repaid in a subsequent income
year, the amount so repaid shall be deducted in computing the income for that subsequent year. Added F.A. 2014
[(27)Where an assessee, being a company, purchases directly or on hire one or more motor car or jeep and value of
any motor car or jeep exceeds ten percent of its paid up capital, then fifty percent of the amount that exceeds such ten
percent of the paid up capital shall be deemed to be the income of such assessee for that income year classifiable
under the head "Income from other sources".]Added F.A. 2011

Page 72 of 137

Problem - 1 Individual Assessment:
The following are the income of Mr. Azad for the year ended June 30, 2014. Compute his total income and tax liability:
BDT
a.
Salary Income
Basic salary
Festival bonus
House rent allowance
Entertainment allowance
Conveyance allowance
Other allowance
Employer's contribution to Provident fund
Tax deducted from salary
420,864
70,144
375,735
4,173
35,072
16,262
42,086
12,000
House Property Income

House rent
City Corporation tax
Salary of security guard
Salary of sweeper
297,600
9,000
48,000
12,000
c.
378,975
d.
Income from partnership (A real estate business)

[Tax deducted at source Tk. 65,280]
596,400
e.
Income from land sale (capital gain)

[Tax deducted at source Tk. 40,000]
160,000
f.
Income from share business u/s 32(7)
b.
g. Dividend income (Gross)

h. Interest from SB A/C (Gross)
8,974,071
1,204,374
965
i.
Income from fisheries business
403,000
j.
Income from poultry firm

[Investment in govt. bond]
205,000
Notes:
1.
2.
3.
4.
5.
Purchase of 5-years Bangladesh Sanchaya Patra

Investment in DPS
Advance tax for car registration
Assessee's total wealth
The assessee has a flat in Bashundhara R/A but was vacant due to non-connection of
electricity and gas.
200,000
120,000
15,000
125,090,210

Page 73 of 137
Solution:
Mr. Azad
Income Year: 2013-14
Assessment Year: 2014-15
Computation of total taxable income
A.
Income from Salary

1. Basic salary
2. Festival bonus
3. House rent allowance
Less: Lower of 50% basic salary or Tk. 20,000 p.m.
50% of basic salary
Or, Tk. 20,000 p.m.
5.
6.
7.
8.
Less: Exempted
Other allowance
Employees' contribution to Provident fund
BDT
BDT
BDT
BDT
420,864
70,144
375,735
210,432
240,000
(210,432)
165,303
4,173
35,072
(30,000)
5,072
16262
42,086
723,904
B.
Income from House Property

Annual value
Less: Allowable expenses:
Repair and maintenance (25% of annual value)
City corporation tax
297,600
74,400
9,000
(83,400)
214,200
C.

378,975
D.
Income from partnership
596,400
E.
Capital Gain
Income from land sale (assuming that sales occurred within 5 years)
F.
160,000
Income from Other Sources

1.
2.
3.
4.
5.
Dividend income (gross)

Less: Exempted
Interest from SB A/c
Income from fisheries business
Income from poultry firm
Less: Exempted
Income from share business
Less: Exempted
1,204,374
(20,000)
1,184,374
965
403,000
205,000
(205,000)
8,974,071
(8,974,071)
1,588,339
Total Taxable Income
3,661,818

Page 74 of 137

Calculation of Investment Allowance
1.
2.
3.
Actual investment
a. Investment in govt. bond [10% of BDT 205,000]
b. Employee and Employer's contribution to PF
c. Purchase of 5-years Bangladesh Sanchaya Patra
d. Investment in DPS [up to BDT 60,000]
20,500
84,172
200,000
60,000
30% of Total taxable income excluding Employer's contribution

to PF, Income from fisheries business and Capital gain [30% of
(3661818-42086-403000-160000)]
364,672
917,020
Maximum allowance u/s 44
15,000,000
Tax rebate @ 15% of the lowest of (1), (2) and (3)
54,701
Tax Liability Calculation

Total income excluding income from fisheries business
[3,661,818 - 403,000]
Applicable slab
On 1st
Next
Next
Next
Remaining
220,000
300,000
400,000
500,000
1,838,818
Fisheris income
403,000
3,258,818
Rate
0%
10%
15%
20%
25%
Tax amount
30,000
60,000
100,000
459,705
3%
Less: Investment tax rebate

Less: Average rate on income from partnership
[607,094 3,258,818 596,400]
Less: Advance payment of tax
From salary
On land sale
On interest
On dividend income
Net tax liability
12,090
661,795
(54,701)
(111,105)
12,000
40,000
97
120,437
(172,534)
323,455

Page 75 of 137

Problem - 2 Individual Assessment:
Mr. A is 60 years old and employed by a private limited company. He has joined the company on 01 July 2013. He
has received the following income and benefits during the year ended 30 June 2014:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
Basic salary Tk. 100,000 per month sent to his bank directly. He had outstanding salary for the month of
June 2014 which was paid on 02 July 2014. He had also received arrear salary of Tk. 50,000 during the year
from previous employment.
The present employer allowed house accommodation at a concessional rate. Mr. A paid Tk. 60,000 only as
rent during the income year 2013-14.
Additional conveyance allowance of Tk. 50,000 was paid to Mr. A in addition to the conveyance allowed
under Rule 33D.
Entertainment allowance @ 5% of basic salary was paid to Mr. A.
Free and consessional passage of Tk. 200,000 for travel in Bangladesh by Mr. A was allowed by the
employer against actual claim of expenditure of Tk. 300,000.
Employer spent Tk. 500 p.m. for free tea, coffee and beverage for the office of Mr. A durig working hours.
Company spent Tk. 200,000 for Mr. A during the year against reimbursement of utility bills of his residence.
Received share of net profit of Tk. 200,000 from partnership. He is entitled to tax rebate as per tax law.
Derived net income from production of corn, maize and sugar beet for Tk. 5,000.
Purchased wage earners' bonds on 30 June 2013 and received interest of Tk. 50,000 in the following year on
the said investment of Tk. 500,000.
Taken advance of Tk. 200,000 from a company against accumulated profit where he was an alternate
director and a shareholder.
Mr. A is also a manufacturer and exporter of garments products. He sold export quota at Tk. 25,000 against
export value of Tk. 500,000.
Mr. A incurred a capital loss of Tk. 500,000 on account of sale of shares in the earlier year, but this year he
made a capital gain of Tk. 600,000 from the sale of shares.
Rental income of Tk. 600,000 received from a five-storied building consists of 10 flats constructed during
the period from 01 July 2012 to 30 June 2013 in an area of Muladi, Barisal.
During the year Mr. A has claimed the following expenditures as his investments:
1.
2.
3.
4.
5.
Purchased Sanchay Patra for Tk. 50,000.

Contributed 10% of his basic salary towards Super Annuation Fund.
Deposited Tk. 75,000 under Deposit Pension Scheme with a Financial Institution.
Deposited Tk. 20,000 to Benevolent Fund.
Contributed 10% of basic salary to a recognised provident fund. A similar contribution was made by the
employer wherefrom he receive interest of Tk. 1,800 from the said fund @ 18%.
6. Paid insurance premium of Tk. 20,000 for his spouse and minor child. The policy value is Tk. 100,000.
7. Purchased a computer for Tk. 50,000 and a laptop for Tk. 60,000.
You are required to calculate the total income and tax liability of Mr. A for the assessment year 2014-2015. Make
necessary assumptions, if required.

Page 76 of 137

Solution:
Mr. A
Income Year: 2013-14
Assessment Year: 2014-15
Computation of total taxable income
A.
BDT
BDT
Income from Salary

1. Basic salary
2. Arrear salary from previous employment
3.
4.
5.
6.
7.
8.
9.
BDT
BDT
1,200,000
50,000
House rent allowance [25% of basic salary]

Less: Rent paid
R-33B
300,000
(60,000)
240,000
Add: Car facility
R-33E
R-33D
50,000
60,000
110,000
Free and concessional passage in Bangladesh
Less: Exempted
R-33G
200,000
(200,000)
60,000
Reimbursement of Utility
Employer's contribution to RPF
Interest on RPF
Less: Lower of interest @ 14.5% or 1/3 of BS
Interest @ 14.5%
1/3 of Basic Salary
200,000
120,000
1,800
1,450
400,000
(1,450)
350
1,980,350
B.
Income from Interest on Securities

Interest on securities (gross)
50,000
50,000
C.
Income from House Property

Rental income
Less: Exempted
6th-A-38
600,000
(600,000)
-
D.
Agricultural Income
Income from production of corn, maize and sugar beet
Less: Exempted 50%
5,000
(2,500)
2,500
E.

1. Income from partnership business
2. Export quota [3% of BDT 500,000]
200,000
15,000
215,000
F.
Capital Gain
Income from land sale (assuming that sales occurred within 5
years)
Less: Exempted 100%
600,000
600,000
1,200,000
G.
Income from Other Sources

1.
Dividend income (gross)
200,000
200,000
Total Taxable Income
3,647,850

Page 77 of 137
Calculation of Investment Allowance

1. Actual investment
a. Sanchay Patra
b. Contribution to Super Annuation Fund
c. Investment in DPS [up to BDT 60,000]
d. Contribution to RPF
e. Insurance premium
f. Laptop purchase
g. Contribution to Benevolent Fund
50,000
120,000
60,000
240,000
10,000
60,000
20,000
2. 30% of Total taxable income excluding Employer's contribution

to PF, Income from fisheries business and Capital gain [30% of
(2485350-5000-120000-350)]
560,000
708,000
3. Maximum allowance u/s 44
15,000,000
Tax rebate @ 15% of the lowest of (1), (2) and (3)
84,000
Tax Liability Calculation

Applicable slab
On 1st
Next
Next
Next
Remaining
Rate
220,000
300,000
400,000
500,000
1,027,850
0%
10%
15%
20%
25%
Less: Investment tax rebate

Less: Average rate on income from partnership
[362,963 2,447,850 200,000]
Less: TDS on wage earners' bond
Net tax liability
Tax amount
30,000
60,000
100,000
256,963
446,963
(84,000)
(29,656)
(2,500)
330,807

Page 78 of 137
Part: Seven
Set off and Carry Forward Losses
Set Off and Carry Forward Losses:
Study References:
Section; 37: carry forward losses.
Section; 38 read with section 46B, 46C and 3rd schedule
39,40,41,42
Set Off Losses: Section 37

Wherever an assessee sustains a loss in any year under any head of income, he is entitled to set off the loss so
sustained against his income, profits or gains under any other head in that year. Provided that any loss in respect of
any speculation business or any loss under capital gains or any loss from any other source, income of which is
exempted from tax shall not be so set off.
Carry forward of loss from business: Section 38

Whenever an assessee sustains any loss under the head Business or Profession and the loss cannot wholly be setoff against under any other head, 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. Loss cannot be carried forward for more than 6
successive assessment years.
Section - 46B: Exemption from tax of newly established industrial undertakings set up between the
period of July 2011 and June 2013, etc. in certain cases.1.
2.
(1) Subject to the provisions of this Ordinance, income, profits and gains under section 28 from an industrial
undertaking (hereinafter referred to as the said undertaking) set-up in Bangladesh between the first day of
July, 2011 and the thirtieth day of June, 2019 (both days inclusive) shall be exempted from the tax payable
under this Ordinance for the period, and at the rate, specified below:
if the said undertaking is set-up in1. (i) Dhaka and Chittagong divisions, excluding Dhaka, Narayanganj, Gazipur, Chittagong,
Rangamati, Bandarban and Khagrachari districts, for a period of five years beginning with the
month of commencement of commercial production of the said undertaking:
2.
Period of Exemption
Rate of Exemption
For the first two years (first and second year)
100% of income
For the next two years (third and fourth year)
50% of income
For the last one year (fifth year)
25% of income
(ii) Rajshahi, Khulna, Sylhet, Barisal and Rangpur divisions (excluding City Corporation area) and
Rangamati, Bandarban and Khagrachari districts, for a period of ten years beginning with the month
of commencement of commercial production of the said undertaking:
Period of Exemption
Rate of Exemption
For the first two years (first and second year)
100% of income
For the third year
70% of income
For the fourth year
55% of income
For the fifth year
40% of income

Page 79 of 137

For the sixth year
25% of income
For the last four years (seventh to tenth year)
20% of income
Carry forward of loss in speculation business: Section 39

Loss from speculation business, which cannot be set-off during the year against income from any other speculation
business, can be carried forward to the next following year and set-off against income from any speculation business
in the said following year. If the loss cannot be wholly set-off, it can be carried forward to the next year and so on,
restricted upto 6 successive years.
Carry forward of loss under the head Capital Gains: Section 40

Loss under the head Capital Gains can be set-off against income from the same head during the income year. If the
loss cannot be set-off in the above manner, the loss or portion thereof can be carried forward to the next assessment
year and set-off against income under the same head in that year restricted upto 6 successive assessment years.
Loss upto Taka 5,000 cannot be carried forward. Amount in excess of Taka 5,000 can only be carried forward and
set-off in the aforesaid manner.
Loss of Agricultural Income: Section 41

Where any assessee sustains a loss of profit or gains in any year under the head Agricultural Income and the loss
cannot be wholly set-off under Section 37, the loss or portion thereof where the assessee has no income under any
other head, shall be carried forward to the following year and set-off against the profits and gains, if any, of such
agricultural income and if the loss in either case cannot be wholly set-off, the amount of loss not so set-off, shall be
carried forward to the next year and so on but not more than 6 years.
Set-off of loss in the case of succession in business: Section: 42

In case of succession in business otherwise than by inheritance, the person succeeding in the business shall not be
entitled to set off the loss of the person succeeded. In the case of change in constitution of firm, the firm shall not be
entitled to set-off the proportionate share of loss of the retired or deceased partner. A partner of the firm shall also not
be entitled to the benefit of such loss.
For example,
Partner
A
B
C
Total loss
Loss (Year 1)
25,000
25,000
25,000
75,000
Partner
A
B
C (6 months)
D (6 months)
Proft (Year 2)
40,000
40,000
20,000
20,000
Proft after set off

15,000
15,000
0
20,000
Loss to be carry forwarded = 0 (zero)

If C come back within 6 years and make profit, than remaining 5,000 can be set off.
If D is the successor of C, rest of 5,000 loss can be set-off against Ds income.
Carry forward of depreciation allowance: Section 42(6)

Depreciation allowance which cannot be given full effect of, in any year, because of there being no profits or of
inadequate profits, unadjusted allowances or portion thereof as the case may be, shall be carried forward to the next
year or years and be part of allowance for that year.
While setting-off loss on account of depreciation allowance, effect shall first be given to business loss including loss
from speculation business.

Page 80 of 137
Advance Payment of Tax

Advance income tax is the tax which is to be paid by the assesse in advance either by deduction or collection of tax at
source or by payment of quarterly instalments.
(1) Who is liable to pay advance tax?
Both existing and new assessees are liable to pay advance income tax if following situations arise
In case of existing assessee, if his last assessed total income exceeds Tk. 400,000 [excluding agricultural income
and capital gain (other than capital gain from sale of share)], and
In case of new assessee, if his current years income is likely to exceed Tk. 400,000 [excluding agricultural
income and capital gain (other than capital gain from sale of share)].
(2) What is the basis on which advance tax payments should be calculated?
In case of existing assessee:
In case of existing assessee, advance tax is to be calculated on the basis of his last assessed income. If his last
assessed income exceeds Tk. 400,000 [excluding agricultural income and capital gain (other than capital gain
from sale of share)], he is required to pay advance tax. (Sec-64)
In case of new assessee:
A new assessee who has not previously been assessed shall also be required to pay advance tax if his current
years income [excluding agricultural income and capital gain (other than capital gain from sale of share)] is
likely to exceed Tk. 400,000. (Sec-68)
(3) When and how is advance tax to be paid?
Advance tax is to be paid in the following four equal instalments based on financial year for which the tax is payable:
1st instalment
:
15th September
nd
2 instalment
:
15th December
rd
3 instalment
:
15th March
4th instalment
:
15th June
Provided that if an assessment of the assessee is completed before 15 th May, then on that basis the payable amount of
the rest instalment/ instalments is/are to be determined. (Sec-66)
(4) Whether deduction/collection of tax at source will be treated as advance tax?
Yes, withholding tax is also to be treated as advance payment of tax.
(5) What will happen in case of excess payment of advance tax?
If the advance tax paid by the assessee exceeds the tax payable by him on regular assessment, Govt. will pay simple
interest on excess payment @ 10% per annum to be calculated from 1st July of the respective assessment year to the
date of regular assessment but not more than 2 years.
(6) Is there any scope to pay estimated amount of advance tax?
Yes, if any assessee feels, at any time during the year, that his tax is likely to be less that the tax payable as per law,
then he may submit an estimate to the DCT and pay estimated amount of advance tax accordingly (Sec-67). But at the
time of assessment if the DCT finds that his estimate is wrong and tax actually comes higher, then assessee will have
to pay simple interet as per section 73.
Page 81 of 137

(7) What are the consequences in case of failure to pay advance tax?
The consequences are as follows:
I. Assessee will be treated as an assessee in default (Sec-69).
II. Simple interest @ 10% per annum will be chargeable on the amount falls short from 75% of the assessed tax to
be calculated from 1st April of the year in which the advance tax was paid to the dte of assessment but not more
than 2 years (Sec-73).
III. DCT may also impose penalty up to 100% of the shortfall (Sec-125).

Page 82 of 137

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Page 88 of 137

Page 89 of 137
Table of Withholding Tax

Sl.
No.
1
Item
Rate of deduction/
collection
Deducting Authority
50
Average rate
Every employer
Govt. salary
(including
remuneration of
M.P.)
50B
Average rate
Govt. Accounts Office
Discount on
Bangladesh Bank
Bill
50A
a.
b.
Any person
responsible for
making such payment
Interest on securities
(including treasury
bill/bond and
debenture)
Individual - 30%
Company - applicable
rate or maximum rate
(whichever is higher)
5% (at upfront system)
Contractor and
supplier (82C)
If payment Tk.
2,00,000
Nil
If payment > Tk.

2,00,000 but
Tk. 5,00,000
1%
If payment > Tk.

5,00,000 but
Tk. 15,00,000
2.50%
If payment > Tk.

15,00,000 but
Tk. 25,00,000
3.50%
If payment > Tk.

25,00,000 but
Tk. 3,00,00,000
4%
If payment > Tk.

3,00,00,000
5%
Salary (other than

Govt. salary)
Section/
Rule
a.
b.
Oil supplied by
oil marketing
company
Oil supplied by
dealer or agent
of oil marketing
company
(excluding
51
52/ 16
Section
52 read
with
Rule 16
Employer will not

deduct tax at source
or will deduct tax at a
lower rate/ amount in
case an employee can
produce a certificate
issued by the DCT to
do so.
Any person
responsible for issuing
such security
0.60% if payment exceeds

Tk. 2,00,000.
Remarks
Govt.
organization
Corporation
NGO
Company
Bank (including
co-operative
bank)
Insurance
company
University
Medical/ Dental/
Engineering
colleges
Applicable on
CUMULATIVE
payment made to
same contractor/
supplier DURING
THE year.
Same
1%

Page 90 of 137

petrol pump
station)
c.
Oil supplied by
oil refinery
3%
Gas supplied by
Gas
transmission
company to gas
distribution
company
Indenting
commission
3%
d.
Gas distribution
company
52/ 17(1)
7.50%
Bank
Shipping agency
commission
52/ 17(2)
5%
Bank
Service rendered by
doctor at hospital or
diagnostic center
52A(1)
10%
Royalty/ Technical
know-how fee (82C)
Fees for
professional/
technical services
(including any
services applying
professional
knowledge)
52A(2)
10%
52A(3)
10% (if the payee does not

have any 12-digit TIN then
the rate will be 15%)
Stevedoring
agency
commission
Private security
service
Any service
other than the
services covered
under any other
deduction head
52AA
10% - General rate
Truncated Rate for special

case as per NBR circular:
Private
security
received
through
Private Security Service
provider, and
Manpower
supply
received
through
OUTSOURCING
organization i.e. 1.50%
(10% of 15%) of gross
bill
[if commission is not
identifiable from the
NGO
Company
Trust (who are
running any
general/
specialized
hospital or any
diagnostic center)
Govt.
organization
Corporation
NGO
Company
Bank (including
co-operative
bank)
Insurance
company
Govt.
organization
Corporation
NGO
Company
Bank (including
co-operative
bank)
Insurance
company
Deducting authority
will not deduct tax at
source or will deduct
tax at a lower rate/
amount in case party
produces a certificate
issued by the DCT to
do so.

Page 91 of 137
C&F Agency
commission (82C)
Hand-made
Cigarette (82C)
Land acquisition
(82C)
52AAA
11
12
8
9
10
bill commission is
deemed to be 15% of
the bill and 10% tax
deduction
will
be
applicable
on
that
truncated base of 15%]
10%
Commissioner of
customs
Post office
52B
10% on banderole
52C
2% at city corporation,
paurashava and cantonment
board area
1% in other area
Persons responsible
for making such
payment.
Interest on savings
certificate (partly
82C)
52D
Brick field
52F
5%
But no tax shall be deducted
on interest where the
cumulative investment at the
end of the income year in
the
pensioners
saving
certificate and wage earners
development bond does not
exceed Tk. 5,00,000.
Tk. 45,000 for one section
Bank
Post office
National Savings
Bureau
D.C. Office
Tk. 75,000 for one and half

section
Tk. 90,000 for two section
13
Travel Agency
Commission
52JJ
14
Any payment to life

insurance policy
holder in excess of
total premium
Local L/C
52T
52U
Tk. 1,50,000 for automatic

brickfield
3%
On commission or discount
or incentive bonus or any
other benefit paid by the
airlines to GSA for selling
air ticket/ air cargo
5%
However, TDS will not be
applicable in case of death
of such policy holder.
3%
On total proceeds exceeding
Tk. 5,00,000
15
Airlines
Life insurance
company
Bank or financial
institution
Not applicable on
rice, wheat, potato,
onion, garlic, peas,
chick peas, lentils,
ginger, turmeric,
dried chilies, pulses,
maize, coarse flour,
flour, salt, edible oil,
sugar, black pepper,
cinnamon,
cardamom, clove,
date, cassia leaf and
all kinds of fruits.

Page 92 of 137
16
17
18
19
20
21
22
Revenue sharing or
any license fee or
any other fees or
charges paid to
regulatory authority
Trade license
renewal
52V
10%
Mobile phone
company
52K
City Corporation and

pourashava
Freight forward
agency commission
L/C commission
52M
Tk. 500 for Dhaka and

Chittagong City Corporation
Tk. 300 for other city
corporations and paurashava
at district headquarters
Tk.
100
for
other
pourashava
15%
52(I)
5%
Import (82C)
(But AIT on raw
material import is
not 82C)
Service charge on
services provided by
a resident to any
foreign person
International
Gateway Service on
International phone
call (82C)
53/ 17A
The Commissioner of
Customs
52Q
5%
(But in case of iron, steel,
water vessels and other
floating
structures
for
breaking up, the rate is Tk.
800 per ton)
10%
52R
1%
Bank (through which

the receipt on account
of international
gateway service in
respect of
international phone
call is received)
International Gateway
Service Provider
(through which the
revenue related to
international phone
call is shared under an
agreement with
BTRC)
Govt.
organization
Corporation
NGO
Company
Bank (including
co-operative
bank)
University
Medical/ Dental/
Engineering
colleges
5%
House rent
Person responsible for

making such payment
Bank
53A/
17B
5%
23
Bank

Page 93 of 137
Shipping business of
a resident (82C)
53AA
Man power export

(82C)
Rent of conference
hall and convention
center
53B/
17C
52P
Export of knit-wear,
Woven garments,
terry towel, carton,
garments
accessories, jute
goods, frozen food,
vegetables, leather
goods, and packed
foods (82C)
Any other type of
export (not 82C)
Security house (82C)
53BB
24
25
26
27
28
5%
(But if service rendered
between 2 or more foreign
countries then the rate is
3%)
10% on per head service
charge
5%
0.60%
(In case of garments, the
rate is 0.30%)
31
Bureau of Manpower
NGO
Company
University
Medical/ Dental/
Engineering
colleges
Bank
53BBBB
53BBB
Public auction (82C)
53C/
17D
0.05% on transaction value

(other than bond)
5% (In case of tea auction,
the rate is 1% only)
Service charge paid

to non-resident
courier company by
its local agent (82C)
Performing in a film,
drama,
advertisement or any
TV or radio program
or purchasing a film,
drama or TV or radio
program
53CC
15%
53D
10%
29
30
Any hospital,
clinic or
diagnostic center
The Commissioner of
Customs
32
Rental power (82C)
52N
6%
33
Salary of foreign
technician serving in
52(O)
5%
DSE and CSE
Govt.
organization
Corporation
Company
(including private
limited company)
Insurance
Local agent of nonresident courier
company
Any person
responsible for
making part or full
payment for
purchasing/
performing in a film,
drama, advertisement
or any television or
radio program
PDB
Not applicable if total

payment does not
exceed Tk. 10,000
Diamond cutting
industry

Page 94 of 137
34
35
36
37
any diamond cutting

industry (82C)
Export cash subsidy
(82C)
Distributorship
Commission
Foreign buyers
agent
Bank interest
53DDD
3%
Bank
53E
10%
Company
If any company sells its

products to its distributors at
a price lower than MRP,
then 3% tax on difference
between DP and MRP is to
be collected.
7.50%
Bank
10%
Bank
53EE
53F/
17H
Real Estate Business

(82C)
53FF
Land developer
(82C)
53FF
Insurance
commission paid to
agent of insurance
company (82C)
Surveyor of General
Insurance (82C)
53G
38
39
40
53GG
The rate will be 15% if the

deposit holder holds deposit
more than Tk. 1,00,000 but
does not possess 12-digit
TIN.
Tk. 1,600 or Tk. 1,500 or
Tk. 600 per square meter for
residential
building
or
apartment depending on the
area
Tk. 6,000 or Tk. 5,000 or
Tk. 1,600 per square meter
for
commercial
space
depending on the area
5% of the deed value of land
at any area of Dhaka,
Gazipur,
Narayanganj,
Munshiganj,
Narsingdi,
Manikganj & Chittagong
District.
2% in other district
5%
[At the time of payment or
at the time of credit whichever is earlier]
15%
[At the time of payment]
Registration Authority
Insurance Company
General Insurance
Company

Page 95 of 137
Sl.
Item
No.
41 Sale of land or
(i) land and building
(commercial area)
41
(ii)
Sale of land or
land and building
(other than
mentioned at
Schedule A)
Section/
Rate of deduction/ collection
Rule
53H/
Schedule A (For Land)
17(II)
Gulshan, Banani, Motijheel, Dilkhusha,
North South Road, Motijheel Expansion
areas and Mohakhali of Dhaka
4% of the deed value or Tk. 10,80,000
per katha (1.65 decimal) Higher one
Kawran Bazar, Uttara, Sonargaon Janapath,
Shahbag, Panthapath, Banglamotor, Kakrail
of Dhaka
Banga Bondhu Avenue, Badda, Sayedabad,
Postogola and Gandaria of Dhaka.
Agrabad and CDA Avenue of Chittagong
and Narayanganj.
For building/apartment/flat/structure/floor
space:
In addition to tax applicable for land
mentioned above, an additional tax @
Tk. 600 per square meter or 4% of the
deed
value
of
such
building/apartment/flat/structure/floor
space Higher one.
53H/
Schedule B (For Land)
17(II)
Uttara (Sector 19), Khilgaon rehabilitation
area (beside 100 feet road), Azimpur,
Rajarbagh rehabilitation area (beside biswa
road), Baridhara DOHS, Bashundhara
(block A-G), Niketon of Dhaka.
Agrabad,
Halishohor,
Panchlaish,
Nasirabad, Mehedibag of Chittagong.
4% of the deed value or Tk. 90,000 per
katha (1.65 decimal) Higher one
Gulshan, Banani, Baridhara, Nababpur and
Fulbaria of Dhaka.
Dhanmondi, Green Road (from road 3 to 8
of Dhanmondi Residential area) of Dhaka.
Kakrial, Sagunbagicha, Bijoynagar, Green
road, Eskaton, Elephant Road, Fakirapool,
Arambagh, Mogbazar, (within 100 feet of
Deducting Authority
Sub-Registrar
Sub-Registrar

Page 96 of 137
41
(v)
Sale of land or
land and building
(other than
mentioned at
Schedule A and B)
53H/
17(II)
main road), Tejgaon industrial area, Sher-ebangla nagar administrative area, Agargaon
administrative area, Lalmatia, Mohakhali
DOHS, Cantonment of Dhaka and Khulshi
of Chittagong.
Kakrial, Sagunbagicha, Bijoynagar, Green
road, Eskaton, Elephant Road (outside 100
feet of main road) of Dhaka.
Uttara (Sector 10 to 14), Nikunj (north and
south), Badda rehabilitation area, Gandaria
rehabilitation area, Shympur rehabilitation
area, IG bagan rehabilitation are, Tongi
industrial area of Dhaka.
Shympur industrial area, Postogola
industrial area and Jurain industrial area of
Dhaka.
Khilgaon rehabilitation area (beside less
than
100
feet
road),
Rajarbagh
rehabilitation area (beside 40 feet and
internal road) of Dhaka.
Goran (beside 40 feet road) and Hazaribagh
Tanary Area of Dhaka.
For building/apartment/flat/structure/floor
space:
In addition to tax applicable for land
mentioned above, an additional tax @
Tk. 600 per square meter or 4% of the
deed value of such building/apartment/
flat/structure/floor space Higher one.
Sub-Registrar
Schedule C
Within the jurisdiction of RAJUK and CDA
except areas in schedule A and B:
4% of the deed value
Within the jurisdiction of Gazipur,
Narayanganj, Munshiganj, Manikganj and
Narsingdi, Dhaka and Chittagong districts
(excluding RAJUK, CDA and Dhaka both

Page 97 of 137
42
43
44
45
Registration of
leasehold property
Transfer of share
of shareholder of
stock exchange
(82C)
Gain on sale of
shares or securities
traded in Stock
Exchange (82C)
Interest on post
office savings bank
Rental value of
vacant land or
plant and
machinery
53N
City Corporation area)

Areas within the jurisdiction of Pauroshava
of any district headquarter
Areas of any other Pauroshava:
Other areas not specified in schedule A, B
and C
4%
Sub-Registrar
Applicable for more than 10 years lease.
15%
DSE and CSE
53O
Company or firm 10%
53I
If gain > Tk. 20 lakh 5%

10%
53J
5%
53HH
Company holding
Trading Right
Any person not being company or firm
Entitlement (TREC) of
any stock exchange on
proportionate average
Below or equal Tk. 10 lakh 0%
cost of share including
fees, commission,
Above Tk. 10 lakh
interest on loan (before
If gain > Tk. 10 lakh but Tk. 20 lakh closing of a financial
year)
3%
Post office
46
47
Direct
advertisement to
newspaper,
magazine or
private TV channel
or private radio
53K
3%
Govt. organization
Corporation
NGO
Company
Bank (including cooperative bank)
Insurance
University
Medical/ Dental/
Engineering
colleges
Govt. organization
Corporation
NGO
Company
Bank (including cooperative bank)

Page 98 of 137
48
49
50
51
52
station or any web

site (including
airtime purchase of
private television
channel, private
radio station or
such web site)
Soft drinks
(including mineral
or bottled water)
Capital gain from
transfer of shares
by sponsor
shareholders and
directors of listed
companies (82C)
Dividend
52S
53M
54
Insurance
University
Medical/ Dental/
Engineering
colleges
3%
The Security Printing
(on the value of such soft drinks and Corporation
mineral water determined by the VAT
Authority)
5%
DSE and CSE
Lottery (82C)
55
Individual @ 10%.
If there is no 12-digit TIN, then @ 15%.
[For Resident & Non-resident Bangladeshi]
Individual @ 30%
[For non-resident foreigners]
Company @ 20%
20%
Any payment to
non-resident which
is not covered by
any other section
56
Foreign individual @ 30%
Company

such payment
such payment
Time limit for payment:

Normally within 2 weeks from the end of the month of deduction [Rule 13]
Deduction from salary may be deposited quarterly with prior permission
Double Cheque Method:
1. Deduction from contractors or suppliers (Sec-52);
2. Fees for professional or technical services (Sec-52A);
3. House property (Sec-53A);
4. Commission or fees (Sec-53E);
5. Unauthorized deduction prohibited (Sec-60);
6. Payment where no deduction is made (Sec-63).
Consequence of non-compliance:
The deducting authority will be treated as an assessee in default [Sec-57(1)(a)].
2% additional amount per month is collectable [Sec-57(1)(b)].
Expenditure will be treated as income for non-deduction/ collection of tax at source [Sec-30].
Page 99 of 137
Part: Eight
Assessment of Partnership Firm
Assessment of Partnership Firm:
Study References:
Section 30(b);
43(3)
85
Sixth Schedule (Part A) Para 18
Sixth Schedule (Part B) Para 16
Section 30(b); Deduction Inadmissible:

Any payment by way of interest, salary, commission or remuneration made 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.
Section 43(3); Computation of total income:

Where the assessee is a partner of a firm, then, whether the firm has made a profit or a loss, his share (whether a
net profit or a net loss) shall be taken to be any salary, interest, commission or other remuneration payable to him
by the firm in respect of the income year increased or decreased respectively by his share in the balance of the
profit or loss of the firm after the deduction of any interest, salary, commission or other remuneration payable to
any partner in respect of the income year []Deleted F.A. 1995 and such share shall be included in his total income.
Provided that if his share so computed is a loss, such loss may be set off or carried forward and set off in
accordance with the provisions of section 42.
Section 85; Special provisions regarding assessment of firms:

(1) Notwithstanding anything contained in this Ordinance, where the assessee is a firm and the total income of the
firm has been assessed under sections 82, 83, or 84, as the case may be,[(a)] Deleted F.A. 1995
(b) in the case of a firm, the tax payable by the firm shall be determined on the basis of the total income
of the firm.
(2) Whenever any determination is made in accordance with the provisions of sub-section (1), the Deputy
Commissioner of Taxes shall, by an order in writing, notify to the firm(a) the amount of tax payable by it, if any ;
(b) the amount of the total income on which the determination has been based; and
(c) the apportionment of the amount of income between the several partners.
Sixth Schedule (Part A) Para 18
Any income received by an assessee in respect of any share of income out of the capital gains on which tax
has been paid by the firm of which the assessee is a partner.
16. Any sum being the share or portion of the share of the assessee in the income of 1[a firm] if tax of such
income has already been paid by the firm:
Provided that where there is included in the total income of an assessee any income exempted under this
paragraph, the tax payable by the assessee shall be an amount bearing to the total amount of the tax which
would have been payable on the total income had no part of it been exempted, at the same
proportion as the unexempted portion of the total income bears to the total income.
Page 100 of 137
Problem - 1
ABC Partnership Firm
Profit and loss account
For the year ended 30 June 2014
Assessment year: 2014-2015
Debit
Description
Salary to A
Office rent to B
Interest paid to B
C
Office Maintenance
Provision for bad debt
Commission paid to A
C
Net profit
BDT
200,000
300,000
100,000
250,000
300,000
250,000
4 00,000
500,000
1,200,000
3,500,000
Description
Gross profit
Capital gain on machinery
Credit
BDT
3,000,000
500,000
3,500,000
Compute:
1. Total taxable income of the firm;
2. Allocation of firm's profit among the partners;
3. Tax liability of the firm;
4. Total taxable income of B;
5. Net tax payable by B.
Solution:
(1) Total Income
Particulars
Net profit as per profit and loss account
Less: Capital gain for separate consideration
BDT
1,200,000
(500,000)
700,000
Add: Inadmissible expenses:

Salary to partner A [Sec - 30(6)]
200,000
Interest to partner (B+C)
350,000
Commission (A+C)
900,000
Provision for bad debt
250,000
Business Income
Income from capital gain
2,400,000
500,000
Total Income
2,900,000

Page 101 of 137

(2) Allocation of Income
A
Salary
Commission
Interest
B
200,000
400,000
600,000
C
100,000
100,000
Total
500,000
250,000
750,000
Total taxable income of the firm

Less: Capital gain (As it is not distributable as per 6th Schedule, Part-A, Para-18)
Value of benefits provided to partners
Distributable Income
200,000
900,000
350,000
1,450,000
2900,000
(500,000)
2,400,000
(1,450,000)
950,000
Distribution:
A = (950,000/3 + 600,000) = (316,667+600,000) = 916,667
B = (316,667+100,000)
= 416,667
C = (316,667+ 750,000)
= 1,066,667
Total income of partner B = 416,667
3. Tax Liability:
On First
Next
Next
Next
Balance
Total
220,000 @ 0%
300,000 @ 10%
400,000 @ 15%
500,000 @ 20%
1,480,000 @ 25%
2,900,000
Tax (BDT)
30,000
60,000
100,000
370,000
5,60,000
Assume that the capital gain is within the 5 years of purchase.
Minimum tax: As gross receipts information is not given in the question, it is assumed minimum tax is lower than the
computed amount.
4. Income of B:
BDT
House property income
Annual value
Less: 30% repair & maintenance
Income from business/profession
Total income
300,000
(90,000)
210,000
416,667
626,667

Page 102 of 137

5. Tax rebate for B:
BDT
First, 220,000 @ 0%
Next, 300,000 @ 10%
Next, 106,667 @ 15%
Total tax liability
Less: Tax rebate
Net tax liability
30,000
16,000
46,000
(30,585)
15,415
Tax rebate = (Tax X Taxed income from firm) / Total income

= (46,000 X 4,16,667) / 6,26,667=
30,585
Investment tax credit: No information is given so, no tax credit.

Page 103 of 137
Part: Nine
Assessment
Assessment:
1. PROVISIONAL ASSESSMENT (SEC.81):
The D.C.T. is empowered under section 81 of I. T. Ordinance, 1984 to make provisional assessment in a
summery manner
i. On the basis of return and statements, where return has been filed (after allowing depreciation as per
3rd Schedule and also after setting off any loss carried forward if any); or
ii. On the basis of last assessed income, where no return has been filed.
As the name indicates that it is not final, just an assessment done provisionally to collect tax before regular
assessment. There shall be no right of appeal against provisional assessment. Rather all penal measures can
be enforced to recover tax as per provisional assessment.
2. ASSESSMENT ON THE BASIS OF CURRECT RETURN (SEC.82):
Where in the opinion of the D.C.T. normal return or revised return submitted by the assessee is correct and
complete in all respect he shall assess total income on the basis of that return and communicate the
assessment order within 30 days from the date of such assessment. The following are the restrictions to do
assessment under this section:
i.
Return must be filed within the prescribed time;
ii.
Tax as per return shall be paid before submission of return;
iii.
Such return does not show any loss.
iv
Such return does not show lesser income than the last assessed income.
v.
Assessment on the basis of such return does not result in refund.
3. UNIVERSAL SELF- ASSESSMENT (SEC. 82BB):

Universal self-assessment system has been introduced in our country from the assessment year 2007-2008.
Every assessee (including company) is eligible to submit return under this system. In this system assessee
has to tick the box universal self-assessment at the top of the return form. DCT will issue a receipt of such
return and that receipt will mean that assessment is complete. It is hassle free in the sense that assessment
has been done on the basis of return and without any physical presence. Meanwhile, due to this simplicity, it
becomes very popular method of submitting return. But it should be kept in mind that return must be correct
and complete.
Procedure to submit return under universal self-assessment system:
The procedure is very simple. Assessee has to prepare his return either by himself or with the help of other
and then it is to be signed and verified. Assessee has to tick the box universal self-assessment at the top of
the return form and after paying tax (if applicable) submit the return within the last date of submission of
return. However, the assessee should keep in mind the following:
(a)
Such return must be submitted within the last date of submission of return or within the extended
time allowed by the DCT.
(b)
Tax as per return (if any) is to be paid before submission of return.
(c)
No question is to be raised by the DCT as to the source of initial capital investment in case of new
assessee showing new business if at least 25% of initial capital is shown as income. Initial capital
formed in such way is to be kept in business and not transferable in any manner during the year or
within 5 years from the end of the assessment year.

Page 104 of 137

Tax audit:
The return submitted at this system may, afterwards, be selected by the NBR or its subordinate authority (if
so authorized by the Board) for audit. The Board will determine the manner of such selection.
If return filed under universal self-assessment scheme showing at least 20% higher income than the income
assessed or shown in the immediate preceding assessment year, then it shall not be selected for tax audit by
the NBR. But the conditions are:
1.
2.
3.
4.
5.
Return is to be accompanied by corroborative evidences in support of tax exempted income (if any).
Return is to be accompanied by bank statement in support of taking loan (if any) exceeding Tk.
5,00,000.
Return does not show any receipt of gift.
Return does not show any income on which reduced tax rate is applicable.
If the return is selected for audit, then DCT will proceed to make fresh assessment by issuing notice under
section 83(1) for hearing and he will make assessment within 2 years from the end of the assessment year.
Otherwise it will be barred by time limitation. Assessment can be done under section 83(2) or under section
84 as the situation permits.
Re-open the universal self assessment under section 93:
If any concealment has been detected in the return submitted by the assessee under universal self assessment
scheme within 6 years from the end of the assessment year then the DCT may re-open the case and proceed
to assess further.
4. FINAL SETTLEMENT OF TAX LIABILITY (SEC. 82C):
Any tax deducted /collected at source from the following heads shall be deemed to be the final discharge of
tax liability:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Contractors and suppliers (Section 52+Rule 16)

Royalty and Technical know-how fee (Section 52A(2)
C&F Agency commission (Section 52AAA)
Handmade cigarette (Section 52B)
Compensation against property acquisition (Section 52C)
Rental power (Section 52N)
International Gateway Service (IGS) on international phone call (Section 52R)
Import [other than raw-material import] (Section 53+Rule 17A)
Shipping Agency Commission(Section 53AA)
Manpower export(Section 53B+Rule 17C)
Export of (a) knit-wear
(b) Woven garments
(c) Terry towel
(d) Carton
(e) Garments accessories
(Section-53BB)
(f) Jute goods
(g) Frozen foods
(h) Vegetables
(i) Leather goods and
(j) Packed foods
Member of Stock Exchange (Section-53BBB)
Public Auction (Section 53C+Rule 17D)
Non-resident Courier (Section 53CC)
Salary of foreign technicians serving in a diamond cutting industry (Section-52 O)

Page 105 of 137

16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Export cash subsidy (Section 53DDD)

Real Estate and Land Development Business (Section-53FF)
Insurance Commission (Section 53G)
Surveyor of General Insurance (Section-53GG)
Sale of property (Section-53H)
Capital Gain from transfer of shares by sponsor shareholders (Section 53M)
Income from Lottery (Section 55)
Interest on Pensioners Savings Certificate and Wage Earners Development Bond (Section 52D)
Transfer of shares of shareholders in stock exchange (Section 53N)
Gain on sale of shares of listed companies by companies and firms (Section 53 O)
Section 82C has been re-drafted through Finance Act, 2011 changing the way of calculating income which
will suffer more taxes. Some new conditions are as follows:
(1) Income to be determined through back calculation
(2) Such income will not set off with loss under any other head or loss of earlier year or years.
(3) Though it is final settlement of tax liability but tax is to be paid again in the following situations:
If shown income is in excess of the amount determined under back calculation, then tax is to be
paid again at the applicable rate on excess income shown.
Tax at applicable rate will also be payable on disallowances under sec. 30.
Individual taxpayer shall have to pay surcharge if net wealth exceeds Tk.2 crore.
5. SPOT ASSESSMENT (SEC.82D):

Where an assessee, not being a company, who has not previously been assessed but carrying on business or
profession in any shopping center or commercial market or having a small establishment, the D.C.T may fix
tax payable by him at the rate prescribed at Rule-38B and the receipt obtained for payment of such tax shall
be deemed to be an assessment order.
6. ASSESSMENT AFTER HEARING (SEC.83):
When the D.C.T. is not satisfied without requiring the physical presence of the assessee who filed the return
or the production of evidences then he will issue notice u/s 83(1) fixing a date and time for hearing.
After hearing and considering the evidences produced and if necessary considering such other evidences by
issuing another notice u/s 83(2) the D.C.T. will make assessment u/s 83(2) within 30 days from the last
hearing and communicate the assessment order within another 30 days from the date of assessment.
Thus, section 83(1) deals with notice of hearing and section 83(2) deals with both requisition notice and
assessment.
7. ASSESSMENT ON THE BASIS OF REPORT OF NBR APPOINTED CHARTERED
ACCOUNTANT (SEC.83AAA):
When NBR has reasonable cause to believe that a return submitted by any company assessee is incorrect or
incomplete, then the Board may appoint a chartered accountant to examine the books of accounts of that
company. He will then exercise the powers and functions of a DCT only relating to section 79 and other than
clause (f) of section 113. After examination of the books of accounts, he will submit report to the Board and
the Board will then forward the report to the DCT for consideration. After receiving the report, DCT will
proceed to assess the income of the company by issuing notice u/s 83(1)
8.
BEST JUDGMENT ASSESSMENT (SEC. 84):

Where any assessee fails to file return required by a notice u/s 77/93 and has not filed a return or revised
return u/s 78 or to comply with the requirements of notices u/s 79, 80 or 83(I), the D.C.T. shall assess
income to the best of his judgment.

Page 106 of 137

9. ASSESSMENT OF BUS, TRUCK, MINIBUS ETC.:
Deviating from the normal assessment procedure, owner of bus/mini bus, truck/truck Lorries, coaster, taxi
cab etc. will pay tax on at the fixed rate prescribed at SRO No 160-law/2014 dated 26/06/2014.
10. ASSESSMENT OF PARTNERSHIP FIRM (SEC.85):
Like other category of assessee, DCT will assess the income of the partnership firm and determine the tax
payable thereon by the firm. He will also apportion the total income of the firm (arrived before tax) between
the partners.
11. ASSESSMENT IN CASE OF CHANGE IN THE CONSTITUTION OF THE FIRM (SEC.86):
If DCT found at the time of assessment of a firm that a change has occurred in the constitution of the firm,
the assessment shall be made on the re-constituted firm but the conditions are:
(1) Income will be apportioned between those partners who were partners during the income year.
(2) When tax assessed on any partner is not recoverable from him it will be recovered from the reconstituted firm.
12. ASSESSMENT IN CASE OF CONSTITUTION OF A NEW SUCCESSOR FIRM (SEC.87):
If it is found at the time of assessment of a firm that a new firm has been constituted to succeed the previous
firm DCT will make two assessments one for the predecessor firm and the other for the successor firm.
13. ASSESSMENT IN CASE OF SUCCESSION TO BUSINESS OTHERWISE THAN ON DEATH
(SEC.88):
Where any person carrying on business or profession has been succeeded otherwise than by death by another
person the predecessor shall be assessed for the period up to the date of succession and the successor shall be
assessed for the period after the date of succession. Provided that(1) Where the predecessor cannot be found the assessment shall be made on the successor
(2) Where tax is not recoverable from the predecessor, it is to be recovered from the successor
who shall be entitled to recover it from the predecessor.
14. ASSESSMENT IN CASE OF DISCONTINUED BUSINESS (SEC.89):
When any business or profession is discontinued, a notice of such discontinuance must be given to the
D.C.T. within 15 days of such discontinuance of the business or profession accompanied by a return of total
income for the broken period. If the person discontinuing such business or profession fails to give such
notice, the D.C.T. may impose penalty a sum not exceeding the amount of tax subsequently assessed on him.
15. ASSESSMENT IN CASE OF PERSONS LEAVING BANGLADESH (SEC. 91):

Whenever any person is leaving Bangladesh and has no intention to come back, the D.C.T. may proceed to
assess him for all the completed income years for which his assessments remain pending as well as for the
broken period up to the probable date of his departure from Bangladesh.
Here is deviation from the usual practice as the assessment of the broken period may be completed before
the commencement of the relevant assessment year. One important thing to note here is that, the assessee is
entitled under the law to get at least seven days time to file his return and statements of income.
16. ASSESSMENT OF A DECEASED PERSON (SEC. 92):
Whenever any person dies, his executor, administrator or other legal representative is liable under the law to
pay out of the estate of the deceased any tax which was payable by him and any other tax liability which
might be payable in consequence of any assessment made after his death. Liability of the legal representative
is limited to the extent to which decreased estate is capable of meeting the liability.
Legal representative shall be deemed to be an assessee for this purpose, provided a notice is given to him as
per section 92(2).

Page 107 of 137

17. ESCAPED ASSESSMENT (SEC. 93):
A fresh assessment can be made by the D.C.T. in case of
i)
Escaped assessment;
ii) Under assessment;
iii) Assessment at too low a rate;
iv) Assessment results excessive relief or refund.
Preconditions:
i)
Action under section 93 cannot be initiated unless definite information has come into the possession
of the D.C.T.
ii) Before initiating the proceeding under section 93 previous approval in writing from the DCT is to
be taken, except in a case where a return has not been filed u/s 75/77
iii) Notice under section 93 can be issued within 5 years from the end of the assessment year in case it
is escaped assessment or under assessment and within 2 years from the end of the assessment year
in case it is assessed at too low a rate or has been subject to excessive relief or refund.
18. ASSESSMENT IN THE CASE OF MINORS, LUNATICS, IDIOTS, BENEFICIARIES OF ANY
TRUST. (SEC. 95):
Minors, lunatics and idiots are assessable to tax as beneficiaries through their guardians and trustees in the
same way and to the same extent as it would have been livable and recoverable from such beneficiaries of
full age or sound mind in direct receipt of any income profits and gains. In the like manner, the beneficiaries
of any property managed by a Trust, Court of Words, receiver or manager will be brought to tax through the
Trustees, Court of Words, receivers or manager.
19. ASSESSMENT OF SHIPPING BUSINESS (SEC. 102):
If any Ship calls on any port in Bangladesh, the aggregate of the receipt arising from the carriage of
passenger, livestock, mail or goods shipped at the port since the last arrival of the ship or at any port outside
Bangladesh for which amount is received or deemed to be received in Bangladesh shall be treated as income
received in Bangladesh and in this case tax rate will be 8% (usually tax rate is 4% in case where there is a
double taxation avoidance agreement with the country the ship is originated).
20. ASSESSMENT OF NON-RESIDENT AIRLINES (SEC. 103A):
If any foreign aircraft calls on any airport in Bangladesh, the aggregate of the receipts arising from the
carriage of passengers, livestock, mail or goods loaded at the said airport into that aircraft shall be deemed to
be income received in Bangladesh and in this case tax rate will be 3% (usually no tax in case where there is a
double taxation avoidance agreement with the country the aircraft is originated).
Penalty and Prosecution:

Introduction
There are provisions for imposition of penalties on fraudulent assessee at chapter XV (section 123-133) and
prosecution at chapter XXI (section 164-171) of the Income Tax Ordinance, 1984.
The penalty is the additional amount of income tax though as per definition of tax at section 2 (62), tax includes
penalty. The power to impose penalty is given mainly to the Deputy Commissioner of taxes (DCT) and in case of
concealment of income the power to impose penalty is also given to the Commissioner of Taxes (Appeal), Appellate
Joint Commissioner of Taxes and Taxes Appellate Tribunal. The power to impose penalty is subject to the prior
approval of the Inspecting Joint Commissioner of taxes (IJCT) except in the case of imposing penalty for failure to
file return u/s 124. Penal proceedings can be initiated by the DCT only in the course of any proceedings in connection
with the regular assessment and no such proceedings can be started after completion of the assessment order. If the
penalty proceedings are not finalized but the assessment is completed there is nothing to bar the DCT to impose
penalty. There is another restriction that assessee has been heard or has been given a reasonable opportunity of being
heard before imposing penalty.
Page 108 of 137

Equally no prosecution can be instituted without prior sanction of the Board and Board has power to compound such
offences.
Penal Provisions
The penal provisions are tabulated below:
Sl.
Grounds of Penalty
Section
Amount of Penalty
1.
Penalty
for
not
maintaining accounts in
the prescribed manner
123
(Read with
section 35 and
Rule-8 and
Rule-8A)
2.
a) Penalty for failure to

file return including
withholding tax return
124(1)
b) Penalty for failure to

furnish
certificate,
statement,
accounts,
information etc. required
u/s 58, 108, 109, 110 and
184C
c) Penalty for failure to
furnish
information
required u/s 113
124(2)
(a) 1.5 times of the amount

of tax payable (Maximum)
(b) Tk.100 where the total
income does not exceed the
threshold limit (Maximum)
(c) 50% of tax on house
property or Tk. 5,000
whichever is higher in case
the owner of the house
receiving more than Tk.
25,000 but violates rules
and order of NBR relating
to maintenance of register
and depositing rent to bank
account.
10% of the last assessed tax
or Tk. 1,000/- whichever is
higher plus Tk. 50/- per day
during which the default
continues.
Tk 500/- plus 250 per month
during which the default
continues.
d) Penalty for using fake

T.I.N. or T.I.N. of
another person
3.
Failure to pay advance

tax
124(2) Proviso
124A
125
Tk.25,000/- plus 500/- per

day during which the default
continues.
Tk.20,000/( maximum)
The amount of short fall

(maximum)
Pre-conditions/
Comments
1) Penalty cannot be
imposed unless the assessee
has been heard or has been
given
a
reasonable
opportunity of being heard.
2) DCT shall not impose the
penalty without the previous
approval of the IJCT.
Penalty cannot be imposed

unless the assessee has been
heard or has been given a
reasonable opportunity of
being heard.
-Do-
-Do-
1) Penalty cannot be
imposed unless the assessee
has been heard or has been
given
a
reasonable
opportunity of being heard.
2) DCT shall not impose the
penalty without the previous
approval of the IJCT
-Do-

Page 109 of 137

4.
5.
6.
7.
Penalty
for
noncompliance with notice
u/s 79, 80, 83(1) and
83(2)
126
Failure to pay tax u/s 74

on the basis of return
127
Penalty for concealment

of income
128
Penalty for false audit

report by Chartered
Accountant
Penalty for default in
payment of tax
129A
9.
Failure to deduct/collect
tax at source or having
deducted/collected fails
to deposit into national
exchequer.
57
10.
Failure to give notice to

the DCT regarding the
discontinuance
of
business
89(3)
8.
137
The
amount
subsequently
(maximum)
of
tax
assessed
-Do-
If tax paid u/s 74 is less than

80% of the payable amount
then 25% of the short fall
(maximum).
-Do-
If 80% is covered then no

penalty.
15% of the tax evasion. If
the tax evasion is detected
after one year or more, then
the amount of penalty will
increase by additional 15%
for each earlier assessment
year
Not less than Tk. 50,000
and not more than Tk.
2,00,000.
The amount of arrear tax
(maximum)
2% per month of the amount

of tax to be deducted,
collected or deposited
The
amount
subsequently
(maximum)
of
tax
assessed
-Do-
-DoIf the amount of tax on

which penalty was imposed
has been fully reduced by
the order of any Appeal/
Tribunal/ Supreme court,
the
penalty
shall
automatically be cancelled
and if any penalty paid shall
be refunded.
(1) The deducting authority
will also be treated as an
assessee in default.
(2) Expenditure will be
disallowed as per section
30(a) and 30(aa)
No pre-condition.
The above-mentioned sections prescribe the maximum penalty (except section 124 and section 57 where penalty is
fixed). But the fact is that the ceiling of penalty does not mean that penalty must necessarily be imposed in every
case. The discretion of the DCT to levy or not to levy a penalty is still preserved by the penalty sections mentioned
above.

Page 110 of 137

Prosecution (Imprisonment for punishable offence)
The prosecution provisions are tabulated below:
Sl.
Nature of Offence
1.
Failure to deduct/collect
tax at source or having
deducted/collected
but
fails to deposits into
national exchequer.
2.
Non-compliance
of
notices u/s 77, 79, 80 and
83
Failure to file return u/s
75 or in compliance with
notice u/s 77 and 93
Refuses
to
furnish
information required u/s
113
Refuses
to
permit
inspection or to allow
copies to be taken in
accordance with the
provisions of section 114
Fails
to
furnish
information required u/s
115
Fails to comply with the
requirement u/s 116
Fails to comply with the
requirement u/s 116A
Refuses to permit or
obstructs the income tax
authority to exercise
power u/s 117
Makes false statement at
the verification of the
return
or
other
documents
Wilfully aids, abets,
assists, incites or induces
other person to deliver a
false return, accounts,
statements, etc.
Refuses
to
furnish
information as may be
necessary for the purpose
of survey u/s 115
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Reference
Section
164 (a)
Imprisonment
Comments
1 year (maximum) with or

without fine
1) No prosecution can
be instituted without
prior sanction of the
NRB.
2) NBR has the power
to compound offences.
164 (b)

without fine
-Do-
164 (c)

without fine.
-Do-
164 (cc)

without fine
-Do-
164 (d)

without fine.
-Do-
164 (e)

without fine
-Do-
164 (ee)

without fine
without fine
without fine
-Do-
165 (a)
Minimum 3 months but

maximum up to 3 years with
or without fine
-Do-
165 (b)

or without fine
-Do-
165 (d)

or without fine
-Do-
164 (eee)
164 (f)
-Do-Do-

Page 111 of 137

13.
14.
15.
16.
17.
Deliberately using fake

TIN or TIN of another
person
Obstructs income tax
authority to discharge
their function
Conceals income or
deliberately
furnishes
inaccurate particulars
Disposal the property
after the receipt of notice
from TRO to prevent
attachment
Disclosure of information
in contravention of the
provisions of section 163
165A
3 years (maximum) with or

without fine up to Tk. 50,000
-Do-
165B

without fine
-Do-
166

or without fine
3 years (maximum) with or
without fine
-Do-
6 months (maximum) with or

without fine
-Do-
167
168
-Do-
Penalty for not maintaining accounts in the prescribed manner (section 123).
As per provision of section 35 income shall be computed in accordance with the method of accounting regularly
employed by the assessee in case of the following heads of income: 1. Income from business or profession.
2. Agricultural Income
3. Income from other sources.
Medical practitioners known as doctors, surgeons, physicians, dentists, psychiatrists, homeopaths, veterinary surgeons
other than medical practitioners, who do not make any separate charge for consultation but make a charge for the
medicines supplied by them and legal practitioners (including income-tax practitioners) accountant and auditors,
architects and engineers, are to maintain accounts in the manner prescribed in Rule-8.
In case of house property income, the owner shall have to maintain register relating to details of rent received if
monthly rent received exceeds Tk. 25,000 and that rent must be deposited to his bank account. (Rule - 8A)
Penalty for failure to file Income Tax Return (Section- 124)
The Deputy Commissioner of Taxes has not the absolute power to impose penalty without giving due regard to see
the circumstances which causes default on the part of the assessee to file the return on time and if there is any
reasonable cause for which he failed to file the return on time penalty should not be imposed. Absence of reasonable
cause is necessary to justify a penalty-mere non-furnishing of, or delay in furnishing a return of income is not enough.
Imposition of penalty is not compensatory but punitive and the proceeding to impose penalty is quasi criminal. It is
well settled that the liability to pay penalty does not arise merely on proof of default in filing the return on time and
the discretionary power of the authority to impose penalty for failure to file return on time is to be exercised judicially
and on consideration of all the relevant circumstances. Penalty may be imposed for not furnishing a return within the
time allowed in the notice calling for a return, even if the assessee does furnish a return after the expiration of the
time allowed.
Penalty for concealment of income (section 128)

This section prescribes penalty for concealment of income. An assessee who had deliberately filed an incorrect return
shall submit a revised return. When the omission in the first return is on the point of being discovered, the DCT while
assessing on the basis of the revised return shall impose a penalty under section 128 of I.T. Ordinance, 1984 for
concealment of income in the first return.
Concealment of income in the original return would be attracting penalty even if the assessee submits a revised return
u/s-78 before the assessment is completed.
This section specifies the different nature of concealment and prescribes the maximum amount of penalty to be
imposed depending on the nature and circumstances of the case. For concealing particulars of income or for
furnishing inaccurate particulars of income which includes suppression of any item of receipt liable to tax or showing
Page 112 of 137

such expenditure which has not been actually incurred or claiming any deduction which is not legally allowable. For
such type of concealment DCT shall impose @15% of the tax evasion. If the tax evasion is detected after one year or
more, then the amount of penalty will increase by additional 15% for each earlier assessment year.
Penalty for default in payment of tax (section-137)

This section gives discretion to the DCT to impose or not to impose a penalty when an assessee is in default in
payment of tax including advance tax. It is not obligatory on the DCT to impose a penalty in every case where there is
default in payment of tax and the amount of the penalty is also in his discretion, but the total amount of penalty
should not exceed the amount of tax in arrear.
The penalty so imposed under this ordinance shall be in addition to any other liability of the assessee, which he has
incurred in any other provisions under this ordinance or under any other law of the country.

Page 113 of 137
Part: Ten
Appeal
Appeal:
An appeal lies to the Appellate Joint Commissioner of Taxes (AJCT) or to the Commissioner (Appeals), as the case
may be, against the order of the Deputy Commissioner of Taxes (DCT). Section 153 gives the right of appeal only to
the tax payer and not to the department. Therefore, income tax department cannot appeal against any order of the
DCT. But the Inspecting Joint/Additional Commissioner of Taxes (IJCT/IACT) has the power U/S 120 to revise any
order passed by the DCT if it is erroneous and prejudicial to the interest of the revenue. Commissioner of Taxes
working in the territorial zone can also exercise his revisional power U/S 121A and pass such order not being an
order prejudicial to the interest of the assessee. Therefore, no appeal would lie if a right of appeal is not given at our
tax law because appeal is not an inherent right. The sequence of appeal is given below through a flow chart:
Order
of the
DCT
3
Choose an
Appeal Option
4
2
Review
application
to the CT
of
Territorial
Zone
1st Appeal to the

AJCT (other
than company
cases and its
directors)
END
1st Appeal to the

AACT
(For company
cases and its
directors)
6 1st Appeal to the

Commissioner
(Appeals)
(For company
and its directors)
2nd appeal to the Taxes

Appellate Tribunal (both
assessee and income tax
department can go)
Reference application to
High Court Division of
the Supreme Court (Only
at question of law point)
9
Appeal to the Appellate
Division of the Supreme Court
against the judgment of the H/C
division (if the H/C division
certifies to be fit case for appeal
to the Appellate Division)
END
Page 114 of 137

1.
First appeal to the AJCT/AACT/Commissioner (Appeals)
Only assessee can file 1st appeal to the Appellate Joint Commissioner of Taxes (AJCT) or Appellate Additional
Commissioner of Taxes (AACT) or Commissioner (Appeals) as per jurisdiction. The jurisdiction is usually
mentioned at the bottom of the demand notice issued by the DCT. Normally, AACT and Commissioner (Appeals)
deal with company cases along with the directors of the company and the AJCT deals with other individual cases.
Appeal to the Commissioner (Appeals) also lies against the order made by the IJCT U/S 10 or U/S 120.It is to be
noted here that the right of appeal is given to the assessee. Where an assessment is made on the representative or on
the agent of a non-resident, the person beneficially entitled to the income is nevertheless an assessee within the
meaning of section 153 and has therefore a right to appeal.
When 1st appeal can be filed
(a)
Appeal can be filed by the assessee against the following order of the DCT:
(i)
(ii)
(iii)
(iv)
Assessment Order (except assessment U/S 81, 82 and 82BB)

Determination of tax liability to pay.
Tax Computation (including an order imposing simple interest U/S 73)
Set-off of losses U/S 37 (If the assessee has any objection as to the computation of loss or set-off of
loss).
(v)
Penalty U/S 124, 125, 126,127, 128 and 137.( There is no provision to file appeal against the order
of charging penalty @2% per month for non deduction/ collection of tax at source).
(vi) Refusal to allow a claim of refund.
(vii) Determination to the actual amount of refund.
(viii) Disallowing the claim of foreign tax credit (7th Schedule(para-7)
Appeal can also be filed to the Commissioner (Appeals) against the following order of the IJCT/IACT:
(i)
(ii)
(b)
Assessment Order U/S 10.

Order to revise the order of the DCT U/S 120.
Procedure to file 1st Appeal

The following procedure should be followed to file 1 st appeal:
(i)
(ii)
(iii)
(iv)
Appeal shall be filed at the form prescribed at Rule -27 and Rule-27A with duly signed and verified.
Appeal fee of TK. 200/- is to be paid before submission of appeal.
Tax as per return is to be paid if it is not paid at the time of filing return or afterwards.
Appeal shall have to be filed within 45 days from the date of service of demand notice except in case
of appeal against the disallowances of the foreign tax credit as per 7 th schedule Para-7.
However appeal authorities can entertain an appeal after condoning the delay if he is convinced that
assessee has sufficient reason for failure of file appeal in time. Demand notice should be served properly
otherwise assessee will get unlimited time. The power to condone such delay is discretionary. Provision
for time limitation of 45 days will not attract if demand notice was not served with assessment order (I.T.
88) and Tax computation form (I.T. 30), in which case assessee will get unlimited time for filing appeal.
So without I.T.88 and I.T.30 the service of demand notice is not complete. In computing the 45 days, the
time required for obtaining a certified copy of such order should be excluded.
Where the 45 days expires on day which is a holiday, the appeal may be made on the day next following
such holiday.

Page 115 of 137

(c)
Disposal of appeal cases by the appeal authority

The following procedure should be followed by the appeal authority to dispose of an appeal:
(i)
(ii)
(iii)
(iv)
(v)
Notice of hearing is to be given to both appellant and the concerned DCT.

Appeal authority can make enquiry and call for such particulars as he may require before
disposing of an appeal. He can also give instruction to the DCT for further enquiry.
Appeal authority can allow new or additional ground of appeal if he is satisfied that the omission
of that ground was not willful or unreasonable.
Appeal authority will not admit any documentary evidence which was not produced before the
DCT unless he is satisfied that appellant was prevented by sufficient cause from producing such
evidence before DCT.
Appeal authority in his judgment can give following decision when an appeal filed against
assessment order:
a.
b.
c.
d.
e.
confirm
reduce
Enhance
Set aside with the direction to make fresh assessment. (only on the ground that notice was
not served properly)
Annul
Enhancement of assessment means increase in the amount of total income or tax. It can be
done only after giving the assessee a reasonable opportunity of being heard.
If the AJCT or Commissioner (Appeals) does not enhance the total income but by means of
reduction under one head and an increase under another head allows the assessment to remain
the same or reduces it, it can not be said to have enhanced merely because income under one
head has been increased Where the assessees income has been assessed under more than one
head, even if the assessees appeal is confined to the income assessed under only one of the
heads, the AJCT or Commissioner (Appeals) may enhance the assessment by increasing the
amount assessed under another head of income in respect of which the assessee has not
appealed. The reason is that income tax is only one tax and when the assessee goes in appeal
then exposes the assessment as a whole.
But appeal authority has no power to enhance the assessment by assessing entirely new sources
of income outside the subject matter of the assessment appealed against. He has no jurisdiction
to travel beyond the subject matter of the assessment and his power of enhancement relates only
to that income which has been subjected to the process of assessment.
On the other hand it is not open to the assessee who has preferred an appeal to withdraw it so as to prevent
the Appellate Joint Commissioner of Taxes (AJCT) or Commissioner (Appeals) from enhancing the
assessment.
(d) Appeal authority in his judgment can give the following decisions when an appeal filed against
penalty order:
(i)
confirm
(ii) set-aside (only on the ground that notice was not served properly)
(iii) cancel
(iv) reduce
(v)
enhance (only after giving reasonable opportunity of being heard)
(e) In any other case, appeal authority can pass such order as they think fit. But the AJCT or Commissioner
has no power to review his own order in any case but he is empowered U/S 173 to rectify any mistake
apparent from record.
Page 116 of 137

(f) Appeal shall be disposed of by the appeal authority with 150 days from the end of the month of which the
appeal was filed and such order shall be communicated to the appellant, DCT and Commissioner of Taxes
within 30 days. If the appeal is not disposed of within the period of limitation the appeal so filed shall be
deemed to have been allowed.
2.
Procedure to file 2nd appeal to the Taxes Appellate Tribunal

(a)
(b)
(c)
(d)
(e)
3.
Both assessee and DCT (with prior approval of his Commissioner) can prefer 2 nd appeal against the
1st appeal order (Including an order imposing penalty u/s 128 by the AJCT or Commissioner
(Appeals). An order of the AJCT or Commissioner (Appeals) refusing to condone delay (if there is
any application for condo nation) and refusing to admit, or rejecting after hearing, an appeal as time
barred, will be treated as an order passed in the appeal and a 2 nd appeal would lie to the tribunal.
Appeal shall be filed at the form prescribed at Rule-28 with duly signed and verified by the
appellant.
Tribunal fee of TK.1000/- is to be paid before submission of 2 nd appeal (this fee is not applicable
when appeal is filed by the DCT).
Assessee has to pay tax @ 10% of the difference between the tax as per appeal order and tax as per
section 74. However, authority to reduce such tax has been given to the Commissioner of Taxes if
assessee applies for this.
Appeal shall be filed to the Taxes Appellate Tribunal within 60 days from the date of receiving 1 st
appeal order.
Disposal of appeal by the Taxes Appellate Tribunal

The following procedure should be followed by the Taxes Appellate Tribunal to dispose of an appeal:
(a)
Notice of hearing is to be given to both appellant and the department. Even if the appellant does not
appear on the day fixed for hearing, the Tribunal is bound to decide the appeal on merit and cannot
dismiss the appeal for default.
(b)
Tribunal may call for such particulars as they may require or can give instruction to the DCT for
further inquiry.
(c)
Tribunal will give judgment as they think fit. The power to pass such order as the Tribunal thinks fit
can be exercised only in relation to the matters that arise in the appeal. It is not open to the Tribunal
to adjudicate or give a finding on a question which is not in dispute and which does not form the
subject matter of the appeal.
The Tribunal would be entitled to enhance the assessment as it stands after the appeal order in case
of appeal by the department or in case of cross appeal. But when the appeal is filed by the assessee
and there is no cross appeal by the department, it is not open to the Tribunal to give a finding
adverse to the assessee.
(d)
Since a reference application to the High Court division lies only on a question of law, the Tribunal
is the final fact finding authority.
(e)
Appeal shall be disposed of by the Appellate Tribunal within 6 months from the end of the month of
filing appeal; otherwise appeal so filed shall be deemed to have been allowed. Such order should be
communicated within 30 days for the date of order.
(f)
Tribunal has no power to review its own order but they are empowered by section 173 to rectify any
mistake apparent from record.
(g)
Tribunal has power to permit an appeal to be withdrawn.
Decision shall be given in accordance with the opinion of the majority of its members. It is the duty of the
members of the Tribunal who heard the appeal in the first instance to formulate clearly the point on which they
differ and it is only thereafter that a reference can be made to a third member. After the decision of the third
member on the point referred to him the case should go back to the original Bench, since the third member has
not given the jurisdiction to decide and dispose of the appeal. In this way decision will be based on the opinion
of the majority of the members.

Page 117 of 137

4.
Procedure to file reference application to High Court Division of the Supreme Court
(a)
(b)
(c)
(d)
Both assessee and the Commissioner of Taxes (with prior permission from NBR) can file reference
application to High Court Division of the Supreme Court only against any question of law arising
from the order( including an order under section 173) of the Taxes Appellate Tribunal. An order of
the Tribunal dismissing an appeal as time barred or refusing to condone delay is obviously an order
of the Tribunal and consequently a reference lies against it. Where assessee is the applicant the
Commissioner of Taxes will be the respondent and where the Commissioner of Taxes is the
applicant, the assessee will be the respondent.
Application shall be filed within 90 days from the date of receipt of the Tribunal order at the form
prescribed at Rule-29 with duly signed and verified.
Fee of Tk. 2,000 is to be paid before submission of application. However no fee is needed if
application is made by the Commissioner of Taxes.
Where the assessee is the applicant then 15% or 25% of the difference between the tax as per return
and the tax as per tribunal order is to be paid followingly.
Particulars
Rate
Rate to be applied
i. If tax demand is below Tk. 1,000,000
15%
On the difference between the
tax as per Tribunal order and
ii. If tax demand is more than Tk. 1,000,000
25%
tax as per return.
However NBR has the power to waive or modify the requirement of such payment.
(e)
Application shall be in triplicate and accompanied by the following document:

(i)
(ii)
(iii)
(iv)
(f)
(g)
5.
Certified copy of Tribunal Order

Certified copy of Appeal Order
Certified copy of Assessment Order
Any other document relevant to the question of law which was submitted to the DCT or to
the AJCT or to the Tribunal.
After getting hearing notice from the High Court Division, the respondent shall have to submit the
reply in writing at least 7 days before the date of hearing.
Tax as per Tribunal order shall be payable notwithstanding the pendency of a reference in the High
Court Division. The High Court Division may in a proper case stay of recovery proceedings till the
disposal of the reference.
Disposal of reference application by the High Court Division

(a)
(b)
(c)
A division bench of not less than 2 Judges will hear the case as per section 98 of the Code of Civil
Procedure, 1908.If the judges are equally divided the question on which there is the difference of
judicial opinion may be referred to another judge or to a larger Bench and the decision of the
majority of the judges would prevail.
The High Court Division will decide the question of law and deliver its judgment containing the
grounds on which the decision is founded. The judgment of the High Court Division as a whole is
binding between the parties in the particular case. If the judgment expounds a wrong construction of
the Ordinance, an appeal against it is open and there is no other procedure by which it can be
corrected.
The cost of the reference shall be in the discretion of the Court.

Page 118 of 137

6.
Procedure to file appeal to the Appellate Division of the Supreme Court

An appeal shall lie to the Appellate Division against the judgment of the High Court Division provided the
High Court Division certifies the case to be a fit one for appeal to the Appellate Division of the Supreme
Court. The High Court Division would certify the case as a fit one for appeal and grant leave to appeal to the
Appellate Division if a substantial question of law is involved or if the question is otherwise of great public or
private importance.
If the High Court Division refuses to certify a case to be a fit one for appeal to the Appellate Division, an
application may be made to the Appellate Division for special leave to appeal against the decision of the High
Court Division in special circumstances.
7.
Disposal of appeal by the Appellate Division of the Supreme Court

The appellate division will hear and dispose of the appeal as per provision of Code of Civil Procedure, 1908.
8.
Revisional Power of Commissioner of Taxes under section 121A

While section 120 empowers the Inspecting Joint Commissioner of Taxes and Inspecting Additional
Commissioner of Taxes to exercise revisional power in favour of revenue, section 121A empowers the
Commissioner of Taxes of the territorial zone to exercise revisional power in favour of the assessee. The
following procedure should be followed to file a review application to the Commissioner of Taxes:
(i)
Application shall be made in a plain paper as there is no prescribed form.
(ii) Review fee of TK. 200/- is to be paid before submission of application.
(iii) Tax as per return is to be paid if the application is filed against the order of the DCT and undisputed
portion of tax as per 1st appeal order is to be paid if the application is filed against the AJCT or AACT.
(iv) Application shall have to be submitted within 60 days from the date the date of receiving order.
However Commissioner of Taxes can entertain an application after condoning the delay if he is
convinced that assessee has sufficient reason for failure of submit application in time. However the
power to condone such delay is discretionary. If it is made against the order of the DCT, it is to be made
either after the time of appeal (45 days) is over or with an affidavit waiving the right of appeal and if it
is made against the order of the AJCT or AACT it is to be made either after the time of 2 nd appeal (60
days) is over or with an affidavit waiving the right of filing Tribunal.
9.
Disposal of revisional application by the Commissioner of Taxes

(1) Commissioner of Taxes will hear a case which is passed by any authority subordinate to him. DCT is
directly the subordinate to the Commissioner of Taxes. Though AJCT and AACT are not subordinate to
the Commissioner but for the purpose of section 121A, they will be deemed to be the subordinate to the
Commissioner so that their order can be revised by the Commissioner of Taxes.
(2) Commissioner of Taxes will pass order within 60 days from the date of receiving application failing
which application will be deemed to have been allowed fully.
(3) Commissioner of Taxes can make enquiry and can also give instruction to the DCT for further enquiry.
(4) Commissioner of Taxes shall not pass any order which is prejudicial to the assessee. A prejudicial order
is that order which places the assessee in a different and worse position than before. But an order
declining to interfere shall not be deemed to be an order prejudicial to the assessee. Commissioners
revisional power is of an administrative nature and therefore he is not bound to hear the assessee before
passing his order.
(5) An order passed by the Commissioner of Taxes under section 121A is not appeal able to the Taxes
Appellate Tribunal and no reference will lie against such order.

Page 119 of 137

10.
Alternative Dispute Resolution (ADR)

Any dispute of an assessee lying with any income tax authority i.e. Taxes Appellate Tribunal or Supreme
Court may be resolved through ADR. Assessee can also go directly to the ADR against the assessment or reassessment done by the DCT. If the case is pending at Appellate Tribunal or Supreme Court, then an assessee
can also prefer ADR taking permission in writing from the concerned appeal forum. After obtaining such
permission from the appeal forum, the appeal (both from assessee and department) shall remain stayed during
the ADR negotiation process. The whole process is summarized in following figure:

Page 120 of 137

Procedure to file application to ADR
a.
b.
c.
d.
e.
4 sets of application form at the prescribed form will be submitted to the respective appeal authority.
Fee Tk. 500 per year is to be paid and copy of which is to be attached with the application.
Application for ADR is to be filed within 30 days from the date of receiving demand notice of the date
of receiving permission from the appeal authority/court, as the case may be.
Where the case is under process appeal/tribunal/court then the copy of permission is to be attached with
the application of ADR.
Assessee shall not be eligible for the application of ADR if he does not file return of income for the
concerned year and does not pay tax as per return.
Procedure of disposal by the ADR

1. Board will nominate a facilitator from the panel of facilitators and convey it to the applicant, facilitator
and the concerned Commissioner of Taxes. Board may, however, change the facilitator if any objection is
raised by the applicant or by the tax department.
2. Upon receiving the application of ADR, the facilitator shall forward a copy of the application to the
respective Deputy Commissioner of Taxes (DCT) and call for his opinion on the grounds of the
application and also whether the conditions of return submission and tax payment as per return by the
assessee have been complied with.
3. If the DCT fails to give his opinion regarding fulfillment of the above mentioned conditions within 5
working days from receiving the copy, the Facilitator may deem that the conditions thereto have been
fulfilled.
Panel of Facilitators
NBR will form a panel of facilitators. The following persons shall be eligible for appointment as a facilitator by the
Board
1) An expert retired income tax official not below the rank of Joint Commissioner of Taxes.
2) A retired official of judicial service not below the rank and status of District Judge.
3) A Chartered Accountant practiced income tax for a period not less than 8 years.
4) A Cost and Management Accountant practiced income tax for a period not less than 10 years.
5) An Income Tax Practitioner within the meaning of section 174(2)(f) and practiced income tax for a period not
less than 20 years.
6) A professional legislative expert not below the rank and a status of Deputy Secretary.
7) A business man expert at income tax law.
Methodology to be followed by the Facilitator to mitigate the dispute
(1) The facilitator will notify in writing both the applicant and the Commissioner of Taxes or the Commissioners
representative to attend the meeting for settlement of disputes.
(2) He may adjourn the meeting from time to time.
(3) He may call for records or evidences from the DCT or from the applicant with a view to settle the dispute.
(4) Before disposing of the application, he can cause to make such enquiry by any income tax authority as he thinks
fit.
(5) The Facilitator will assist the applicant assessee and the Commissioners representative to agree on resolving the
dispute or disputes through consultations and meetings.
(6) Dispute may be resolved by an agreement, either wholly or in part, where both the parties of the dispute accept the
points for determination of the facts or laws applicable in the dispute.
Page 121 of 137

(7) Where an agreement is reached, either wholly or in part, between the assessee and the Commissioners
Representative, the Facilitator shall record, in writing, the details of the agreement.
(8) The recording of every such agreement shall describe the terms of the agreement including any tax payable or
refundable and any other necessary and appropriate matter and the manner in which any sums due under the
agreement shall be paid and such other matters as the Facilitator may think fit to make the agreement effective.
(9) The agreement shall be void if it is subsequently found that it has been concluded by fraud or misrepresentation of
facts.
(10) The agreement shall be signed by the assessee and the Commissioners Representative and the Facilitator.
(11) Where no agreement, whether wholly or in part, is reached or the dispute resolution is ended in disagreement
between the applicant assessee and the concerned Commissioners Representative for non-cooperation of either of the
parties, the Facilitator shall communicate it in writing recording reasons thereof, within 15 days from the date of
disagreement to the applicant and the Board, the concerned court/ Tribunal/ appellate authority and income tax
authority, as the case may be, about such unsuccessful dispute resolution.
(12) Where the agreement is reached, recorded and signed accordingly containing time and mode of payment of
payable dues or refund, as the case may be, the Facilitator shall communicate the same to the assessee and the
concerned DCT for compliance with the agreement.
(13) No agreement shall be deemed to have been reached if the Facilitator fails to make an agreement within 2
months from the end of the month in which the application is filed.
(14) Where there is a successful agreement, the Facilitator shall communicate the copy of the agreement to all the
parties within 15 days from the date on which the Facilitator and the parties have signed the agreement.
Effect of agreement
1) Where an agreement is reached, it shall be binding on both the parties and it cannot be challenged in any
authority, Tribunal or Court either by the assessee or by the department.
2) Every agreement shall be conclusive as to the matters stated therein and no matter covered by such agreement
shall be reopened.
Limitation of appeal where agreement is not concluded
1) Where an agreement is not reached wholly or partly, the assessee may prefer an appeal
a. To the Appellate Joint Commissioner of Taxes (Appeals), as the case may be, where the dispute arises
against the order of the DCT.
b. To the Taxes Appellate Tribunal, where the dispute arises against the order of the Appellate Joint
Commissioner of Taxes or Appellate Additional Commissioner of Taxes or Commissioner of Taxes
(Appeals), as the case may be, and
c. In the court from where the assessee applicant has got permission to apply for ADR.
2) In computing the period of limitations for filing appeal the time elapsed between the filing of the application and
the decision or order of the ADR shall be excluded.
Fees to be paid to Facilitator
The Facilitator is entitled to receive fees from both the assessee and the Govt. The quantum of fees is to be computed
in the following way
20% of disputed tax

or
Tk. 50,000
Whichever is lower, but not

less than Tk. 5,000.
50% of fees is to be paid by the

assesse and 50% by the Govt. or
Govt. approved agency within 30
days from resolving the dispute

Page 122 of 137
Part: Eleven
Double Taxation Avoidance Agreement
Double Taxation Avoidance Agreement (Sec. 144 read with 7th Schedule):
Double taxation avoidance agreement is usually an agreement between 2 countries seeking to avoid double taxation
by defining the taxing rights of each country with regard to cross, border flows of income and providing tax credits or
exemptions to eliminate double taxation. The Govt. of Bangladesh also may enter into an agreement with the Govt. of
other countries for the avoidance of double taxation and the prevention of fiscal evasion. Income tax policy wing of
the National Board of Revenue (NBR) is entrusted to negotiate the double taxation treaty with foreign countries to
promote foreign direct investment in Bangladesh. Such agreement will come into force through notification in the
official Gazette. It will be treated as an international law and accordingly its legislative position would be over and
above our Bangladesh tax law. The objectives of such agreement are:1. To provide relief from Bangladesh tax.
2. To determine income accruing or arising to non-residents from sources within Bangladesh.
3. To determine income of a non-resident carrying on business from within and outside Bangladesh.
4. To determine the income of a resident person having special relation with non-resident.
5. To recover tax.
6. To exchange the information for avoidance of double taxation and the prevention of fiscal evasion.
The Bangladesh model of Agreement on Avoidance of Double Taxation consists of 29 Articles that are as
follows:
Article
1
:
Persons Covered
Article
2
:
Taxes Covered
Article
3
:
General Definitions
Article
4
:
Resident
Article
5
:
Permanent Establishment
Article
6
:
Income from Immovable Property
Article
7
:
Business Profits
Article
8
:
Shipping and Air Transport
Article
9
:
Associated Enterprises
Article
10
:
Dividends
Article
11
:
Interest
Article
12
:
Royalties
Article
13
:
Fees for Technical Services
Article
14
:
Independent Personal Services
Article
15
:
Dependent Personal Services
Article
16
:
Director's Fees
Article
17
:
Artists and Sportsmen
Article
18
:
Pensions
Article
19
:
Government Service
Article
20
:
Students and Trainees
Article
21
:
Lecturers and Researchers
Article
22
:
Other Income
Article
23
:
Elimination of Double Taxation
Article
24
:
Non-Discrimination
Article
25
:
Mutual Agreement Procedure
Article
26
:
Exchange of Information
Article
27
:
Diplomatic Agents and Consular Officers
Article
28
:
Entry into Force
Article
29
:
Termination
Page 123 of 137

Like many others developed as well as developing countries of the world, Bangladesh too cannot absolve herself
from the need to facilitate her trade and investments with the outside world through international tax treaty network
with other countries. The increased pace of industrialization coupled with increased foreign direct investment in the
country necessitated tax treaty arrangements with other countries to provide investors with certainty and guarantees in
the area of taxation. As on March, 2011, the status of Bangladesh on Avoidance of Double Taxation Agreements is as
follows:
Name of the countries with which Agreement on Avoidance of

Double Taxation is in force.
Sl. No
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
Name of the Country
29
30
31
U.K
Singapore
Sweden
Korea
Canada
Pakistan
Romania
Sri Lanka
France
Malaysia
Japan
India
Germany
Netherlands
Italy
Denmark
China
Belgium
Thailand
Poland
Philippines
Vietnam
Turkey
Norway
Indonesia
USA
Switzerland
Oman (only
business)
Myanmar
Mauritius
Saudi Arabia
32
UAE
on
SRO
No.
Date
227-L/80
124-L/82
382-L/83
433-L/84
247-L/85
221-L/88
348-L/88
365-L/88
2-L/89
67-L/90
235-L/91
45-L/93
1-L/94
267-L/94
63-L/97
72-L/97
114-L/97
11-L/98
222-L/98
39/L/99
56/L/2004
301-L/2004
308/L/2004
20-L/2006
60-L/2007
71-L/2007
52-L/2010
08/07/1980
21/04/1982
19/10/1983
02/10/1984
06/06/1985
11/07/1988
23/11/1988
10/12/1988
04/01/1989
15/02/1990
06/08/1991
27/02/1993
01/01/1994
14/09/1994
12/03/1997
17/03/1997
13/05/1997
14/01/1998
07/09/1998
03/03/1999
04/03/2004
18/10/2004
31/10/2005
12/02/2006
20/04/2007
10/05/2007
23/02/2010
10/5/2008
airlines
07/10/2008
21/12/2009
04/01/2011
(date of signing)
17/01/2011
(date of signing)
Date of effect in Bangladesh

(assessment year
commencing on or after)
01/07/1978
01/01/1980
01/07/1984
01/07/1984
01/07/1982
01/01/1980
01/07/1989
01/07/1989
01/07/1989
01/01/1982
01/07/1992
01/07/1993
01/01/1990
01/07/1995
01/07/1980
01/07/1997
01/07/1998
01/07/1998
01/07/1999
01/07/2000
01/07/2004
01/07/2005
01/07/2004
01/07/2006
01/07/2007
01/07/2007
13/12/2009
Gazette not yet published


Page 124 of 137
Comparative Rates in Double Taxation

Avoidance Agreement
Sl. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
Name of the Country

U.K
Singapore
Sweden
Korea
Canada
Pakistan
Romania
Sri Lanka
France
Malaysia
Japan
India
Germany
Netherlands
Italy
Denmark
China
Belgium
Thailand
Poland
Philippines
Vietnam
Turkey
Norway
Indonesia
USA
Permanent
Establishment
183 days
183 days
183 days
183 days
183 days
183 days
183 days
183 days
183 days
183 days
6 months
183 days
183 days
6 months
183 days
183 days
6 months
183 days
183 days
183 days
6 months
6 months
12 months
6 months
183 days
183 days
Maximum tax rate

for dividend
10%/15%
15%
10%/15%
10%/15%
15%
15%
10%/15%
15%
10%/15%
15%
10%/15%
10%/15%
15%
10%/15%
10%/15%
10%/15%
10%
15%
10%/15%
10%/15%
10%/15%
15%
10%
10%/15%
10%/15%
10%/15%
Maximum tax
rate for Interest
7.5%/10%
10%
10%
10%
10%
15%
10%
15%
10%
15%
10%
10%
10%
10%
10%/15%
10%
10%
15%
10%/15%
10%
15%
15%
10%
10%
10%
10%
Maximum tax rate

for Royalties
10%
10%
10%
10%
10%
15%
10%
15%
10%
15%
10%
10%
10%
10%
10%/15%
10%
10%
10%
15%
10%
15%
15%
10%
10%
10%
10%

Page 125 of 137
Part: Twelve
Main Features of Finance Act, 2014 (Income Tax Portion)
A. Tax rate
Tax rate of the following has been changed:
(1) Individual
(2) Non-resident foreigner
(3) Publicly traded company
(4) Non-publicly traded company
(5) Minimum tax (Company and Partnership Firm)
(6) Reduced tax rate as per SRO
Surcharge for individual taxpayer has been re-structured as under:
Net wealth
Below Tk. 2 crore
Over Tk. 2 crore but less than Tk. 10 crore
Over Tk. 30 crore
Rate of Surcharge
Nil
10%
15%
20%
25%
A.2 Tax rate of Non-resident foreigner

Tax rate of Non-resident foreign individual has been raised from 25% to 30%.
A.3 Tax rate of Publicly Traded Company
Tax rate of publicly traded company has been re-fixed as under:
Particulars
If dividend declared more than 20%
Previous Tax Rate

24.75%
If dividend declared less than 10%
37.50%
New Tax Rate/ Provision

If minimum 30% cash dividend declared,
then the tax rate will be 24.75%
35%
A.4 Tax rate of Non-publicly traded company

Tax rate of Non-publicly traded company has been reduced from 37.5% to 35%.
A.5 Minimum tax for company and partnership firm [Section 16CCC]
Every company and partnership firm will be required to pay minimum tax @ 0.30% (previous rate was 0.50%) on its
gross receipt or tax calculated on the basis of total incomes whichever is higher.
Every partnership firm having gross receipts of more than Tk. 50,00,000 will be required to pay minimum tax as
before but at a reduced rate of 0.30% of gross receipts.
A.6 Reduced tax rate for autonomous bodies [SRO No. 158 dated 26 June 2014]
25% tax rate will be applicable on the income of the following autonomous bodies (other than capital gain because on
capital gain, gain tax rate will be applicable as per 2nd Schedule):
Page 126 of 137

Name of the autonomous bodies
Dhaka WASA
Bangladesh Hi-Tech Park Authority
Chittagong WASA
Mongla Port Authority
Khulna WASA
Payra Port Authority
Rajshahi WASA
Bangladesh Civil Aviation Authority
Bangladesh Betar
Insurance Development and Control Authority
RAJUK
BTV
Bangladesh Land Port Authority
BIWTC
National Housing Authority
BRTA
Chittagong Port Authority
Renewable Energy Development Authority
Barendra
Multipurpose
Development
Authority
BRTC
SEC
PDB
REB
WDB
BEPZA
JMRA
RDA
KDA
CDA
A.7 Tax rebate for Manufacturing Industry [SRO No. 185 dated 01 July 2014]
The following tax rebate facility has been given to manufacturing industry:
Serial No.
Conditions
Period
In case, commercial production starts from 01 July 2014

to 30 June 2019
If any existing industry transfer its factory outside
Dhaka, Gazipur, Narayangonj and Chittagong districts
and any city corporation area.
In case, commercial production already started before
01 July 2014
1st 10 Years
1st
10
Years
starting from such
transfer
Up to 30 June
2019
Rate
of
Rebate
20% of tax
Tax
20% of tax
10% of tax
But the following industry will not be eligible for tax rebate:
1) Industry situated or to be started at any city corporation area or any area under Dhaka, Gaizpur, Narayangonj
and Chittagong districts.
2) Industry enjoying/enjoyed tax holiday.
3) Industry having tax-exempted income.
4) Industry enjoying reduced tax rate facility.
5) Industry run by a listed company.
6) Industry having no updated environment clearance certificate from the Directorate of Environment.
A.8 Reduced tax rate for national level research institute [SRO No. 163 dated 26 June 2014]
Reduced tax @ 15% will be applicable for national level research institute registered under Trust Act, 1882 or
Societies Registration Act, 1860 with effect from 01 July 2014.
A.9 Withholding tax on import of silver bullion and gold bullion [through deletion of serial no. 155 and 156 of
Rule 17A (b)]
AIT at import stage will be imposed @ 5% on silver bullions and gold bullions and it will be final settlement of tax
liability as per section 82C.
A.10 Tax of non-resident oil company [Rule 39]
Deemed income of non-resident oil companies have been raised from 10% to 15%.
A.11 Tax rate of Car, Jeep and Micro Bus [SRO No. 164 dated 26 June 2014]
Rate of tax which is to be paid at the time of registration or renewal of fitness has been increased with effective from
01 July 2014. The new rate based on the engine capacity (cc) is given below:
Page 127 of 137
SL.
i.
ii.
iii.
iv.
V
vi.
vii.
Particulars
Up to 1,500 CC car or jeep
Above 3,500 CC car or jeep
Micro Bus
Old rate (Tk.)

15,000
30,000
50,000
60,000
60,000
100,000
15,000
New rate (Tk.)

15,000
30,000
50,000
75,000
100,000
125,000
20,000
Such tax is adjustable with regular tax of the motor car owner.
A.12 Tax rate of bus, truck, etc. [SRO No. 160 dated 26 June 2014]
Increasing the rate of tax for bus, minibus, coaster, taxicab, prime mover, truck, tank lorry, pick-up, human hauler,
maxi and auto-rickshaw [SRO No. 160 dated 26 June 2014]:
SL.
Particulars
1.
Bus (capacity more than 52

seats)
Bus (capacity 52 seats or
less)
A/C luxury bus
Bus (double decker)
A/C Mini Bus/Coaster
Other Mini Bus/Coaster
Prime mover
Truck and tank lorry
(capacity more than 5 ton)
Truck and tank lorry
(capacity more than 1.5 ton
to 5 ton)
Truck/pick-up
(capacity
1.5 ton or less) and all type
of human hauler, maxi and
auto-rickshaw
A/C taxi cab
Non A/C taxi cab
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Not more than 10 years old (Tk.)

Old rate
New rate
More than 10 years old (Tk.)

Old rate
New rate
10,000
12,500
5,000
6,500
7,000
9,000
3,500
4,500
20,000
10,000
10,000
4,000
15,000
30,000
12,500
12,500
5,000
19,000
10,000
5,000
6,000
2,000
8,000
15,000
6,500
9,000
2,500
10,000
10,000
12,500
6,000
7,500
6,000
7,500
3,000
4,500
2,500
3,000
2,000
2,500
7,000
2,500
9,000
3,000
3,000
1,000
4,500
1,500
A.13 Tax rate of water vessel [SRO No. 162 dated 26 June 2014]
Increasing the rate of tax for water vessel, cargo, coaster and dump urge, etc. [SRO No. 162 dated 26 June 2014]:
SL.
Particulars
Not more than 10 years old (Tk.)
More than 10 years old (Tk.)
Old rate
New rate
Old rate
New rate
1.
Day
time
passenger
75
100
25
40
carriage (based on per
passenger)
2.
Carriage of goods by
100
135
35
60
cargo/coaster (per ton)
3.
Carriage of goods by dump
75
100
28
50
urge (per ton)

Page 128 of 137
B. Individual tax matter

B.1 Withdrawal of tax exemption facility from capital gain on sale of rural agricultural land [Section 2 (15) (c)]
Capital gain from sale of rural agricultural land was tax free as per section 2 (15) (c). This section has been deleted
through Finance Act 2014. Therefore, any gain from sale of any land is now taxable. Side by side, withholding tax
will be applicable as per section 53H which will be treated as final settlement of tax liability u/s 82C.
B.2 Allowable deduction from house property income [Section 25 (g) and 25 (gg)]
Interest on house building was allowable expenditure. But this year one restriction has been imposed that such loan, if
needed, must be obtained from any Bank or non-banking financial institution (NBFI). Otherwise interest on loan will
not be allowed as deduction.
Maintenance of bank account by the owner of house property income [Rule - 8A]
Where any person having ownership or possession of any house property, whether used for residential or commercial
purpose, receives any rent exceeding Tk. 25,000 per month shall have to operate a bank account for the purpose of
depositing rent and advance (if any) received from such house property. He shall also maintain a separate register for
recording particulars of tenants and amount received or receivable from the tenants.
Penalty can be imposed by the DCT as per section 23 (2) for any violation of this rule. The maximum penalty is 50%
of tax payable on house property income or Tk. 5,000 whichever is higher.
B.3 Compulsory return submission is withdrawn in certain cases [Section 75]
Return submission in the following cases was mandatory irrespective of the amount of income which is withdrawn
through Finance Act, 2014:
a)
b)
c)
d)
If assessee owns a building more than one storey with plinth area more than 600 sq. feet.
If assessee subscribes a telephone.
If assessee is a candidate of Union Parisad Election.
If assessee has a TIN.
B.4 No tax audit if at least 20% higher income is shown under Universal Self-Assessment scheme [Section
82BB]
If return filed under universal self-assessment scheme showing at least 20% higher income than the income possessed
or shown on the return of the immediate preceding assessment year shall not be selected for tax audit by the NBR on
fulfillment of the following conditions:
a)
b)
c)
d)
e)
Return is to be accompanied by corroborative evidence in support of income exempted from tax.

Return is to be accompanied by bank statement in support of taking loan (if any) exceeding Tk. 500,000.
Return does not show receipt of gift during the year.
Return does not show any income on which reduced tax rate is applicable under section 44.
B.5 12-Digit TIN [Section 184B (3)]

Every existing assessee having 10-digit TIN or a TRN shall have to obtain a 12-digit TIN before the last date of
submission of return as required under section 75.
The word TIN is replaced by 12-digit TIN everywhere in the Income Tax Ordinance, 1984.
Page 129 of 137
B.6 Raising the tax-free agricultural income from Tk. 50,000 to Tk. 200,000 [6 th Schedule, Part-A, Para-29]
If anybody has only source of income from agriculture then it will be free up to Tk. 200,000 (earlier it was Tk.
50,000).
B.7 Tax-free cash dividend ceiling raised from Tk. 10,000 to Tk. 20,000 [6 th Schedule, Part-A, Para-11A]
Tax-free cash dividend ceiling has been raised from Tk. 10,000 to Tk. 20,000.
B.8 Tax exemption on interest from Pensioners Savings Certificate and Wage Earners Development Bond
[6th Schedule, Part-A, Para-32A]
Interest on Pensioners Savings Certificate and Wage Earners Development Bond will be tax free if the total
accumulated investment at the year-end does not exceed Tk. 500,000. Withholding tax will not also be applicable in
such situation.
B.9 New list of tax-free income [6th Schedule, Part A, Para 48 to 51]
a)
Any foreign income of any Bangladeshi citizen, if brought into Bangladesh as per existing laws applicable in
respect of foreign remittance. [Para - 48]
b) Income donated through crossed cheque to Govt. approved girls school or girls' college. [Para - 49]
c) Income donated through crossed cheque to Govt. approved technical and vocational training institute. [Para - 50]
d) Income donated through crossed cheque to Govt. approved National Level Institution engaged in the Research &
Development (R&D) of agriculture, science, technology and industrial development. [Para - 51]
B.10 Notional Income for availing full-time car facility [Rule 33D]
In case of salaried person, notional income for availing full time car facility from the employer has been reduced from
7.50% to 5% of basic salary.
C. Deduction of Tax at Source

The details of changes in withholding tax-rate, and introduction of new area of withholding tax are summarized
below [Section 51 to 54].
SL.
1.
Head of deduction/
collection of tax at
source
Interest on securities
2.
Contractor and
supplier
3.
Oil supply
Section
Earlier rate of deduction/

provision
51
10%
52
Deduction was applicable on

local L/C also.
52/ Rule16
New
New rate of deduction/ provision
5%
Deduction will also be applicable
on treasury bill/ treasury bond and
debenture.
Provision of tax deduction on local
L/C is withdrawn from section 52
and a separate section 52U has
been inserted to deduct tax at
source @ 3%.
Oil supplied by dealer (excluding
petrol pump station) or oil
marketing companies : 1%
Oil supplied by oil refinery: 3%
Gas supplied by Gas transmission
company to gas distribution
company: 3%

Page 130 of 137

(1) If the payee does not
have any TIN, the rate of
tax deduction is 15%.
(2) Actuarial service was not
included in professional
service.
(1) The word TIN is replaced

by 12-digit TIN. 15% tax
deduction will be applicable if
the payee 12-digit TIN.
(2) Actuarial service will also be
included
in
professional
service.
52D
5%
52F

Tk. 45,000 for one and half
section
5%
But no tax shall be deducted where
the cumulative investment at the
end of the income year in the
pensioners saving certificate and
wage earners development bond
does not exceed Tk. 5,00,000.
Tk. 75,000 for one and half section
4.
Professional or
technical services
52A (3)
5.
Interest on savings
certificate
6.
Brick field
7.
Travel agency
commission
52JJ
New
8.
9.
Rental power
Soft drinks
52N
52S
10.
Any payment by the

life insurance
company to policy
holder in excess of
total premium
Local L/C or any
financing agreement
called by whatever
name
52T
4%
Deduction was not applicable
on mineral or bottled water.
New
52U
New
Revenue sharing or
any license fee or
any other fees or
charges paid to
regulatory authority
by the mobile phone
operator company
House rent
52V
New
53A
5%
Export cash subsidy

Distributorship
commission
53DDD
53E
11.
12.
13.
14.
15.
5%
If any company sells its
products to its distributors at
dealer price (DP) which is
lower than MRP, then 5% tax

Tk. 1,50,000 for automatic
brickfield
3% on commission or discount or
incentive bonus or any other
benefit provided by the airlines to
GSA or GSA to travel agent for
selling air ticket/ air cargo
6%
Deduction will also be applicable
on mineral or bottled water.
5%
Not applicable in case of death of
such policy holder.
3% on total proceeds exceeding

Tk. 500,000.
[But not applicable on rice, wheat,
potato, onion, garlic, peas,
chickpeas,
lentils,
ginger,
turmeric, dried chillies, pulses,
maize, coarse flour, flour, salt,
edible oil, sugar, black pepper,
cinnamon,
cardamom, clove, date, cassia leaf
and all kinds of fruits]
10%
Hospital, clinic and diagnostic

center are also to be included in
the list of deducting authorities.
3%
The rate would be 3% instead of
5%.
Page 131 of 137
16.
Bank interest
53F
17
(i)
Sale of land or land

and building
(commercial area)
Section
53H with
Rule 17(II)
17.
(ii)

and building (other
than mentioned at
Schedule A)
53H/
17(II)
on difference between DP
and MRP is to be collected.
15% withholding tax was
applicable if the deposit
holder does not have any
TIN.
3% at RAJUK and CDA
2% at Dhaka (excluding
RAJUK area), Chittagong
(excluding CDA area),
Gazipur, Narayanganj,
Munshiganj, Manikganj, and
Narshingdi district
15% withholding tax was

applicable if the deposit holder
does not have any 12-digit TIN.
Schedule A (For Land)
Gulshan,
Banani,
Motijheel,
Dilkhusha, North South Road,
Motijheel Expansion areas and
Mohakhali of Dhaka
4% of the deed value or Tk.
10,80,000 per katha (1.65 decimal)
Higher one
Kawran Bazar, Uttara, Sonargaon
Janapath, Shahbag, Panthapath,
Banglamotor, Kakrail of Dhaka
Higher one
Banga Bondhu Avenue, Badda,
Sayedabad,
Postogola
and
Gandaria of Dhaka.
Agrabad and CDA Avenue of
Chittagong and Narayanganj.
Higher one
For building/ apartment/ flat/
structure/floor space: In addition
to tax applicable for land
mentioned above, an additional tax
@ Tk. 600 per sq. meter or 4% of
the deed value of such building/
apartment/flat/
structure/floor
space Higher one.
Schedule B (For Land)
Uttara (Sector 19), Khilgaon
rehabilitation area (beside 100 feet
road), Azimpur, Baridhara DOHS,
Rajarbagh rehabilitation area
(beside biswa road), Niketon,
Bashundhara (block A-G) of
Dhaka.
Agrabad, Halishohor, Panchlaish,
Nasirabad,
Mehedibag
of
Chittagong.
90,000 per katha (1.65 decimal)
Higher one
Gulshan,
Banani,
Baridhara,
Nababpur and Fulbaria of Dhaka.
Higher one
Dhanmondi, Green Road (from
road 3 to 8 of Dhanmondi
Residential area) of Dhaka.
Higher one.

Page 132 of 137

Kakrial,
Sagunbagicha,
Bijoynagar, Green road, Eskaton,
Elephant
Road,
Fakirapool,
Arambagh, Mogbazar, (within 100
feet of main road), Tejgaon
industrial area, Sher-e-bangla
nagar
administrative
area,
Agargaon administrative area,
Lalmatia, Mohakhali DOHS,
Cantonment of Dhaka and Khulshi
of Chittagong.
Higher one
Kakrail, Sagunbagicha, Eskaton,
Green road, Bijoynagar, Elephant
Road (outside 100 feet of main
road) of Dhaka.
Higher one
Uttara (Sector 10 to 14), Nikunj
(north
and
south),
Badda
rehabilitation
area,
Gandaria
rehabilitation
area,
Shympur
rehabilitation area, IG bagan
rehabilitation are, Tongi industrial
area of Dhaka.
Higher one.
Shympur industrial area, Postogola
industrial
area
and
Jurain
industrial area of Dhaka.
Higher one.
Khilgaon
rehabilitation
area
(beside less than 100 feet road),
Rajarbagh rehabilitation area
(beside 40 feet and internal road)
of Dhaka.
Higher one
Goran (beside 40 feet road) and
Hazaribagh Tanary Area of
Dhaka.
Higher one
For building/ apartment/ flat/
structure/floor space:
In addition to tax applicable for
land mentioned above, an
additional tax @ Tk. 600 per
square meter or 4% of the deed
value of such building/apartment/
flat/structure/floor space
Higher one.
Page 133 of 137

17
(iii)

and building (other
than mentioned at
Schedule A and B)
53H/
17(II)
1% at any other area
18.
Registration of
leasehold property
53HH
New
19.
Direct advertisement
53K
20.
Transfer of shares of
shareholder in Stock
Exchange
Gain on sale of
shares or securities
traded in Stock
Exchange
53N
Direct advertisement to
newspaper, magazine, private
TV channel and private radio
station
New
53 O
New
21.
22.
Dividend
54
10% on all individuals
Schedule C
Within the jurisdiction of RAJUK
and CDA except areas in schedule
A and B: 4% of the deed value.
Within the jurisdiction of Gazipur,
Narayanganj, Munshiganj,
Manikganj and Narsingdi, Dhaka
and Chittagong districts
(excluding RAJUK, CDA and
Dhaka both City Corporation area)
Areas within the jurisdiction of
Pauroshava of any district
headquarter
Areas of any other Pauroshava:
Other areas not specified in
schedule A, B and C
4%
[Applicable for more than 10years lease]
Tax shall be deducted from
advertisement through website
also.
15%
Company or firm 10%
Any person not being company or
firm :
Below or equal Tk. 10 lakh 0%
If gain > Tk. 10 lakh but Tk. 20
lakh 3%
If gain > Tk. 20 lakh 5%
The rate will be 15% if the
recipient does not have a 12-digit
TIN, then @ 15%.
D. Final Settlement of Tax Liability

Deduction from local L/C was under section 52 and it was a final settlement of tax liability under section 82C. Now it
is separated from section 52 and a new section 52U has been inserted which is not within the overview of 82C.
Furthermore, the following new 3 heads of deduction has been brought into the coverage of section 82C:
Section
52D
53N
53 O
Head
Deduction of intereste on pernsioners savings certificate and wage earners development
bond
Transfer of share of shareholder in Stock Exchange
Gain on sale of shares or securities traded in Stock Exchange

Page 134 of 137
E. Share Market
E.1 Imposition of tax on capital gain on sale of shares of listed companies [Section 53 O and 82C]
Share market related SRO No. 269 of 2010 has been deleted and withholding tax system has been newly introduced
@ 10% on companies and firms. Such withholding tax will be treated as Final Tax Liability u/s 82C.
E.2 Collection of tax from transfer of shares of shareholders of stock exchange [Section 53N]
Tax is to be collected @ 15% from transfer of shares of shareholders of stock exchange.
E.3 Tax exemption to DSE and CSE for 5 years [SRO No. 157 dated 26 June 2014]
Income of DSE and CSE will remain tax free for 5 years with effect from 01 July 2014 at the following rate:
Year
1
2
3
4
5
Rate of exemption
100%
80%
60%
40%
20%
E.4 Tax free cash dividend ceiling raised from [6th Schedule, Part-A, Para 11A]
Tax free cash dividend ceiling has been raised from Tk. 10,000 to Tk. 20,000.
F. Company tax matter

F.1 Deduction from income in case of repayment of cash loan in a subsequent income year [Section 19 (26)
Provisio]
If cash loan is taken by any company from any other person, it is to be treated as deemed income u/s 19 (26). This
year a provisio is added which says that if such loan or part thereof is repaid in a subsequent income year, the amount
so repaid shall be deducted in computing the income for that subsequent year.
F.2 Ceiling of excess perquisite [Section 30 (e)]
Ceiling of excess perquisite has been raised from Tk. 250,000 to Tk. 350,000.
F.3 Head office expenditure in case of foreign company [Section 30 (g)]
The ceiling of Head Office expenditure in case of foreign company was 10% of assessed profit. Now assessed
profit will be replaced by disclosed net profit.
F.4 Royalty and Technical Know-how Fee [Section 30 (h)]
The ceiling of royalty, technical service fee, technical know-how fee and technical assistance fee was 8% of assessed
profit. Now assessed profit will be replaced by disclosed net profit.

Page 135 of 137

F.5 Auditors report to be ensured that accounts are maintained in accordance with BAS and reported as per
BFRS [Section 35(3)]
In case of financial audit the chartered accountants shall have to certify that accounts are maintained in accordance
with BAS and reported as per BFRS.
F.6 Transfer Pricing [Section 107EE and 107F]
Every assessee who has entered into an international transaction shall furnish along with the return of income, a
statement of international transaction in the form and manner as the board may prescribe. [Section 107EE]
Transfer pricing will be effective in Bangladesh with effect from 01 July 2014 [SRO No. 161 dated 26 June 2014].
F.7 Extension of tax holiday facility for another 4 years [Section 46B and 46C]
Tax holiday for industrial undertaking and physical infrastructural facility has further been extended up to 30 June
2019.
F.8 Tax holiday for automatic brick field [Section 46B (2) (gg)]
Brick made of automatic Hybrid Hoffmann Kiln technology will be eligible for tax holiday for 5 or 10 years
depending on the location of the brick field.
F.9 Year wise tax exemption percentage of tax holiday Industrial Undertaking [Section 46B]
Tax exemption percentage and area of tax holiday for industrial undertaking has been re-designed as below
(previously it was 7 years):
Years
(b) Rajshahi, Khulna, Sylhet, Rangpur

and Barisal division (excluding City
Corporation area) and the hill district
of Rangamati, Bandarban and
Khagrachari
10
Rate of exemption
Established within 30 Established from 01 July
June 2013
2013 to 30 June 2019
1st 3 years. 100%
1st 2 years. 100%
2nd 3 years. 50%
3rd year . 70%
Last year 25%
4th year 55%
5th year 40%
6th year 25%
7th to 10th year.. 20%
F.10 Computation of tax u/s 74 taking into consideration of minimum tax as per section 16CCC
Earlier there was no relation of minimum tax for computing tax as per return u/s 74. Now at the time of computing
tax as per return u/s 74, minimum tax as per section 16CCC is also to be considered.
F.11 New heads in the tax depreciation schedule [3rd Schedule]
Following new heads have been included in the tax depreciation schedule:
Heads
Office Equipment
Physical infrastructures:
Payment runway, taxiway
Apron, Tarmac
Boarding bridge
Communication, navigation and other equipment
Rate of depreciation
10%
2.50%
2.50%
10%
5%

Page 136 of 137

F.12 Accelerated depreciation on plant and machinery [3 rd Schedule, Para 7B]
Accelerated depreciation on plant and machinery will be applicable at the following rate if it is set up in Bangladesh
within the period 01 July 2014 to 30 June 2019:
Years
1
2
3
Rate of depreciation
50%
30%
20%
F.13 Amortization (3rd Schedule, Para 10A)

Amortization of license fee will not only include Spectrum assignment fees but also will include GSM license fees,
license acquisition fees or license renewal fees.
Such amortization on different fees will be effective from the assessment year 2013-14.
F.14 CSR (SRO No. 186, dated 01 July 2014)
The following new area has been inserted in the list of CSR:
Donation to Govt. approved fund for helping victims of natural disaster or for any tournament and national level
program.
Ceiling of CSR has also been raised from Tk. 8 crore to Tk. 12 crore.
G. Penalty
SL.
1
2
3a
3b
Provision
In case of house property income, if the owner of
the property violates rules and order of NBR
[Section 123 (2)]
For concealment of income [Section 128]
Incorrect or false audit report [Section 129A (b)]
Rate of penalty
50% of tax on house protperty income or Tk.
5,000 whichever is higher.
15% of tax evasion (earlier 10%)
Not less than Tk. 50,000 and not more than Tk.
200,000.
If audit report is not certified by CA to the effect

that the accounts are maintained according to BAS
and reported in accordance with BFRS [Section
129A (a)]
H. Travel Tax [SRO No. 159 dated 26 June 2014]

The rate of foreign travel tax has been reshuffled as under:
SL.
1
2
3
Country
South America, North America, Europe, Africa, Australia, New
Zealand, China, Japan, Hong Kong, South Korea, North Korea,
Vietnam, Laos, Combodia and Taiwan.
SAARC countries
Other countries
New rate
Tk. 4,000
Previous rate
Tk. 3,000
Tk. 1,200
Tk. 3,000
Tk. 1,000
Tk. 2,500

Page 137 of 137

Ranjan Sir Lecture - Details - (Updated in Light of FA 2014) (SECURED)

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Ranjan Sir Lecture - Details - (Updated in Light of FA 2014) (SECURED)

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Updated (Finance Act 2014)

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Income tax authority, Types of taxes, Some important

definitions, Tax rate, Reduced tax rate

Income from Salary

Income from Interest on Securities, Income from House

Property, Agricultural Income

Income from Other Sources, Individual Assessment

assessment, Tax Holiday

Set off and carry forward losses, Advance Income Tax,

Deduction and Collection of Tax at Source

Assessment of Partnership Firm

Double Taxation Avoidance Agreement

Main Features of Finance Act, 2014 (Income Tax Portion)

Assistant, Audit and advisory services

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Income Tax Ordinance 1984

Direct Tax Vs Indirect Tax:

Income Tax Laws:

Section (sub section)

Income Tax Authority (Section 3):

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Customs & VAT

Some Important Definitions:

TAX; (section 2(62)):

Assessee; (section 2(7)):

Updated (Finance Act 2014)

Resident and Non-Resident:

Partial Control & Management

Difference between resident and nonresident:

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Resident Vs. Non-Resident:

(i) Hindu Undivided

Condition for being

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Condition for being resident

The control and management

A company whether a Bangladeshi company or

Incidence of taxation on the basis of residential status:

The income accruing or

(a) A non-resident, unlike a resident, is

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Maximum tax rate is

Investment tax credit

Investment tax credit

of accrual or deemed accrual, it can not

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Other than Company:

Income other than these two will be taxed as above.

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)

Tax rate will be

Tax rate will be

, 1991 (1991 14 ) shows

Mohammad Ahsanullah, ahsan.14143@gmail.com, 01915185280

Updated (Finance Act 2014)