Miss Sabrina Mahisha

The objective of this writing is to provide a summarized picture of the current scenario of Income Tax BD. All the information in this writing has been made under the light of Income Tax Ordinance, 1984, SROs as well as the National Budget Speech 2022-2023. Hence, this writing contains an up-to-date version of the Income Tax of some important sectors of Bangladesh.

Information relating to the Current Income Tax Rate

i) Income Tax Rate for an individual:

a)  Minimum Tax Rate: The business turnover tax rate for individual taxpayers is 0.25%.

  b)  Investment Credit: Investment credit will be allowed a flat 15% of the eligible amount. The ceiling for calculation of eligible amount for investment credit is 20% of total income. Moreover, the rate of investment credit will be 7.5% in case of failure in the submission of return.

  c) Submission of Income Tax Return:

  d)  Submission of IT-10B: One has to submit IT-10B (Asset & Liabilities Statement) for all local and global assets & liabilities.     

 e)    Tax rate of Individuals: Individual taxpayers’ income tax rates and tax rates remain unchanged from 2020-2021.

Existing Tax StepExisting Tax rate
Up to Tk. 3 Lakhs.0
On next Tk. 1 Lakh.5%
On next Tk. 3 Lakhs10%
The next Tk. 4 lakhs15%
The next Tk. 5 lakhs20%
The rest of the money25%

          f) Provisions for undisclosed offshore assets: Undisclosed asset holders would be allowed to show any of their immovable assets outside Bangladesh in tax returns by paying a 15% tax. Bangladesh, without repatriation to Bangladesh is 15% of Fair Market Value. It is to be noted that, a Bangladeshi can repatriate any cash, bank deposits, bank notes, bank accounts, convertible securities and financial instruments by paying a 7% tax. Moreover, A Bangladeshi can legalize these assets without repatriation to Bangladesh by paying a 10% tax.

ii)     Tax Rate for the Companies:

         a) Publicly Traded Companies can be classified under the following categories:

  b)  The tax rate for non-listed Public and Private Companies is 27.5%. However, in case of any contravention, the Tax rate can be increased up to 30%.

  c)  The tax rate on artificial entities and taxable entities other than companies and associations has been fixed @ 27.5%.  However, in case of any contravention, the Tax rate can be increased up to 30%.

   d)   A 15% tax will be imposed on the income of Private universities, private medical colleges, private dental colleges, private engineering colleges, or private colleges solely dedicated to imparting education on ICT.

   f)   The Tax Rate for the Association of persons is 27.5%. However, in case of any contravention, the Tax rate can be increased up to 30%.

            g)  The tax rate of One Person Company (OPC) is 22.5%.   However, in case of any contravention, the Tax rate can be increased up to 25% Tax will be applicable.

Condition: Please note that all receipts and income must be transacted through bank transfer. Moreover, all expenses and investments over Tk. 12, 00, 000 (Twelve Lakhs) (annual) must be transferred through Bank.

iii) Tax Rate on Banks and Financial Institution: The Tax Rate on the Publicly traded bank, insurance, and financial institution (except merchant banks) is 37.5%. On the other hand, for the non-Publicly traded bank, insurance, and financial institution, a 40% Tax is to be imposed. Apart from this, a Tax Rate of 37.5%   will be imposed on Merchant Bank.

iv) Tax Rate on Tobacco Producing Companies: A tax of 45% + 2.5% (surcharge) will be imposed on the Companies producing all sorts of tobacco items including cigarettes, bidi, chewing tobacco, and gul.

v) Tax Rate on Mobile Traded Company: 40% Tax is to be imposed on Publicly traded mobile operator companies. On the other hand, the imposed Tax rate for Non-publicly traded mobile operator companies is 45%.

vi)   Taxpayer of the Third gender

       a) The current tax-free limit for third-gender taxpayers is up to TK 350,000.

       b) if a taxpayer employs 10% of the total workforce of the organization or 25 persons from the physically challenged or the third gender community, the employer will be entitled to get :

vii) Tax on the information and communication technology (ICT) (Start-up Business) : For encouraging the start-up businesses relating to the ICT, the bindings of all other types of reporting are exempted, one has to submit the income tax return. Moreover, the rate of turnover tax has been fixed at 0.10%.

viii) Tax on Textile Industry: The current Tax rate on the Textile Sector stands at 15%. This facility will be enjoyed until June 30, 2025.

xi) Tax from Non-resident: National Board of Revenue has been requested to formulate proper scope and areas of income and exemption of Non-residents to ensure proper collection of revenue of them. It may also include inserting a mandatory provision relating to the proof of submission of return, in cases where income arises to a person from Bangladesh through digital presence.

x)       Rationalization of fishery income tax rate :

  Amount of income          Tax Rate
   On income up to the first Tk 10 lac.0
   On income up to the next Tk 10 lac5%
   On income up to the next Tk 10 lac10%
  On the remaining income15%

 xi) Deduction at Source :

 Tax Deduction from Source will be conducted by Bank. The source tax rate at the import stage is as follows:

xii) Bangladesh Digital Transformation:     

In addition to the existing 22 sectors in the digital transformation of Bangladesh, the following 6 more sectors have been declared tax-free sectors.

a.)  Cloud Service

b.)  System Integration

c.)  e-learning platform

d.)  e-book publications

e.)  Mobile applications development service and

f.)  IT Freelancing

xiii) Incentive to ‘Made in Bangladesh’ in mega industrial production:

To take Bangladesh ahead in the mega-industry, an automobile (three-wheelers and four-wheelers) manufacturing company was established with an investment of at least Tk. 100 crore or more shall enjoy a 20-years tax exemption. Moreover, the income earned in foreign exchange by ocean-going vessels carrying the Bangladeshi flag from paying tax until 2030 provided the income is brought to Bangladesh through a banking channel. In this regard, a 12% tax rate will be imposed for all other general industries exporting goods and services, on the other hand, 10% for all other green industries exporting goods and services.

xiv) Incentives for Made in Bangladesh in the production of Home Appliances:

Washing machines, blenders, microwave ovens, electric sewing machines, induction cookers, kitchen hoods, and kitchen knives & kitchen appliances industry will enjoy 10 years of tax exemption. The existing exemption facility has been expanded to the import of raw materials used in these sectors.

xv) Industrialization of agricultural products:

    a) Such as value addition of agricultural products produced in Bangladesh through industrialization are:

    b)  Entrepreneurs manufacturing agricultural machinery have been given tax exemption for 10 years.

xvi) National skills development and employment incentives:

Institutions engaged in providing education and training in the following sectors to create skilled human resources suitable for industrialization shall enjoy tax exemption for 10 years.

        i. Diploma Degree and Vocational Education in all fields of Agricultural Fisheries Science and IT and

xvii) Light engineering entrepreneurial creation and employment incentives:

        Which are all kinds of products in the light engineering industry are:

            a) Will be used only in industrial factories and

            b) There will be no complete instrument parts.

Manufacturing entrepreneurs have been given 10 years of tax exemption.

xviii) Entrepreneurial creation and employment incentives in the IT hardware sector :

In the IT sector, Bangladesh is dependent on imports for self-sufficiency in creating industries and enterprises and as an incentive for employment. CCTV and pen drive manufacturers have been given tax exemption for 10 years.

xix) Ensuring affordable and decentralized medical care:

 Income from hospital operation will enjoy tax exemption for 10 years provided that-

            i)  Hospital must be located outside Dhaka, Narayanganj, Gazipur, and Chittagong districts and

            ii) There should be at least a 250-bed hospital or 200-bed specialized hospital.

xx) Assistance in micro-credit collection:

In order to provide easy access to microcredit, the income of organization licenses by the Micro Credit Regulatory Authority has been made tax-free.

xxi) Stamp Duties for deeds: Some changes have been brought to the Finance Act, 2022, in respect of the Stamp Duties, the amount of the Stamp duties are discussed below:

           a)      Affidavit:  BDT 300

           b)     Deed of Sale (Saf kabala): 1.5% of the valuation of the Subject Matter, but not exceeding BDT 2, 00, 00, 000)

           c)    Certified copies of the deed: BDT 100

           d)    Affidavit for Divorce:  BDT 2000

           e)     Deed of Declaration of Heba:  BDT 1000

           f)    Deed of Lease:  The following stamp duties will be performed on account of the Deed of Lease:

            g)   Partnership Firm: If the Capital is BDT100000, BDT 2000 will be applicable as Stamp Duty, in other cases BDT 4000 will be applicable.

            h) Power of Attorney:

The Government is empowered by Section 44(4) (b) of ITO, 1984, to exempt any income or any portion of it, from the Tax Liability as required by Law. Hence, the Government by Official Gazette has recently allowed some exemptions other than the ITO, 1984. Hereby, the important updates are shortly being discussed below:

a) Tax Rate on Export Income (SRO- 158- Aain/Aikor/2022, dated 01 June 2022): The Government has exempted Tax on Export Income, which will be applicable from 01 July 2022 to 30 June 2025:

•           Tax will be exempted @50% on the export Income of individuals, Firm & Hindu Undivided Firm

•           Tax will be exempted @12% on the export income of others

•           10% Tax Exemption will be made on any income earned by other than Individual, Firm & Hindu Undivided Firm from exporting goods manufactured in Leadership in Energy and Environmental Design (LEED) Certified Factories.

•           Any Transportation Service, Mobile Telecommunication Service, Internet, and Internet-Related Service will not be benefitted under this SRO- 158- Aain/Aikor/2022.

b) Yarn production & dyeing (SRO- 159- Aain/Aikor/2022 dated 01 June 2022): The Government has made a 15% tax rate on the income of the business relating to Yarn Production, dyeing, finishing, printing, and other similar business to this. This exemption will be applicable from 01 July 2022 to 30 June 2025.

Recent changes to the Income Tax Ordinance, 1984 (ITO, 1984

Some changes have been brought to the Income Tax Ordinance (ITO), 1984. The changes have been shortly discussed below:

xxii)  Special Tax : Section 19AAAA regarding Special Tax Treatment in respect of undisclosed property, cash, etc)& Section 19AAAAA regarding Special Tax Treatment in respect of investment in the new industrial undertaking have been omitted. However, Section 19AAAAAA has recently been inserted regarding Special Tax Treatment in respect of the investment in the new industrial undertaking, whereby if someone invested any sum of money (along with the tax at the rate of 10% on the invested sum) in new industrial undertaking between 1.07.2021 and  30.06.2022 (both days inclusive), no authority shall raise any question regarding the source of income. Provided that, the above-mentioned Tax will be payable pay order or by automated challan.

xxiv)  Limit of excess perquisites: Section 30(e) of the ITO, has been amended. Now an employer will enjoy the benefit of section 30 of the ITO, if his expenditure of perquisites under section 2(45) to any employee exceeds BDT 1,000,000 (ten lakhs only), instead of the earlier amount of tk. 5,50,000 (Five lakhs fifty thousand only.

xxv) Deemed income: Cancellation of Indebtedness: Section 19 (11) is modified. The Provision of 19 (11) shall not be applicable to the Individual. Hence, Loan/Interest waived by a commercial bank/Bangladesh Krishi Bank/Rajshahi Krishi Bank/any leasing company will be not treated as income in the case of an individual.

xxvi) Deemed income (Receipt of loan or gift): Deposits received by a Bank or a financial institution or an organization registered with Micro Credit Regulatory Authority or NGO Affairs Bureau shall not be deemed to be an income under section 19 (21). Moreover, any loan or gift is received from the spouse or parents (or sons or daughters) of the Assessee, and a banking channel or a formal channel is involved in the process of such loan or gift shall not be deemed an income under the above-mentioned section.

xxvii) 5% special reserve: As Section 29(1)(v) has been deleted, therefore 5% special reserve created by Financial Institution will be admissible from now.

xxviii) Tax impact on scheme of Amalgamation: Section 32 (5A) has been inserted. The tax shall not be imposed upon any capital gain that arises from the transfer of a capital asset in a scheme of amalgamation. However, any consideration received by the shareholders of the amalgamating companies in any manner other than the shares of the amalgamated company shall be subject to applicable tax. Moreover, Tax exemption of capital gain from Govt. Securities under section 32(7), are no longer in force.

xxix)   Requirement of submission of audit report: Section 35 has slightly been amended, previously this provision was applicable to all the companies under the Companies Act, 1913or the Companies Act, 1994 which is amended by “Company” under section 2(20) of the ITO. Hence, it is mandatory for the “Company” under section 20(2) of the ITO, to submit the audit report with the income tax return.

xxx)  Business loss & Unabsorbed Depreciation for the amalgamated company: Subsection 8 has been inserted to Section 42 of the ITO, by which the amalgamated company is given the right to carry forward the accumulated loss and unabsorbed deprecation of ambulating company.

xxxi) New Conditions for availing of Exemption/Reduced rate facilities:  Some new conditions have been added to the 44 (5) (a). The new conditions are:

a)  All the receipts, from the exempted source of income or income subject to a reduced rate of tax, through bank transfer, shall be received

b)   In case of failure to comply with the provision of chapter VII, may restrain   from getting the benefit of exemption under section 44 of ITO, 1984.

c)  The above-mentioned provision of receiving the receipts through bank transfer is applicable for an individual assesee having gross receipts not exceeding Tk. 1,00,00,000 (one Crore only) and for the agriculture or farming income.

xxxii) Failure to submit return under Chapter VII: Proviso (a) of Section 52 has been amended. As per the updated provision, in case of failure to submit proof of submission of return at the time of making payment, or if the payee does not receive payment by bank transfer. In such cases, the TDS rate shall be fifty percent (50%) higher than the normal TDS rate.

xxxiii) New Deducting Authorities: Hotel, resort, community centers and transport agencies having annual turnover exceeding BDT One Crore, have been added as Deducting Authorities, in relation to Section 52 of the ITO.

xxxiv) TDS on certain services: The below-mentioned changes have been brought to the Section 52 AA:

                                                a)  The higher rate based on a base value exceeding 25 lakh has been omitted.

 b)  Changes in rate for media buying agency, indenting commission,   mobile network, motor garage or workshop, etc.

                                                c)  TDS on Internet service (@10%) is newly inserted

                                                d)  TDS rate shall be fifty percent (50%) higher if the payee fails to submit proof of submission of return at the time of making the payment; or if the payee does not receive payment by bank transfer.

xxxv) TDS on the export of goods: Section 53BB has been amended. As per the new amendment,1% TDS will be applicable to all export goods, previously some specified goods were subject to the TDS of 0.05%. Moreover, section 53BBBB is deleted.

xxxvi) TDS on the interest of saving/fixed deposit: The changes relating to the TDS on the interest of saving/fixed deposit under section 53 F, are given below:

                                                    a)  If the payee is Company, the new TDS rate will be 20% 

                                                    b) TDS rate will be 50% higher in case of failure to submit proof of submission of return at the time of making payment

                                                    c) Proof of submission of return of parent shall be considered as the   proof of submission of return of a minor.

                   xxxvii) TDS on the lease of property: Section 53 HH has been substituted. The provision is now standing on “Any registering officer responsible for registering any document in relation to any lease of immovable property for not less than 10 years shall not register unless the tax is paid at 4% by the lessor on the lease amount of such property.”

     xxxviii) Deduction from the income of non-residents: Section 56 has slightly been changed. Firstly  10%  TDS for Bandwith payment is newly included. Secondly, TDS on any other payments is revised @20% instead of 30%.

     xxxix) Consequences of failure to deduct: Section 57 has been modified, and new provisions relating to the penalty are added:

                                    a)  Whoever fails to comply TDS chapter of ITO, will be penalized with BDT 1000000 (ten lakhs only).

     b) New provisions are added for imposing a penalty on individuals, and authority who are responsible for deducting or collecting tax

   xxxx) Return of Income: The  list of “submission not mandatory” has been amended under section 75 of the ITO, now return of income is not mandatory for the followings:

                                  a)    A non-resident individual having no fixed base in Bangladesh; or

                                  b)   Any class of persons which the Board may, by order in the official gazette, exempt from filing the return

                                  c)    All Fund except Approved Provident /Gratuity /Pension/Superannuation Fund

                                  d)    Schools under Monthly Payment Order (MPO) that have   introduced an English version in their school

                                  e)     A public university.

    xxxxi) Spot Assessment: Section 82 D has been replaced. The provision of spot assessment at all levels under Section 82D of the ITO, has extended beyond the growth centers. Apart from this, the following changes are brought in section 82D:

                                  a) Where the assessment of an assessee in an individual who is having income from business or profession is made under this section applying regular rate and the assessee pays tax accordingly, no question as to the initial capital not exceeding five times of such assessed income shall be made.

                                    b) The Board (National Board of Revenue) shall issue guidelines as to the manner how assessment under this section shall be made.

xxxxii) Bar to question to assessment: Section 94B is inserted. This insertion specifies that except the “Income Tax Authorities” mentioned under section 3 of the ITO or the courts and authorities mentioned in Chapter XIX, no one shall have the right to question any assessment made under this Chapter-IX.

xxxxiii) Start up Stand Box: Section 111A has been inserted. The followings are some of the notable information about this newly added provision:

                                  a) A startup means a company having an annual turnover not exceeding Tk   1,000,000,000 (one hundred crore) and not a subsidiary or amalgamated company

                                  b) Sections 30 and 30B shall not be applicable for growth years.

                                  c) Where in any growth year, any loss is incurred by a startup registered under this section and the loss cannot be wholly so set off, the amount of the loss which has not been set off, shall be carried forward to the next assessment year and so on for not more than 9 (nine) successive assessment years.

                                 d) The minimum rate of turnover tax is 0.1% in place of 0.6%.

                                 e) Some conditions are specified for getting registration under NBR.

xxxxiv) Disconnecting utility service connections : Section 143(2)(c) has newly been inserted. In case of the failure to pay the undisputed tax liabilities within 21 (twenty one) days from the date of receipt of the notice, the utility service connections, such as gas, electricity, water, etc. shall be disconnected. Any aggrieved party in this regard, may apply for the resolution of the dispute through the ADR process under section 152I which has also been amended.

xxxxv) Proof of Submission of Return: The Proof of Submission return shall be considered as acknowledgment of receipt of return. In case of failure to collect PSR, the person will be deemed to be an assessee in default & liable to pay a penalty not exceeding Tk. 10, 00, 000 (Ten Lakhs only). This submission shall mandatorily be submitted in the given sectors under section 184A, some of the sectors are mentioned below:

xxxxvi)Displaying proof of submission of return: Section 184 C has been amended. Now, an individual having business income needs to display this proof of return, at a conspicuous place on such assessee’s business premises, the penalty will be imposed for any non-compliance in this regard.

xxxxvii) Charges of Income Tax: A new modification has been brought to section 16 of the ITO. Income tax in respect of any income classifiable under the head “Capital gains,” any income by way of “dividend” referred to in clause 2(26), and any income by way of “winnings” referred to in section 19(13), shall be charged at the rates specified in Chapter VII and the Second Schedule).

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