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 the 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 data for 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 returns.
c) Submission of Income Tax Return:
- Date of Submission: One has to submit the 1st Income Tax Return on 30th June, the end of an income year.
- Importance of submitting Income Tax Return: The submission of income tax returns has been made mandatory for obtaining or maintaining a credit card as well as selling land situated in specific areas in which the deed value exceeds tk. 1,000,000 (Ten Lakhs only).
- The requirement for ETIN has been changed to include proof of submission of 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 Step | Existing Tax rate |
| Up to Tk. 3 Lakhs. | 0 |
| On next Tk. 1 Lakh. | 5% |
| On next Tk. 3 Lakhs | 10% |
| The next Tk. 4 lakhs | 15% |
| The next Tk. 5 lakhs | 20% |
| The rest of the money | 25% |
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 the 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:
- The Tax rate of Publicly Traded Companies (having a minimum 10% share allotted to the general public through IPO) is 20%. However, in the case of infringement, the tax rate can be increased by up to 22.5%.
- The Tax rate on the Publicly Traded Company (having less than 10% share allotted to the general public through IPO) is 22.5%. However, in case of infringement, the tax rate can be increased by up to 25%.
b) The tax rate for non-listed Public and Private Companies is 27.5%. However, in case of any noninfringement, the tax rate can be increased by 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 noninfringement, the tax rate can be increased by 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 noninfringement, the tax rate can be increased by up to 30%.
g) The tax rate of One Person Company (OPC) is 22.5%. However, in case of any infringement, the tax rate can be increased to 25%, and 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 BankBank.
iii) Tax Rate on Banks and Financial Institutions:
The Tax Rate on Publicly traded banks, insurance, and financial institutions (except merchant banks) is 37.5%. On the other hand, for non-publicly traded banks, insurance, and financial institutions, a 40% Tax is to be imposed. Apart from this, a tax rate of 37.5% will be imposed on merchant banks.
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 gold.
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 :
- 5% of tax payable or ;
- 75% of the salary paid to these people or 5 percent of the tax payable, whichever is less
vii) Tax on the information and communication technology (ICT) (Startup Business):
To encourage start-ups relating to ICT, the bindings of all other types of reporting are exempted; one has to submit an income tax return. Moreover, the rate of turnover tax has been fixed at 0.10%.
viii) Tax on Textile Industry:
The current tax rate in the textile sector stands at 15%. This facility will be enjoyed until June 30, 2025.
xi) Tax from Non-residents:
The 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. It may also include inserting a mandatory provision relating to the proof of submission of return in cases where income arises from 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 lac | 5% |
| On income up to the next Tk 10 lac | 10% |
| On the remaining income | 15% |
xi) Deduction at Source :
Bankbank will conduct The ax Deduction from the Source. The source tax rate at the import stage is as follows:
- 3% on HR coil and zinc, raw materials used for manufacturing galvanized iron sheets or steel products.
- 20% source Tax on Bank interest for Company taxpayers
- 1% source tax on export proceeds
- 10% on the payments made to non-residents on account of bandwidth payment, in the case of the non-scheduled payments the tax rate will become 20%.
- 5% source tax on lease rent of water bodies except for the ones owned by the government.
xii) Bangladesh Digital Transformation:
In addition to the existing 22 sectors in the digital transformation of Bangladesh, the following six mixer 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-year 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 and 10% for all other green industries exporting goods and services.
xiv) Incentives for Made in Bangladesh in the production of Home Appliances:
The washing machines, blenders, microwave ovens, electric sewing machines, induction cookers, kitchen hoods, and kitchen knives & kitchen appliances industry will enjoy ten 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:
- Fruit processing
- Vegetable processing
- Production of dairy and dairy products and
- Baby food producers
- The entrepreneur has been given ten years of tax exemption
b) Entrepreneurs manufacturing agricultural machinery have been given tax exemption for ten 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 ten years.
i. Diploma Degree and Vocational Education in all fields of Agricultural Fisheries Science and IT and
- Automobiles, Aircraft, Food Preservation Foot over, Glass Mining Mechanical, Shipbuilding, Leather, Refrigeration, Ceramics, Mechanist, Garments, providing professional training in Design, and Pattern Making, Pharmacy, Nursing, Integrated Medical, Radiology & Imaging, Ultrasound, Dental, Animal Health & Production Services, Clothing & Garment Finishing, Poultry Farming.
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 ten 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 exemptions for ten years.
xix) Ensuring affordable and decentralized medical care:
Income from hospital operation will enjoy tax exemption for ten years provided that-
i) The 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:
- Lease for a period of 5 years-25 years, the Stamp duties will be imposed @ 0.2% of the valuation of the Subject Matter but not exceeding BDT 1,00,00,000
- Lease for more than 25 years and permanent Stamp duties will be imposed @ 0.3% but not exceeding BDT 2,00,00,000
- In other cases, Stamp duty will be imposed @0.3% but not exceeding BDT 3,00,00,000
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:
- BDT 1500 for the General Power of Attorney
- BDT 800 for the Special Power of Attorney
- BDT 2000 for the Power of Attorney (Bank & Financial Institution)
The government is empowered by Section 44(4) (b) of ITO, 1984, to exempt any income, or any portion of it, from Tax Liability as required by Law. Hence, the government, through the Official Gazette, has recently allowed some exemptions other than the ITO in 1984. At this moment, 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 benefit 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 has 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 a 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 tax mentioned above will be payable by order or 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, a loan/interest waived by a commercial bank, Bangladesh Krishi Bank, Rajshahi Krishi Bank, or any leasing company will not be treated as income in the case of an individual.
xxvi) Deemed income (Receipt of loan or gift):
Deposits received by a bank by a financial institution or an organization registered with the 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 received from the spouse or parents (or sons or daughters) of the Assessee and a banking channel or a formal channel involved in the process of such loan or gift shall not be deemed an income under the section mentioned above.
xxvii) 5% special reserve:
As Section 29(1)(v) has been deleted, the 5% special reserve created by the Financial Institution will be admissible from now on.
xxviii) Tax impact on scheme of AmalgAmalgamationtion 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 amalgAmalgamationever, 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 the government Securities under section 32(7) is 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, 1913 or 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 amalgamateCompanyny:
Subsection 8 has been inserted into Section 42 of the ITO, by which the amalgamateCompanyny is given the right to carry forward the accumulated loss and unabsorbed deprecation of ambulatinCompanyny.
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 provision mentioned above for receiving the receipts through bank transfer is applicable for an individual who is assessed as having gross receipts not exceeding Tk. 1,00,00,000 (one Crore only) for agriculture or farming income.
xxxii) Failure to submit a return under Chapter VII:
Proviso (a) of Section 52 has been amended. As per the updateProvisionon, 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:
Hotels, resorts, community centers, and transport agencies having an 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 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) The 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 company, the new TDS rate will be 20%
b) The 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. ThProvisionon is now standing on: “Any registering officer responsible for registering any document in relation to any lease of immovable property for not less than ten 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 has been newly included. Secondly, TDS on any other payments is revised @20% instead of 30%.
xix) Consequences of failure to deduct:
Section 57 has been modified, and new provisions relating to the penalty are added:
a) Whoever fails to comply with the 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 authorities who are responsible for deducting or collecting tax
I) Return of Income: The list of “submission not mandatory” has been amended under section 75 of the ITO. Now, the return of income is not mandatory for the following:
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 Funds 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.
xi) 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 has 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 in which assessment under this section shall be made.
xi) Bar to question to assessment: Section 94B is inserted. This insertion specifies that except for 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.
xi) Start-upStartupox: Section 111A has been inserted. The following is some of the notable information about this newly addeProvisionon:
a) A startup company has an annual turnover not exceeding Tk 1,000,000,000 (one hundred crores) and is not a subsidiary or amalgamateCompanyny
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 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.
xiv) 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.
xv) 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:
- applying for a loan exceeding Taka five lakh from a bank or a financial institution;
- becoming a director or a sponsor shareholder of a company;
- Obtaining or continuing an import registration certificate, export registration certificate, or trade license in the area of a city corporation or paurashava; or s license or enlistment as a surveyor of general insurance; or license as a Nikah Registrar under the Muslim Marriages and Divorces (Registration) Act. 1974 (LII of 1974);
- obtaining registration of co-operative society;
- obtaining registration, by a resident, of the deed of transfer, banana, or power of attorney or selling of land, building, or an apartment situated within a city corporation or a paurashava of a district headquarters or cantonment board, where the deed value exceeds Taka ten lakh; or obtaining a drug license, a fire license, environment clearance certificate, BSTI licenses and clearance;
- obtaining or maintaining a credit card;
- obtaining or continuing the membership of the professional body as a doctor, dentist, lawyer, chartered accountant, cost and management accountant, engineer, architect or surveyor, or any other similar profession;
- obtaining the admission of a child or a dependent in an English medium school providing education under the international curriculum or English version of the national curriculum, situated in any city corporation, district headquarters, or Paurashava;
- obtaining or continuing the connection of electricity in a city corporation or cantonment board;
- opening a letter of credit for theort;
- opening postal savings accounts of Taka exceeding five lakhs;
- opening and continuing bank accounts of any sort with a credit balance exceeding Taka ten lakhs; or purchasing savings instruments (Sanchayapatra) of Taka exceeding five lakhs;
- participating in any election in upazila, Saurashtra, Zilla parishad, city corporation, or Jatiya Sangsad;
- receiving any payment which is an income of the payee classifiable under the head “Salaries” by any person employed in the management or administrative function or any supervisory position in the production function; or receiving any payment which is an income of the payee classifiable under the head “Salaries” by an employee of thGovernmentnt or an authority, corporation, body or units of thGovernmentnt formed by any law, order or instrument being in force, if the employee, at any time in the income year, draws a basic salary of taka sixteen thousand or more;
- receiving any payment by a resident from a company on account of any advisory or consultancy service, catering service, event management service, supply of manpower, or providing security service;
- releasing overseas grants to a non-government organization registered with the NGO Affairs Bureau or to a Micro Credit Organisation having a license with the Micro Credit Regulatory Authority;
- selling of any goods or services by any digital platform to consumers in Bangladesh.
- applying for the membership of a club registered under কোম্পানি আইন, ১৯৯৪ (১৯৯৪ সনের ১৮ নং আইন) and Societies Registration Act, 1860 (Act No. XXI of 1860);
- submitting tender documents by a resident for theply of goods, execution of a contract, or rendering a service;
- submitting a bill of entry for import into or export from Bangladesh;
- submitting a plan for construction of the building for the purpose of obtaining approval from Rajdhani Unnayan Kartripakkha (Rajuk), Chittagong Development Authority (CDA), Khulna Development Authority (KDA), and Rajshahi Development Authority (RDA), or other concerned authorities in any city corporation or paurashava;
xvi)Displaying proof of submission of return:
Section 184 C has been amended. Now, an individual with business income needs to display this proof of return at a conspicuous place on such assessee’s business premises, and the penalty will be imposed for any non-compliance in this regard.
xvi) 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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