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Customs Duty, Excise Duty, Travel Tax, Gift Tax and Value Added Tax Customs Act 1969

Historical Background
In 1878, at the beginning of the British regime in the Indian Subcontinent, the Sea-Customs Act 1878 was introduced. The Land Customs Act was promulgated in 1924. By consolidating and amending these two Acts relating to customs, the Customs Act 1969 (Act IV of 1969) was prepared and promulgated by the then Pakistan Government and published in the Pakistan Gazette Extraordinary on 8 March 1969 at pages 329-402. This Act came into force on 1 January 1970 [ vide Notification No. S.R.O. 267(i)69 dated 31 December 1969 published in the Pakistan Gazette Extraordinary on 31 December 1969 at page 1035]. The Customs Act 1969 was adopted by the Government of Bangladesh by the Presidents Order No. 48 of 1972.

Objectives of the Customs Act 1969


At the beginning, the objective of the Customs Act 1969 was to consolidate both the sea customs and land customs and also to incorporate air customs in law. The general objective of the Act is to levy and collect customs-duties and also to provide for other allied matters (such as for prevention of smuggling and protection of domestic industries).

Customs Procedure
The Customs Act is related to import and export of goods [as defined u/s 2(l)], which are not prohibited to be brought into Bangladesh u/s 151. The goods are brought into or taken out of Bangladesh under the provisions of the Customs Act. The conveyance [defined u/s 2(g)] entering Bangladesh from any place outside Bangladesh with imported goods must land at a customs-area [defined u/s 2(i)], which is usually a customs-station [defined u/s 2(k)] and which includes other area where imported goods or goods for export are ordinarily kept by the customs authorities. The person-in-charge [defined u/s 2(q)] of the conveyance is liable to comply with this provision u/s 42 2. The customs-station may be a customs-port [defined u/s 2(j)], customs-airport [defined u/s 2(h)], or any land customs-station [defined u/s 2(m)]. For control purposes, no vessel whether laden or in ballast, shall depart from any customs-port without a portclearance granted u/s 513 by the appropriate officer of customs [defined u/s 2(b)] and no conveyance other than a vessel shall depart from a land customs-station without a written permission granted u/s 52 4 by the appropriate officer of customs. Besides u/s 645, goods are usually not to be loaded or unloaded or waterborne except in the presence of the appropriate officer of customs. And usually goods are also not to be loaded or unloaded or passed on certain days at certain times u/s 65 6 and they are not to be loaded or unloaded except at approved places u/s 667. But u/s 678, the National Board of Revenue (NBR) may exempt from the provisions of sections 65 and 66. For imposition of customs duty, the customs authorities assess the duty u/s 80 and 819.

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Section 15 covers Prohibitions. Section 42 covers Arrival of conveyance. 3 Section 51 covers No vessel to depart without port-clearance. 4 Section 52 covers No conveyance other than vessel to leave without permission. 5 Section 64 covers Goods not to be loaded or unloaded or water-borne except in presence of officer. 6 Section 65 covers Goods not to be loaded or unloaded or passed on certain days or at certain times. 7 Section 66 covers Goods not to be loaded or unloaded except at approved places. 8 Section 67 covers Power to exempt from sections 64 and 66. 9 Section 80 covers Assessment of duty and section 81 covers Provisional assessment of duty.

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Statutory Definitions
1. Definition of Goods: u/s 2(l) Goods means all movable goods and includes (i) conveyances, (ii) stores and materials, (iii) baggage, (iv) currency and negotiable instruments, and (v) electronic daaata.10 2. Definition of Conveyance: u/s 2(g) Conveyance means any means of transport used for carrying goods or passengers such as a vessel, aircraft, vehicle or animal. 3. Definition of Customs-area: u/s 2(i) Customs-area means the limits of the customs-station specified u/s 10 (specification of the limits of any customs-station, and approval of proper places in any customs-station for the loading and unloading of goods or any class of goods) and includes any area in which imported goods or goods for export are ordinarily kept before clearance by the customs authorities. 4. Definition of Customs-station: u/s 2(k) Customs-station means any customs-port, customs-airport or any land customs- station. 5. Definition of Customs-port: u/s 2(j) Customs-port means any place declared under section 9 to be a port for the shipment and landing of goods. Section 9 deals with the provisions on Declaration of customs-port, customs-airports, etc. 6. Definition of Customs-airport: u/s 2(h) Customs-airport means any airport declared under section 9 to be a customs-airport. 7. Definition of Land customs-station: u/s 2(m) Land customs-station means any place including an inland river port declared under section 9 to be a land customs-station. 8. Definition of Person-in-charge: u/s 2(q) Person-in-charge means(i) in relation to a vessel, the master of the vessel; (ii) in relation to an aircraft, the commander or pilot in-charge of the aircraft; (iii) in relation to a railway train, the conductor, guard or other person having the chief direction of the train; and (iv) in relation to any other conveyance, the driver or any other person having control of the conveyance. 9. Definition of Appropriate officer: u/s 2(b) Appropriate officer, in relation to any functions to be performed under the Customs Act, means the officer of customs to whom such functions have been assigned by or under the Customs Act. 10. Definition of Smuggle: u/s 2(s) Smuggle means to bring into or take out of Bangladesh in breach of any prohibition or restriction for the time being in force; or evading payment of customs-duties or taxes leviable thereon, (a) narcotics, narcotic drugs or psychotropic substance, or (b) gold bullion, silver bullion, platinum, palladium, radium, precious stones, currency, manufactures of gold or silver or platinum or palladium or precious stones, or any other goods notified by the Government in the official Gazette, in each case exceeding Taka ten lakhs in value; or (c) any goods concealed in any manner in any place on board any ship, vessel or aircraft or in any other vehicle or in any baggage or cargo or on person; or (d) any other goods by any route other than a route declared under section 9 or 10 from any place other than a customs-station; and includes an attempt, abatement or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly.

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In the definition of goods, electronic data have been included by the Finance Act 2001.

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Duties under the Customs Act 1969


The duty collected mainly under the Customs Act 1969 is the Customs Duty (CD). However, as per the provisions of the Customs Act, following are the duties which can be imposed under this Act: (1) General Customs Duty in the name of import duty or export duty u/s 18(1) on all the goods prescribed in the First Schedule of the Customs Act; (2) Regulatory Duty u/s 18(2) on all or any of the goods prescribed in the First Schedule of the Customs Act; (3) Countervailing Duty u/s 18A (introduced by the Finance Act 1995) on importation of subsidized goods; (4) Anti-dumping Duty u/s 18B (introduced by the Finance Act 1995) on importation of goods at an export price less than its normal value; and (5) Safeguard Duty u/s 18E (introduced by the Finance Act 1997) on importation of any article in increased quantities causing serious injury to domestic industry.

Rates of Duties under the Customs Act 1969


The duty collected mainly under the Customs Act 1969 is the Customs Duty (CD). However, as per the provisions of the Customs Act, following are the duties which can be imposed under this Act: (1) General Customs Duty: Such rates are prescribed in the First Schedule of the Customs Act [u/s 18(1)]. (2) Regulatory Duty: Such rates are prescribed through notification in the official Gazette, these rates shall not be more than 50% of the rates of customs duty prescribed in the First Schedule of the Customs Act, or at a rate not exceeding 100% of the value of such goods as determined u/s 25 (i.e., the assessment value for imposing customs duty) [u/s 18(2)]. (3) Countervailing Duty: The amount of such duty shall not exceed the amount of subsidy given on production or transportation of goods imported into Bangladesh [u/s 18A]. (4) Anti-dumping Duty: The amount of such duty shall not exceed the margin of dumping represented by the reduced value from the normal value of the goods imported into Bangladesh [u/s 18B]. (5) Safeguard Duty: The rate of the duty shall be fixed by the Government through notification in the official Gazette in respect of the goods imported into Bangladesh in such increased quantities and under such conditions that such importation may cause or threaten to cause serious injury to domestic industry [u/s 18E].

Value of Goods for Customs Duties Purpose under the Customs Act 1969
For the purpose of imposition of customs duty, the assessable value shall be determined under section 25 or section 25A of the Customs Act 1969. Sec. 25: Value of Goods for Assessment Purposes Actual price: The value of any dutiable goods is to be the actual price, that is, the price actually paid or payable, or the nearest ascertainable equivalent of such price, at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in course of international trade under fully competitive conditions, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for sale or offer for [sec. 25(1)]. Price determined under rules made: Subject to the provisions of sub-section (1) of section 25, the price in respect of imported goods shall be determined in accordance with the rules made in this behalf [sec. 25(2)]. Under this provision, the Customs Valuation (Determination of Value of Imported Goods) Rules, 2000 has been promulgated on 23.02.2000 as an S.R.O. No. 57-Ain/2000/1821/Shulka, subsequently amended by S.R.O. No. 139-Ain/2002/1958/Shulka dated 06.06.2002. Sec. 25A: Pre-Shipment Inspection Agencies and Assessment on the basis of their Certificates For the purpose of the Customs Act, the Government may, by notification in the official gazette, appoint pre-shipment inspection agencies (PSI) and declare that the quality, quantity, price, description and customs classification of any goods verified and certified in the

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prescribed manner by a PSI shall be accepted as the basis for assessment [sec. 25A(1), 25A(2)]. For the purposes of section 25A, the price means value of the goods determined in accordance with sub-sections (1) and (2) of section 25 [sec. 25A(2)]. Mandatory PSI for imports was made effective from 15 February 2000.

Method of Valuation under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2000
Under rule 3(a), for customs valuation of imported goods, value shall be transaction value [prescribed in rule 4]. Under rule 3(b), if the transaction value cannot be determined for any imported goods, the value of the goods shall be determined respectively under rule 5 [prescribed as exchange value of identical goods], under rule 6 [prescribed as exchange value of similar goods], under rule 7 [prescribed as deductive value], under rule 8 [prescribed as computed value] or under rule 9 [prescribed as other methods]. But on application of the importer and with approval of the Commissioner of Customs, provisions of rule 7 and rule 8 can be applied in reverse sequence. 1. Transaction Value [rule 4]: Unbiased value between the buyer and the seller, subject to the following conditions: (a) absence of constraints on the buyer in case of transfer or use of the goods other than (i) constraints imposed under any law in force or any government authority, (ii) constraints relating to limitation on geographical area for the purpose of re-sale of the goods, or (iii) constraint that cannot influence the actual price of the goods; (b) the sale or determination of the value of the goods are not subject to any condition or consideration, for which the value of the goods cannot be determined; (c) except for appropriate adjustment under rule 10, the seller is not directly or indirectly entitled to any fraction of any income earned as a result of resale, transfer or use of such goods; (d) the buyer and the seller are not related. 2. Exchange Value of Identical Goods [rule 5]: Exchange value of identical goods is the transaction value of the identical goods. Identical goods means such imported goods, which (i) are alike in all respects, including physical characteristics, standard and reputation of the goods under process for determination of value; and (ii) are produced in the country in which the goods under process for determination of value are produced [rule 2(b)]. 3. Exchange Value of Similar Goods [rule 6]: Exchange value of similar goods is the transaction value of the similar goods. Similar goods means such imported goods, which (i) are not alike in all respects, but the characteristics and ingredients are alike and which is able to perform alike activities and commercially exchangeable on the basis of trademark, qualities and reputation of the goods with the goods under process for determination of value; and (ii) are produced in the country in which the goods under process for determination of value are produced [rule 2(h)]. 4. Deductive Value [rule 7]: Deductive value is the maximum unit sale price on the other goods imported at same time or almost same time or identical or similar goods, taken from a buyer who is not personally related with the seller after deducting the following costs: (a) commission, profit and other general expenses relating to sales of the imported other goods, or identical or similar goods in Bangladesh, (b) transportation, insurance and other related costs for transportation of those goods in Bangladesh, (c) costs of goods and services mentioned in rule 10(1)(b), where applicable, supplied free of costs or at reduced price and not included in the price paid or payable [i.e., inputs, elements, parts or similar any goods included in imported goods; machinery, dice, mould and similar any goods used in production of imported goods; inputs used in production of imported goods; engineering works, development works, arts, design, plan and sketch required for production of the imported goods and performed outside Bangladesh], (d) duty, tax and other charges applicable on importation of such goods and sales in Bangladesh. 5. Computed Value [rule 8]: Computed value is the sum total of the following costs: (a) production costs of imported goods or costs of inputs of production and costs of processing and other costs required in producing such goods; (b) amount of profit and general expenses reflected generally in the exporting country of the goods under process for determination of

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value on sale of identical or similar goods produced for export in Bangladesh, (c) costs mentioned in rule 10(2) [i.e., transportation costs up to place of importation; costs of loading, unloading and handling; and insurance costs]. Under proviso to rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2000 , where transportation cost [which shall not exceed 20% of FOB value], costs of loading, unloading and handling, and insurance cost are not determinable, they shall be as follows: Transportation cost = 20% of FOB value Costs of loading, unloading and handling = 1% of FOB value + Transportation cost + Insurance cost Insurance cost = 1% of FOB value. 6. Other Methods [rule 9]: Here, the value shall be determined after following any reasonable method consistent with the provisions of other rules and any other price related information of the concerned goods including Internet-based information.

Duties, Taxes and Other Charges Collected by the Customs Authority at Import Stage
Although there are several duties under the Customs Act 1969, the major tax collected under this Act is Customs Duty (CD). Including this CD, the duties, taxes and fees which are collected by the customs authority at import stages are: Customs Duty (CD) under the Customs Act 1969, Regulatory Duty (RD) under the Customs Act 1969, Supplementary Duty (SD) under the VAT Act 1991, Value Added Tax (VAT) under the VAT Act 1991, and Advance Income Tax (AIT) under the Income Tax Ordinance 1984. At import stage, Infrastructure Development Surcharge (IDSC) was introduced by the Finance Act 1997 from FY 1997-98 and withdrawn from 2007-08 u/s 70 of the Finance Ordinance 2007. The rate of the IDSC was 2.5% from FY 1997-98 to FY 2001-02, 3.5% in 2002-03, and thereafter 4% from 2003-04 to 2006-07.

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Computation of Duties and Taxes at Import Stage: Examples


Example-1: For Importers other than Commercial Importer The following procedure is observed by customs personnel for computation of duties and taxes on imports: Assessable Value (AV) : The determination of AV is based on the principle of valuation of imported goods under Section 25 or Section 25A of the Customs Act, 1969. The value for the imposition of customs duty (CD) is the actual price, that is, the price actually paid or payable, or the nearest ascertainable equivalent of such price, at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in course of international trade under fully competitive conditions, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for sale or offer for sale, shall be the value [u/s 25(1) of the Customs Act], but the Government may, by notification in the official Gazette, fix, for the purpose of levying customs duties, tariff values or minimum values for any goods imported as chargeable with customs duty ad valorem [u/s 25(3) of the Customs Act]. The assessable value under section 25(1) of the Customs Act is called the transaction value to be determined under the Customs Valuation (Determination of the Value of Imported Goods) Rules 2000 . Under section 25A of the Customs Act, the assessment of customs duty will be on the basis of the certificate issued by a pre-shipment inspection agency (PSI) appointed under the Pre-Shipment Inspection Ordinance 1999 and the Pre-Shipment Inspection Rules 2002. Under section 25B of the Customs Act, it is mandatory for the importers to have their importable goods inspected by a PSI agency before or at the time of shipment of those goods on board a vessel, aircraft or other conveyance, if not exempted otherwise from this compulsory inspection by a PSI agency. Then, the import duty shall be imposed on the basis of price certified by a PSI agency through the Clean Report of Findings (CRF). In this CRF, the PSI has to mention the CIF (cost, insurance and freight) value. However, the Review Committee constituted by the NBR u/s 193C of the Customs Act can review any matter related to the CRF issued by the PSI agencies. From 2009-10, the import-stage SD is to be imposed on value on which the import duty is imposable under sections 25 or 25A of the Customs Act plus import duty and other duties and taxes (except AIT, SD and VAT) [section 7(2)(a) of the VAT Act, amended by the Finance Act 2009]. But practically, the base for SD is AV plus CD, due to the exclusion of AIT, SD and VAT. To determine the tax-base of VAT at import-stage, the assessable value (AV) for imposition of import duty u/s 25 or 25A of the Customs Act is added with the duties and taxes at import stage such as customs duty (CD) u/s 18(1) of the Customs Act 1969, regulatory duty (RD) u/s 18(2) of the Customs Act 1969, and supplementary duty (SD) u/s 7 of the VAT Act 1991,

but the tax-base of VAT does not include the advance income tax (AIT) u/s 53 of the Income Tax Ordinance 1984 and pre-shipment inspection agencys service charge (PSISC) u/s 14 of the Pre-Shipment Inspection Ordinance 1999 and u/r 32 of the Pre-Shipment Inspection Rules 2002. Thus, the tax base of VAT at import stage is equal to AV plus CD plus RD plus SD, where the tax base for RD is AV, and that for SD is AV plus CD. The AV is computed by first converting CIF (cost, insurance and freight) value of imports in US dollars or other foreign currency into Taka by using the current months conversion rate between US $ (or the foreign currency in question) and Bangladesh Taka as declared by Custom House, Chittagong.

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In those instances where assessable value is based on tariff value, tariff value replaces C&F (cost and freight) value, and CIF value will be C&F value plus insurance (I) expense. The insurance expense will be 1% of C&F value or actual amount. The following illustration might be useful to importers for estimating duties and taxes: Example: For a certain import, let C&F cost = Tk. 100.00 Insurance cost = Tk. 1.00 (1% of C&F) or actual (n.a.) Assessable Value = Tk.101.00. Customs Duty (CD) : Ad valorem CD is computed by taking the appropriate rate of duty times the AV. Hence, if CD rate is 25%, then CD is 25% of AV. For the previous example, customs duty will be 25% of Tk. 101.00, which is Tk. 25.25. Supplementary Duty (SD) : SD is computed on duty paid value (Assessable value + Customs Duty). So, if SD rate is 20%, the computed value of SD in the previous example will be 20% of Tk. (101.00 + 25.25 = 126.25), which is Tk. 25.25. Value Added Tax (VAT) : The tax base for VAT is different. VAT is calculated after CD and SD are added to AV. Thus, given a VAT rate of 15%, total computed VAT in the previous example will be 15% of (AV+CD+SD), or 15% of (Tk.101.00+Tk.25.25+Tk.25.25), which is 15% of Tk.151.50. Computed amount of VAT in this case is Tk.22.725. Advance Income Tax (AIT) : With few exceptions, explained above, AIT of 3% on assessable value (AV) is assessed on all imports. AIT in the previous example would be 3% of Tk.101.00, which amounts to Tk.3.03. Thus, the tax breakup for an import of Tk.100 (C&F) in the previous example is as follows: Duties (CD + SD) Tk. 50.50 (Tk. 25.25 + Tk.25.25) VAT Tk. 22.73 AIT Tk. 3.03 Total Taxes/Duties ______Tk. 76.26 But if Assessable Value (AV) is taken as Taka 100, Total Tax Incidence (TTI) shall be Taka 75.50 or effective TTI is 75.50% of AV. The above computation is made only for illustration of duty/tax computation and rates used in the example may not reflect actual taxes/duties.

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Example-2: For Commercial Importers From FY 2010-11, the commercial importer has to pay import-stage VAT deduction at source (VDS) at 3% of total value at import stage [i.e., {(Assessable Value + Customs Duty + Supplementary Duty) + 20% of (AV+CD+SD)}x15%] in addition to other taxes [u/s 6(4); SRO No. 207-Ain/2010/556-Musak, dated 10.06.2010; rule 18D]. Example: For a certain import, let C&F cost = Tk. 100.00 Insurance cost = Tk. 1.00 (1% of C&F) or actual (n.a.) Assessable Value = Tk.101.00. Customs Duty (CD) : Ad valorem CD is computed by taking the appropriate rate of duty times the AV. Hence, if CD rate is 25%, then CD is 25% of AV. For the previous example, customs duty will be 25% of Tk. 101.00, which is Tk. 25.25. Supplementary Duty (SD) : SD is computed on duty paid value (Assessable value + Customs Duty). So, if SD rate is 20%, the computed value of SD in the previous example will be 20% of Tk. (101.00 + 25.25 = 126.25), which is Tk. 25.25. Value Added Tax (VAT) : The tax base for VAT is different. VAT is calculated after CD and SD are added to AV. Thus, given a VAT rate of 15%, total computed VAT in the previous example will be 15% of (AV+CD+SD), or 15% of (Tk.101.00+Tk.25.25+Tk.25.25), which is 15% of Tk.151.50. Computed amount of VAT in this case is Tk.22.725. Advance Income Tax (AIT) : With few exceptions, explained above, AIT of 3% on assessable value (AV) is assessed on all imports. AIT in the previous example would be 3% of Tk.101.00, which amounts to Tk.3.03. VAT Deduction at Source (VDS) : For commercial importer, VDS of 3% on total value of Taka 181.80 [=Taka 255.03 x 110% = (AV Tk. 101.00 + CD Tk. 25.25 + SD Tk. 25.25)x120%] . It would be Tk. 5.45 for the foregoing example. Thus, the tax breakup for an import of Tk.100 (C&F) in the previous example is as follows: Duties (CD + SD) Tk. 50.50 (Tk. 25.25 + Tk.25.25) VAT Tk. 22.73 AIT Tk. 3.03 ATV Tk. 5.45 Total Taxes/Duties ______Tk. 81.71 But if Assessable Value (AV) is taken as Taka 100, Total Tax Incidence (TTI) shall be Taka 80.90 or effective TTI is 80.90% of AV.

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Excise Duty
According to Kohlers Dictionary for Accountants (1984), excise tax is a tax levied on the manufacture, sale, or purchase of any commodity or service. The basis of tax computation may be ad valorem (as in a value-added tax) or in rem (i.e., on the physical units). An excise duty is usually imposed on local production and activities.

Excise Duty under the Excise and Salt Act 1944: According to the Excise and Salt Act 1944, Excise Duty is a tax imposed on goods manufactured or produced and services provided or rendered in Bangladesh. Under section 2(d) of the Excise and Salt Act 1944, excisable goods means goods specified in Part I of the First Schedule as being subject to a
duty of excise and includes salt. Under section 2(dd) of the Act, excisable services means services, facilities and utilities specified in Part II of the First Schedule as being subject to a duty of excise.

Excisable Goods and Services under the Excise and Salt Act 1944: Excisable Goods: Part-I of the First Schedule of the Excise and Salt Act 1944 have been repealed and
hence there are no excisable goods from FY 2004-05 (previously in 2003-04, the excisable goods included products of Spinning and Weaving Industries, betel nuts, unmanufactured tobacco and salts).

Excisable Services: Part-II of the First Schedule has been substituted to incorporate services
rendered by airline along with the existing services rendered by banks. Thus, excisable services are: (1) Services rendered by banks through maintaining a deposit account; and (2) Services rendered by airline through issuing a domestic Airline Ticket per seat for single journey to ultimate airport of destination.

Rates of Excise Duty:


Following are the changes in the rates of excise duty (SRO No. 119-Ain/2009/302-Abgari, dated 11.06.2009): (1) Service Rendered by Bank [E032.00]: The exemption level for excise duty on bank deposit has been increased from Tk. 10,000 to Tk. 20,000 and the duty rate (per deposit account per year) for the higher deposit range has been not been changed.
Balance of a deposit account Up to Tk. 10,000 Tk. 10,000 to Tk. 1 lakh Tk. 1 lakh to Tk. 10 lakh Tk. 10 lakh to Tk. 1 crore Tk. 1 crore to Tk. 5 crore Above Tk. 5 crore 1.7.04 to 30.6.09 Nil Tk. 120 Tk. 250 Tk. 550 Tk. 2,500 Tk. 5,000 Balance of the account Up to Tk. 20,000 Tk. 20,000 to Tk. 1 lakh Tk. 1 lakh to Tk. 10 lakh Tk. 10 lakh to Tk. 1 crore Tk. 1 crore to Tk. 5 crore Above Tk. 5 crore New (since 1.7.2009) Nil Tk. 120 Tk. 350 Tk. 1,000 Tk. 5,000 Tk. 10,000

(2) Service Rendered by Airline [E033.00]: Since FY 2004-05, under the Recovery of Excise Duty on Domestic Airline (Airline Ticket) Rules 2004 (S.R.O. No. 182-Ain/2004/300-Abgari dated 10.06.2004), the excise duty on domestic airline has been collected at a fixed rate. This duty rate on domestic air ticket has been increased from Tk. 200 to Tk. 300 as follows:
Services Rendered by Airline Services rendered by airline through issuing a domestic Airline Ticket per seat for single journey, which may involve one or more stops over on its way to ultimate airport of destination (b) Foreign national of Diplomatic class, showing his/her diplomatic passport at the Airline Ticket counter and check-in counter (a) Rate up to 30.6.2009 Tk. 200 Rate from 01.7.2009 Tk. 300

Nil

Nil

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Travel Tax
[Bengali version of the Travel Tax Act 2003 published in the Official Gazette on 27 February 2003 and amended by the Finance Act 2003 and the Finance Act 2005.] Travel tax is imposed in Bangladesh only in case of foreign travel. As per section 3(1) of the Travel Tax Act 2003, maximum travel tax per passenger who travels from Bangladesh to any other country, shall be Taka 10,000. But until the rate of travel tax prescribed u/s 3(2), rates mentioned u/s 3(3) are applicable. Government promulgated the Travel Tax Rate Determination Rules 2004 as an SRO [S.R.O. No. 295Ain/2004 dated 13.10.2004] and rule 3 of the Rules prescribed travel tax rates for air travel, rule 4 for travel by sea and rule 5 for travel by land. Following are the effective travel tax rates. Trave l by Air Travel to Travel Tax Rate per Passenger
Under section 3(3) of the Travel Tax Act 2003, effective up to 12.10.2004 Any country in North America, South America, Europe, Africa, Australia, New Zealand, or Far East Rate under Travel Tax Rate Determination Rules 2004, w.e.f. 13.10.2004

Taka 2,500 Taka 800 Taka 1,800 Taka 500 Taka 800

Taka 2,500 Taka 800 Taka 1,800 Taka 300 Taka 500

Land Sea

Any SAARC country Any country except mentioned above Any country Any country

countries

From 1 July, 2004, the above rate will be 50% in case of child having age more than 5 years, but not exceeding 12 years.

Exempted Persons:
Following passengers shall be exempted from travel tax u/s 4(1) and (4(2) of the Travel Tax Act: (a) Child [up to age of 5 years];* (b) Patient suffering from Cancer; (c) Blind person; (d) Invalid person with stretcher cases; (e) Airlines crew on duty; (f) Members of the diplomatic mission in Bangladesh holding diplomatic status and the members of their family; (g) Officials of the United Nations and the members of their family; (h) Any person travelling to Saudi Arabia for Hajj and Umrah; (i) Transit passenger without Bangladesh VISA who shall not stay in Bangladesh for more than seventy two hours; and (j) Bangladeshi nationals working in any airlines and enjoying free air tickets or tickets issued at a concession rate.

According to the original provision, child means any passenger having age not exceeding 18 years. Finance Act 2004 has amended the definition of child as a passenger having age not exceeding 5 years.

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Practical Problems on Excise Duty and Travel Tax


Problem
Mr. Tanveer Haque, a Dhaka-based businessman, has traveled by air extensively both in Bangladesh and abroad. During the last income year, he went to Singapore 6 times, to Germany once and to the USA twice. He traveled India 5 times 3 times directly by air from Dhaka and twice by air from Dhaka to Jessore and then by road to Kolkata. He also traveled to Chittagong 10 times. In all cases, Mr. Haque returned to Dhaka by using the same route through which he went to the destination. As per Part-II of the First Schedule to the Excise and Salt Act 1944, the rate of excise duty is: Tk. 300 for services rendered by airline through issuing a domestic Airline Ticket per seat for single journey to ultimate airport of destination. As per the Travel Tax Act 2003, following are the travel tax rates:
Travel by Air Travel to Any country in North America, South America, Europe, Africa, Australia, New Zealand, or Far East Any SAARC country Any country except countries mentioned above Any country Any country Travel Tax Rate per Passenger Taka 2,500 Taka Taka Taka Taka 800 1,800 300 500

Land Sea

Mr. Tanveer Haque maintains his bank deposit accounts with a reputed scheduled bank. Following are the particulars of his bank balances during the last income year:
Type of deposit account Current deposit Savings deposit Fixed deposit Debit Balance (Taka) Minimum Maximum 5,000,000 10,000,000 ----------------Credit Balance (Taka) Minimum Maximum 8,000,000 20,000,000 800,000 2,000,000 220,000 250,000

Solution:
Computation of Travel Tax:
Travel by Air Travel to Germany USA India Singapore India Time s 1 2 3 6 2 Travel Tax Rate Taka 2,500 Taka 2,500 Taka 800 Taka 1,800 Taka 300 Total Total Travel Tax (Taka) 2,500 5,000 2,400 10,800 600 21,300

Land

Computation of Excise Duty: Excise Duty on Domestic Travel:


Travel by Air Travel Dhaka to Jessore Jessore to Dhaka Dhaka to Chittagong Chittagong to Dhaka Times 2 2 10 10 Total Excise Duty at Tk. 300 per seat per journey (Taka) 600 600 3,000 3,000 7,200 Excise Duty (Taka) 5,000 1,000 350 6,350

Excise Duty on Bank Services:


Type of deposit account Current deposit Savings deposit Fixed deposit Maximum Debit/Credit Balance (Tk.) 20,000,000 2,000,000 250,000 Total

Total Excise Duty: Tk. 7,200 + Tk. 6,350 = Taka 13,550. Total Travel Tax and Excise Duty: Tk. 21,300 + Tk. 13,550 = Taka 34,850.

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Gift Tax :
Charge of Gift Tax Gift Tax is imposed under the Gift Tax Act 1990 (Act No. 44 of 1990). Previously gift tax was imposed under the Gift Tax Act 1963 (Act No. 14 of 1963) which was repealed under section 4 of the Finance Act 1985. The gift tax is leviable on gifts made in any financial year on and from 1 July 1990 at the rates prescribed in the Schedule. Gift tax is a direct tax and under section 3 of the Gift Tax Act 1990, a person is liable to pay gift tax only if he makes a taxable gift. Income Tax Authority is given the power to impose, collect and recover the gift tax. Definition of Gift Gift means the transfer by one person to another of any movable or immovable property voluntarily and without any consideration of any moneys worth [section 2(1)(f) of the Gift Tax Act 1990]. Exemptions from Gift-Tax: Section 4 Under section 4 of the Gift Tax Act 1990, following gifts made by any person are exempted for gift tax purpose: (1) Gift of any property situated outside Bangladesh. (2) Gift to the Government or any local authority. (3) Gift to the following funds or institutions, for charitable purposes: (i) any University established under the law in force in Bangladesh or any educational institution including polytechnic institute, recognized by the Education Board or recognized or run by the Government; (ii) any hospital recognized or run by the Government or any local authority; (iii) any flood or disaster management fund established or approved by the Government; (iv) such institution or funds for religious or charitable purposes, not being a private religious institution or fund which does not ensure for the benefit of the public, as are established in Bangladesh or to any institution established for religious or charitable purposes and registered under any law for the time being in force, up to 20% of the total income determined for the concerned year or Taka one lakh, whichever is less. (4) Gift to dependent relative up to Taka 20,000 on the occasion of his marriage. (5) Gift by way of payment of policy of insurance or annuity for any person (other than wife) dependent upon him for support and maintenance up to Taka 20,000. (6) Gift under a will. (7) Gift in contemplation of death. (8) Gift to sons, daughters, father, mother, his or her spouse, own brothers and sisters. In addition to the above exemption, gifts made in any financial year up to Taka 20,000 are exempt from gift tax. The Government may by notification through official Gazette exempt any class of gift or any class of persons from gift tax. Under section 20, the provisions of the Gift tax Act shall not apply to gifts made by: (1) A body corporate established or constituted by or under any law. (2) Any institution or fund, income of which is exempt from income tax under paragraph 1 and paragraph 2 of Part A of the Sixth Schedule of the Income Tax Ordinance 1984 as follows: Income derived from house property held under trust or other legal obligation (not applicable to an NGO registered with NGO Affairs Bureau) [paragraph 1, Sixth Schedule, Part A, ITO]. Income of a religious or charitable institution derived from voluntary contributions [paragraph 2, Sixth Schedule, Part A, ITO]. Determination of the Value of Gifts: Section 5 The value of the property under gift other than cash shall be the value which it would fetch if sold in the open market on the day of gift. If the property is not saleable in the open market, the gift tax official

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[Deputy Commissioner of Tax (DCT) under the Income Tax Ordinance 1984] shall determine its value according to the rules prescribed for this purpose. Under rule 6 of the Gift tax Rules 1990: (1) value of a policy will be the amount of money which can be received if the gifted policy would have been encashed on the day of gift; (2) in case of shares of private limited company or firm, value of the share will be determined in proportion to the net assets of the company or firm of the year in which the shares were gifted. Return of gifts Under section 7 of the Gift tax Act 1990, gift tax return for any financial year during which any taxable gift was made shall be submitted to the DCT before 15 th September of the next assessment year in a form prescribed under rule 3. Rates of Gift Tax Value of all taxable gifts On the first Taka 5,00,000 On the next Taka 10,00,000 On the next Taka 20,00,000 On the balance Rate of Gift Tax 5% 10% 15% 20%

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