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What is VAT (Value Added Tax)?

Value-added tax (VAT) is an indirect tax on the supply of goods and


services by a person/entity/VAT registered (VAT payer). It is normally
charged at a flat rate, based on the amount paid for the goods or
services. Usually it is included in the price so that the price you see is
the price you pay. VAT is collected at different stages. VAT is rebate
based system.

Imposition of VAT:
Goods
Services

VAT-able Goods or Services/VAT Exempted Goods or Services?


Goods excluded or not mentioned in Schedule-I of VAT Act
Services excluded or not mentioned in Schedule-II of VAT Act
Other than Schedule-I & II, Govt. declared exempted through SRO time to time

Rate of VAT (Value Added Tax)?


15%
0%
1. Imposition of Value Added Tax @15%:
- All goods imported in Bangladesh except mentioned in Schedule One
- All goods supplied except in mentioned in Schedule One
- All services provided in Bangladesh except mentioned in Schedule Two

2. Imposition of Value Added Tax @0%:


- Export or deemed export from Bangladesh
- Supplied goods or services in exchange of foreign currency under any international
agreement or understanding waiving of VAT or SD or both
- Goods supplied and consumed outside Bangladesh to any transport moving outside
from Bangladesh

VAT Act & Rules 1991 Covers

Value Added Tax (VAT):


Turnover Over Tax (TOT)
Supplementary Duty (SD)

What are differences between VAT exempted and


zero rated VAT goods or services?

Important Definition
Input means: Except land, labor, building, office equipment and transports, all sorts of raw
materials, any gas, any material used as fuel, packaging material, service, machinery and spare
parts;
In case of trading-goods- imported, purchased, acquired or otherwise procured in any way for
sale, exchange or to transfer in any other manner;
Input Tax means the Value Added Tax paid on inputs imported by a registered person or purchased
by him from any other registered person.
Producer or Manufacturer shall include any person engaged in any of the following activities,
namely;
Transforming or reshaping of any substance by processing individually or in combination with any
other substance, material or components of production to changing, transforming or reshaping it
into different specific substance or goods so that it becomes useable differently or specifically;
Any incidental or complimentary processes needed to complete the goods;
Printing, publication, lithography or engraving processes;
Assembling, mixing, cutting, liquidifying, bottling, packaging or re-packaging
The work of an assignee or trustee, liquidator, executor or superintendent, in case of any
bankrupt manufacturer or producer, and work of any such person who disposes of the assets of
such manufacturer or producer in his capacity as an entrusted person;
Manufacturing or producing any against monetary consideration in his own plant, machinery or
equipment using raw material or inputs owned by the owner of that goods;

Commercial Importer means a person who imports goods, other than those specified in
the First schedule, and sells or transfers it in anyway without changing its shape, nature,
characteristics or quality, to any other person in exchange of pon (consideration).
Trader means a person who sells or otherwise transfers to any other person in exchange
of consideration any goods imported, purchased or otherwise acquired by him without
changing its shape, nature, characteristics or quality;
Divisional Officer means Value Added Tax officer in charge of a Value Added Tax
Divisional Office or an officer not below the rank of Assistant Commissioner assigned to
discharge any function of Divisional Office of the Large Taxpayers Unit of Value Added Tax;
Local Value Added Tax Office means Office of Superintendent/Revenue Officer of
Value Added Tax, or any branch put under the discharge of Superintendent of Large
Taxpayers Unit, Value Added Tax or any other office specified by the Board by notification
in the official Gazette;
Zero-rated Goods or Services means goods or services exported or deemed to have
been exported or any food or any other material as mentioned in sub-section (2) of section 3
on which no Value Added Tax or, Supplementary Duty, as the case may be, shall be
imposed and all other taxes and duties paid on the inputs of manufacturing or producing of
such goods (except Advance Income Tax and the Supplementary Duty paid on any such
inputs, used for manufacturing or producing exported goods as may be specified in this
behalf by the Government by notification in the official Gazette) shall be refunded;

Supply means sale, transfer, lease or disposal of goods in any other manner,
manufactured or produced by a manufacturer or producer or of goods imported, purchased,
acquired or otherwise procured by a trader in exchange of consideration and shall include
the following activities, namely:
o use of goods acquired, produced or manufactured in the course of business for private,
business or any other purpose outside the business;
o auction or disposal off goods in order to repay the debt of any person
o to take under possession of any taxable goods by a person immediately before the
cancellation of his registration;
o clearance or removal of goods from the place of manufacture or production or trading;
o any other transactions specified by the Government by notification;

deemed to have been exported will include following goods or services, namely:o necessary raw-materials, machinery, infrastructure or any other elements for the
purpose of the production, management, transportation or marketing of any such goods
or services which are not appropriate for consumption or use inside Bangladesh and
which have been invested in foreign currency or have been supplied in exchange of
foreign currency repatriated directly from abroad and includes water, electricity, gas,
telephone or any other services used as inputs; and

o goods or services supplied inside Bangladesh against foreign currency as per


prescribed rules in the specific condition of not imposing taxes under any international
agreement or Memorandum of Understanding.

Consideration means money in total or value measurable in terms of money,


received or receivable against the supply of goods or rendering of services;

Commercial Document means books of accounts, files, documents or papers


maintained by a person to record his commercial transaction showing financial
condition of his business, including documents, namely:- debit voucher, credit
voucher, cash memo, daily purchase and sale records, cash book, journal book,
bank account and the documents related thereto, trial balance, ledger, financial
statements and notes, profit and loss account, profit and loss appropriation
account, bank reconciliation accounts, balance sheet and audit report and any
other related document;

Established Exporter means an exporter recognized by the Duty Exemption and


Drawback Office on the basis of record of his significant exports and drawback
during the last 12 months;

Backward Linkage Industry means any industrial unit which supplies goods or
services against domestic Back to Back Letter of Credit or domestic Letter of
Credit in foreign exchange to any registered person who is under an obligation in
the domestic Letter of Credit to supply goods or services to any actual exporter in
foreign exchange;

Contractual Manufacturer means a person who manufactures goods on


contractual basis in exchange of consideration using raw-materials supplied by
proprietor of branded goods or using own raw-materials;

Turnover Tax
Any producer or manufacturer or trader of taxable goods or provider of
taxable service, whose annual turnover less than 80 lac, shall pay
turnover tax at the rate of 3% of his annual turnover.
A person required to pay turnover tax shall have to be enlisted with the
Revenue Officer for the purpose.
Within 30 days of each year after enlistment regarding the amount of
estimated turnover of that year and the manner of payment of tax shall
have to be submitted to Revenue officer.
An enlisted person may pay turnover tax at a time annually, or monthly
or quarterly.

Some services irrespective of annual turnover are declared for VAT


through SRO issued by NBR.

Supplementary Duty
1. Luxury goods, non-essential and socially undesirable goods and the
other goods and services on which levy of supplementary duty is justified in
the public interest, as specified in the Third Schedule and SRO issued by
NBR, supplementary duty at the rate specified in the said schedule & SRO
shall be charged on such goods and services supplied, imported or
rendered in Bangladesh.
2. For the purpose of levy of supplementary duty, the value of goods or
services shall be,In case of imported goods, at time of customs duty payment
In case of produced or manufactured or in case any other taxable
goods, the pon (consideration) charged to the buyer, in which VAT or
Supplementary is not included.
In case of service rendered in Bangladesh, the total amount received, in
which Supplementary Duty and VAT is not included
3. Supplementary Duty shall be payable at same time and in the same
manner as are applicable for the payment of VAT.
4. Supplementary is charged before VAT and VAT is charged after adding
Supplementary value
4. Supplementary Duty is not rebate-able

Base Value for VAT


For imported goods, VAT will be payable on;
Assessable Value + Customs Duty (CD) + Regulatory Duty (RD) (if any)
+ Supplementary Duty (SD): excluding Advance Income Tax (AIT)
For Supplying goods, value received including input value, all expenses
or applicable cases commission, charge, fee, SD etc. by producer or
manufacturer or business man/trader or commercial importer
For services, total payment received from service receiver.
For MRP basis goods, Govt. will determine through Gazette and brand
symbol tagged.
In case of trade discount, value excluding trade discount with condition
that value after discount must be mentioned in Challan and trade
discount must be consistent with general practice.
NBR can determine value (tariff value) inconsideration of general
public importance and eligible

Timing and Mode of VAT Payment:


VAT on imported goods:
At the same time and in the same manner as import duty is paid in accordance with
provisions of the Customs Act and rules made there under
VAT on taxable goods produced/manufactured and supply of goods imported,
purchased, acquired or procured in any manner (at the time of any of the following
activities, whichever occurs first, namely):
- when the goods are delivered or supplied
- when an challanpatra (invoice) relating to supply of goods is issued
-when any goods are consumed personally or supplied for the use of any other person
- when part or full payment is received
VAT on taxable service rendered a registered or register able person (at the time of
any of the following activities, whichever occurs first, namely):
-when the service is rendered
-when an challanpatra (invoice) relating to the service is issued
-when part or full payment is received
The Board may, in accordance with the procedures by Rules, make provisions for
Advance Payment (i.e. banderol for cigarette), including fixation of the time and
procedure for payment, of VAT, as the case may be, SD, on any goods or services
The person who collects or deducts VAT at source in accordance with the
procedure set by the Boards order in this behalf
VAT except in the case of import stage, shall be paid through Account Current and
Return in accordance with procedures set by Rule.

VAT Registration

Who shall have to take registration?

A supplier of taxable goods


Renderer of taxable services
An importer of any goods
Exporter of services
Annual turnover 60 lac or more

Can a person/entity take more than one VAT registration?


If any person supplies taxable goods or renders taxable services
or carries import and export trade from two or more places, he
shall have to be registered separately for each place
Only registration shall be required in case of more than one
taxable goods or services

Central Registration
Central registration not applicable for manufacturer

Supply of goods centrally


Rendering of services centrally
Import or export business centrally

Accounts and records maintained centrally


Give registration by NBR through general or special order
Submission of list of all sales centers/depots with
application
No sales center will be included operated by third party or
agent
Same books, return and registers required as usual

If a register able person fails to be


registered, what to do?
The person taxable goods or service sales
turnover 80 lac or more but not registered
After due investigation, the proper officer is
satisfied that the person is under obligation to
be registered
The officer shall register and inform the person
The effective date of registration from the date
on which the registration became obligatory

Exemption from Registration


The Govt. may, by general or special order,
exempt any person or class of persons from
registration
Whose amount of annual turnover as received
or to be received does not exceed the amount
fixed, from time to time, by the Govt. by
notification
NBR may, by general or special order, exempt
any class of importer or exporter from the
requirement of registration

Voluntary Registration
A person who is exempted from registration u/s
16 may be registered

Annual turnover less than 40 lac


Shall submit an application to the local VAT
office 30 days before commencement of tax
period
Shall have to pay VAT or SD (if applicable)
from the first day of tax period

VAT Registration Procedure

Registration shall submit in prescribed form Mushak-6

Application shall have to be submitted to a Divisional Officer or to an


office, not below Assistant Commissioner

Submit a declaration in Mushak-7, containing particulars of


premises, plant, capital machineries etc.

Registration certificate to the applicant in form Mushak-8 within 2


working days of the receipt of the application

If a person fails to mention the Import Registration No. in column 6 of


form Mushak-6, the Divisional Officer, shall issue VAT registration
certificate subject to the condition of submission within specified
time/undertaking

Other documents for registration; trade license, 2 copies photograph


for proprietor/MD, TIN certificate, Bank A/c certificate, IRC, ERC, plant
layout, land documents/Rental agreement, MOA & AOA etc.

Two sets of application if it is not mentioned in VAT laws

Changes in VAT Registration

If a registered person intends to change the name, address, any other


information or location of business, shall inform Divisional Officer at least
14 days before
In case of changing place or situation of business, shall have to submit
Muhshak-9
Before change of place or situation, full VAT payment of VAT or as the
case may be, SD or Turnover Tax

Cancellation of VAT Registration


A registered person may, under any of the following circumstances submit to
Divisional Office application in form Mushak-10 for cancellation of
registration;
Refrain from business
Taxable goods or service being declared as exempted from tax
Failure to start business after being registered
Annual turnover of a registered person being less than 80 lacs
Divisional Officer of VAT if satisfied on recommendation of the Revenue Officer
after necessary investigation may cancel registration

Advance Trade VAT (ATV)

ATV is basically VAT at trading stage. In Bangladesh, it is very difficult to


collect VAT at trading stage. Because, accounting system is not up to the
standard. Moreover, shortage of manpower exists in VAT administration.
For these reasons, trading stage VAT is collected at import stage from
importer. This collected VAT at import stage is called ATV (Advance Trade
VAT). Currently, rate for ATV is 4%. The reason for ATV @4% is due to
assumption of value addition at trading stage 26.67% i.e. 15% VAT on
26.67% value addition means ATV @4% on total value.

Advance trade VAT (ATV) is the amount of VAT which is deducted from
Importer in addition of VAT payment @15% (AV+CD+RD, if any + SD, if
any).

ATV is paid by commercial importer at import stage

ATV is calculated as VAT-able value (AV+CD+RD, if any + SD, if any) plus


26.67% value addition on VAT-able value.

ATV: 4% X 126.67% on Value [Assessable Value (AV)+CD+RD (if


applicable ) + SD (if any)]

For example, AV = Tk. 10000, CD = Tk. 2000, SD = Tk. 3600; So, ATV =
[(10000+2000+3600)= Tk. 15600] X 126.67% X 4% = Tk. 790.42

ATV is rebate-able

VAT rebate/Credit
Supplier or trader of taxable goods or provider of taxable service may, in every tax
period, take rebate input tax against output tax payable on goods supplied or service
rendered by him.

VAT rebate can not be taken on following cases:

VAT paid on input used in the production of exempted goods;


Turnover tax paid inputs procured from a Turnover Taxpayer;
SD, paid on inputs, used in the production of goods and rendering of service
VAT paid on reusable package at any other time except for the first time;
The VAT, paid on such goods and services as are related to the construction, balancing,
modernization, expansion etc.
Various goods and services related to production or supply of taxable goods or rendering of
taxable service, the VAT paid in excess of the rate of VAT on such goods and services
VAT paid against expenditure on travel, entertainment, staff welfare and development
activities
VAT paid on inputs which are not included/mentioned in price declaration (Mushak1/1KHA/Mushak-1GHA)
The VAT paid on inputs purchased by the specified service provider as per proviso of subsection (4) of section 5; (taxpayer pays VAT on truncated basis)
Input tax paid on inputs purchased by the trader mentioned in sub-section (4a) of Section 5;
VAT paid on inputs purchased by a supplier who supplies goods at Tariff Value fixed as per
provision of sub-section 7 of section5
Input tax mentioned in Challan or a BOE without registration number of taxpayer
VAT paid on goods remain under the custody of possession or occupancy of other person
Inputs on included in Purchase Register (Mushak-16)
Inputs with bank guarantee and not resolved
VAT paid on value of Inputs of goods or service is one lac or more than one lac and paid
without banking or electronically system

Requirements for Taking Rebate

Shall have to submit price declaration

Shall have to pay VAT@15%

VAT rebate taking on inputs shall be included in the price declaration


(Mushak-1/Mushak-1KHA/Mushak-1GHA)

Shall have Original copy of documents

Valid Challan/documents/BOE

Shall mention Name, Registration number on documents (challan/BOE)

Shall give entry to purchase register (Mushak-16)

Shall give entry Current Register (Mushak-18)

Preserving original documents for 6 years

Shall have inclusion of inputs in Mushak-7

Shall not take rebate in excess of input price mentioned in price declaration
copy (Mushak-1/Mushak-1KHA)

Same tax period or two tax period if there is any valid reason

VAT Rebate (Credit)


If the taxpayer, in spite of having the related documents of inputs in his
possession, if fails, for any reasonable ground, to enter the entire
inputs in the same tax period, into the premise of production, delivery
or service rendering, he may, subject to completion of entry of such
inputs his premise, take rebate (credit) on such inputs on any date
during the next tax period.
The supplier of taxable goods or renderer of taxable service, who also
supplies non-VAT-able goods or renders non VAT-able service, may
take rebate (credit) of input tax against output tax in proportion to the
quantity of inputs used in the manufacture or production of the taxable
goods or taxable service of the total quantity of inputs, as per
procedure set by Rules
If tax paid input is damaged or destroyed while preserved or stored at
the place of production or place of rendering service or trading by the
supplier of taxable goods or renderer of taxable service or traderer, the
input tax on the said destroyed or damaged goods shall be disposed of
in the manner set by Rules.

Partial VAT rebate from Input VAT


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Duty Draw Back on Export or Deemed Export

Any registered person shall be entitled to drawback the VAT, SD,


Import Duty, Excise Duty, and all other duties and taxes (except AIT)
paid on inputs used in manufacture or production of goods or
services for exports or deemed exports.

Drawback shall have to claim within 6 months from the date of export
or deemed export

Govt. may fix rate of drawback of VAT and other duties where
applicable

Any exporter may adjust against output tax payable on goods


supplied or service rendered by him in Bangladesh

Duty Draw Back can be adjusted with CA or claim from DEDO

Difference between VAT Rebate & Duty Draw Back

Input-Output Co-efficient

Truncated Base/Fixed Value Addition Based


VAT (Truncated VAT)

In some of the cases of goods and services producers and sellers face
difficulties in availing VAT credit/adjustment facilities due to non availability of
invoices from the sellers of input.

In case of service, it is very difficult to determine value addition and inputs for
service

Truncated VAT is applicable for 19 services with Truncated VAT rate

Truncated VAT payer can not take rebate input VAT

In order to remove this operational difficulty fixed bases such as 13.33%,


26.67%, 30%, and 60% etc. value addition is taken into account for calculation
of VAT for a number of goods and services. In such circumstances net VAT

rate for different rates of value addition comes to 2%, 4%, 4.5% and 9% etc.

Every year truncated based/fixed value addition is determined through SRO

VAT Deduction at Source


(VDS)

VAT Deduction at Source (VDS)

Customer, consumer or purchaser is the main source of VAT. In VDS,


certain consumer/customer/purchaser/organizations/agencies have
been given responsibility to deduct VAT at source from payment in
certain cases.

Who is authorized to deduct VAT at source?


As per u/r 18 Ka (1) of VAT rules 1991, following organizations or
agencies are responsible for VDS;
Govt. Organization;

Semi-govt. Organizations;
Autonomous Organizations;

NGO;
Bank;

Insurance;
Financial Organization;

Limited Company; and


Educational Organizations

Scope for VDS

When procurement of goods/services are done through tender or work


order, VDS is required

VDS is also applicable for purchasing VAT exempted goods or services

VDS is applicable in different rates for 35 specific services mentioned in


SRO

If supplier or service provider does not provide challan (invoice), VDS is


applicable from the payment of bills

VDS on License fee, Royalty etc. and import of service?

VDS @15% is applicable on license issue or renewal. VDS will be


applicable/deducted from the person who is enjoying benefit for these
service. VDS applicable from connection fees for water, electricity, gas,
telephone or other type connection.

In case of service is delivered from outside geographical location of


Bangladesh and service is received within Bangladesh, Bank or any other
financial institutions (who is related with payment of bill) shall deduct VDS
@15%.

What are responsibilities of the person


who is authorized to deduct VDS?
Deducted amount shall be deposited within 15 working
days after deduction date through treasury challan
Treasury
Challan
code
1/1133/0000/0311
Commissionerate office to 0000 code

and

Certificate issue of 3 copies of Mushak-11KHA within 5


working days of deposit

Copy of certificate with original copy of treasury challan


shall be deposited to his registered circle
Shall show the amount in Mushak-19

Shall preserve copy of certificate for 6 years

Penalties for not deducting VDS


Both supplier or receiver shall be responsible for VDS
jointly

Goods or service receiver shall have to pay VDS amount


as like he is registered person
Shall have to pay interest @2% on deductible amount after
the day on when VDS was applicable
2% of interest is applicable for delayed deposit of deducted
amount

The person responsible and CEO of the organization shall


be punished financially for amount Tk. 25000

Trader

Trader
VAT is paid in different stages i.e. import stage,
manufacturing stage, wholesale, and Retail. Among of these,
whole sale and retail are considered as trading stage.
Trader means a person who sells or otherwise transfers to
any other person in exchange of consideration any goods
imported, purchased or otherwise acquired by him without
changing its shape, nature, characteristics or quality.
Trader has to take VAT registration as S0.99:00 code
Currently, VAT is paid at trading stage in 3 (three)
types/procedures i.e. (i) actual value addition basis, (ii)
26.67% value addition basis, and (iii) fixed amount for small
trader (package VAT)

Types/Procedures of VAT Payment by Trader


Actual value addition basis: VAT is paid @15% on the basis
of price declared/approved in Mushak-1KHA to/by divisional
officer. Actual value is added with import value or purchase for
all cost i.e. transport, electricity, telephone, labor etc. Rebate
can be taken for VAT paid for purchased value or VAT & ATV
paid on import stage.
26.67% value addition basis: If value addition for goods
purchased or imported not more/less than 26.67%, then VAT
can be @4% with value addition of 26.67% with purchased
value. Price declaration/approval is not required. Rebate can
not be taken for VAT paid for purchased value or VAT & ATV
paid.
Fixed amount VAT for small trader: There is a provision for
small trader to pay VAT on area wise highest value addition
and minimum lum sum VAT payment as per SRO.

Fixed amount of VAT for small trader area wise:


Small retail trader or shop pay following mentioned VAT amount annually or
monthly installment basis:

Dhaka City Corporation


Chittagong City Corporation
Other City Corporation
Powro Area of District Town
Other Area

Tk.
Tk.
Tk.
Tk.
Tk.

40,000
40,000
32,000
24,000
12,000

Tk.
Tk.
Tk.
Tk.
Tk.

6000
6000
4800
3600
1800

Price Declaration

Price Declaration for Producer


or Manufacturer

Producer or Manufacturer shall submit a declaration related to base


value including input and output co-efficient of the goods for the purpose
of charging VAT or VAT and Supplementary Duty (if applicable) before
supplying of taxable goods in form Mushak-1.

Shall show input-output co-efficient of goods produced or manufacturing

Price Declaration shall have to submit to Divisional Officer

He can supplies, if intends goods or services from the day of price


declaration (immediate effect)

In case of revision of price, price declaration shall have to be submitted


before 7 days of effective date of price.

Price approval shall be communicated within 15 working days if there is


no queries/objection.

VAT will be paid @15% on VAT levi able value

Price Declaration for Trader or


Commercial Importer

Trader or Commercial Importer shall submit price declaration in


Mushak-1KHA for the purpose of charging VAT before supplying of
taxable goods in form Mushak-1KHA.
Shall show input-output co-efficient of goods imported or procured
Price Declaration shall have to submit to Divisional Officer
He can supplies, if intends goods or services from the day of price
declaration (immediate effect)
In case of revision of price, price declaration shall have to be
submitted before 7 days of effective date of price.
Price approval shall be communicated within 15 working days if
there is no queries/objection.

Price Declaration for registered person supplies


tax-exempted goods or service or exports

If a registered person supplies tax-exempted goods or service or


exports or deemed exports tax exempted goods or service (which are
not consistent with input-output co-efficient mentioned in price
declaration) side by side taxable goods or service, he shall have to
submit price declaration in Mushak-1GA.

Price Declaration shall have to submit to Divisional Officer

He can supplies, if intends goods or services from the day of price


declaration (immediate effect)

In case of revision of price, price declaration shall have to be submitted


before 7 days of effective date of price.

Price approval shall be communicated within 15 working days if there is


no queries/objection.
This is not applicable for 100% export oriented or 100% deemed export
oriented registered person.

Price Declaration for contract


manufacturing
Two party involved one Contract Manufacturer and Other
Proprietor
Contract manufacturer shall have to submit price declaration for
value/consideration per unit received from Proprietor of goods
in Mushak-1.
At the same time, Proprietor of the goods shall have to submit
in Mushak-1 as like producer or manufacturer.
Price Declaration shall have to submit to Divisional Officer
He can supplies, if intends goods or services from the day of
price declaration (immediate effect)
In case of revision of price, price declaration shall have to be
submitted before 7 days of effective date of price.
Price approval shall be communicated within 15 working days if
there is no queries/objection.

Price Declaration for changes or revision


of Price

The registered person shall submit revised price declaration in Mushsk1/Mushak-1Kha/Mushak-1Ga/Mushak-1Gha before seven working days of
price effective to divisional officer

VAT will be paid on basis proposed/determined value from effective date

Divisional officer shall inform circle and divisional office computer cell office

Any change/reification of price declaration can not be done without giving


reasonable opportunity of hearing

If the price/consideration received from customer not changed and change


of value addition less than 5%, revised price declaration is not required.

Price approval within 15 working days

Price Declaration for Trade Discount


The registered person shall inform to the concerned
divisional office
Shall publish a notice in a national daily specifying the
actual price ad the price after trade discount and
duration of trade discount
Trade discount shall not exceed 15% pf the actual price
Trade discount shall be given only for maximum 30 days
during any 12 months period

Determination of higher base value by Divisional


Officer

If it is subsequently evident, regarding value declared, on the basis of


information received from investigation or market survey relating to the quantity
of value addition and apportionment thereof, actual expenditure of the firm,
declared value, approved value, or market value of identical or similar or
concentric goods, kept in the Circle Office, Divisional Office or Office of the
Commissioner, the divisional office can determined higher base value for
goods that,
The declaration base value is inconsistent with the Section 5 of the Act, or
The declared base value is remarkably low than the base value of the similar goods or
goods of same nature and quantity of jurisdiction
The extent of value addition shown in form Mushak-1 is remarkably low or;
Because of any relationship existing between the supplier and the purchaser or for
gaining reciprocal interest or for the benefit of any party

The commissioner of VAT may, at his own motion or on application from a


registered person, or on request from the divisional officer, for the reason of
fluctuation of market price of goods, or for any other special reason in his
opinion, fix the base value for assessment of tax of any goods or class of
goods

Large Taxpayer Unit (LTU)

Generally, VAT admin is made on basis of location. Currently, there


is 13 commissioner office and 1 LTU out of these.

Large Taxpayers Unit (LTU) is a tax (VAT/SD) jurisdiction for


consisting of such class of taxpayers with specified limit or class of
tax payment (big taxpayers).

Currently, there is 168 tax payers registered at LTU

Minimum annual average revenue payment Tk. 5 crore in last 3


years

Minimum 200 VAT registered are included into LTU in terms of


annual highest turnover

There is a committee to LTU for enlisting to LTU

All circles, division offices and commissioner office at same premises

Currently, there is a LTU located at Sagunbagicha Dhaka

NBR will set up another one or two

VAT Challan/Invoice

VAT Challan/Invoice

In VAT system, supplier of goods or services has to provide customers sales


invoice/memo for selling goods or services, is called VAT Challanpatra. VAT
challanpatra is known as Mushak-11/11KA/Mushak-11GHA.

Mushak-11 is issued to registered purchaser/customer and Mushak-11KA for


unregistered purchaser/customers

Mushak-11GA is transferring RM/PM to contract manufaxcturer

Specilist doctor, Legal Consultant, Immigration Advisor, Coaching Centre, English


Medium School, and private medical & engineering colleges issue Mushak-11GHA

In case of import, BOE is considered as Mushak Challanpatra

Any registered can issue in his own format with prior permission from respective
commissioner office with keeping all information required for Challanpatra as it is.

What are the conditions for issuing VAT Challan?

Every registered person shall issue Mushak-11/Mushak-11KA/Mushak-11GHA


with condition that;
Double challan (more than one challan) can not be issued for a single supply of
taxable goods or sale of taxable imported goods or rendering of taxable services.
Duplicate copy of challan can be issued in case of lost of original challan that
challan marked distinctly as Copy Only

Information required for a valid challan

Name, address & VAT registration number of tax payer


Serial number of challan
Name, address & VAT registration number of purchaser/customers
Nature of vehicle & number
Final destination of goods or services
Date, time of issuing challan
Date, time of dispatch of goods or services
Quantity of goods, SD able value, SD, VAT able value, VAT, and total value
Date & time in words
Quantity of goods or services in words
Double carbonized of the challan

Issue of Challan & submission

VAT registered shall issue double carbonized challan


3 copies of challan
1st copy of challan to customers/purchasers at the time of dispatching of goods or services
2nd copy of challan submit to VAT office within 5 working days
3rd copy shall preserve for min 6 years
Carrying goods in different vehicle, VAT shall be issued for each vehicle separately
In case of own consumption, Vat challan shall be submitted to VAT Office within 72 hours

What is Credit Note?

Cancellation of VAT challan, return of goods & services or adjustment into


Current Register (Mushak-18) or; VAT shown in the challan is in excess of the
VAT actually payable

Issue of credit note in form Mushak-12

3 copies of challan are issued

A copy of credit note shall submit within next working day to Circle Office

Credit note can not be issued after expiry of 90 days

Credit note can not be issued for goods supplied or service rendered is
withdrawn because of deterioration of quality standard

Credit note shall be adjusted with current register & shown in monthly return

When Credit Note can not be issued?

In case of returned goods or services in full or part, credit note can not be
issued if it is received back/return after 90 days of supply or rendering

If goods supplied or service rendered is withdrawn because of deterioration of


quality standard

Debit Note
Where, after filling a challan or after adjustment to
current register; it appears that a less amount than
actual VAT/SD payable been mentioned, debit note
is issued.
Issue of credit note in form Mushak-12KA

3 copies of challan are issued


A copy of credit note shall submit within next
working day to Circle Office

VAT Accounting

(Books & Registers)

Accounts book of purchase (Mushak-16)

Accounts book of sales (Mushak-17)

Challanpatra book

Account current book (Mushak-18)

Copies of treasury challan; original copy shall be submitted to circle with 3


working days

With permission from Commissioner, computerized books and accounts


can be maintained

Separate register for contract manufacturing and for regular manufacturing

Shall maintain accounts of raw materials, services, machinery, spare parts,


bills paid, that can be easily audited

NBR may issue order for maintaining accounts, issuance challan by using
electronic cash register or computer or any other electronic machine

VAT Return

Every manufacturer or producer or trader of goods or renderer of taxable


service shall have to submit monthly VAT return (Mushak-19) to local VAT
officer (Circle)

Submission of 2 copies of VAT return (Mushak-19)

VAT return shall have to be submitted within 15th day of the month

If 15th day of the month is holiday, then shall have to submit in last working
day before 15th day of the month

Insurance company shall submit VAT return with 20th day of the month

Manufacturer or producer supplies or exports shall submit documents with


VAT return i.e. VAT current register & any documents demanded by
commissioner

VAT registered person renders service or exports shall submit with return
original copy of treasury challan for VAT paid and any other documents
required by Commissioner

Bandrol

It is made mandatory to tag VAT/revenue stamp or bandrol on every pack


or container of goods of specific section of goods which are considered as
important from point of view of collection of VAT revenue.

Bandrol is mandatory for following goods;


Cigarette
Bidi or hand made cigarette
Soft drinks
Mineral water or purified drinking water

Toilet Soap

Security Printing Corporation (Bangladesh) Limited (Gazipur) acts for


printing and distribution of stamp or bandrol on behalf of National Board of
Revenue (NBR)

Stamp or bandrol used Cigarette, Soft Drinks, Mineral Water & Toilet Soap
can be collected from Security Printing Corporation (Bangladesh) Ltd
without advance payment of VAT prior permission from respective VAT
Office

Bandrol used for Bidi is delivered to Post Office. VAT register can collect
bandrol/stamp with advance payment of VAT

Electronic Cash Register (ECR)

Electronic Cash Register (ECR) is an electric device which is for


maintaining and storing VAT(VAT & SD, if applicable)
accounts/records for sales of goods or services

Respective Commissioner (VAT) can elect for following service


renderers and large & medium trader situated at all city corporations
and district town for using ECR i.e. hotel, restaurant & fast food
shop, sweetmeat shop, furniture shop, beauty parlor, community
center, shopping center, departmental store, general store, other
large & medium trader and jewelry shop etc.

ECR shall have battery back in case of power failure not interrupting
sales

Inactive or disturbing of ECR machine, VAT register shall inform VAT


Office within 24 hours and total demage shall inform within 24 hours
and replace with new ECR machine within 15 days.

Example for Price Declaration

Product Name: PCNO


MRP = Tk. 100
Registered as manufacturer at manufacturing
Registered as trader at depot stage

Calculate Manufacturing VAT, Trading VAT, Total


VAT, Value Addition at Manufacturing &
Trading/depot stage:
Paying VAT at trading stage @4% (26.67% value addition basis)
Paying VAT at trading stage at actual value addition basis
(assume @10%)

Manufacturer paying VAT at depot/trading


stage @4% (26.67% value addition basis)
Manufacturing Stage
Input
Value
Tk. 50.5

Value Addition

SD Leviable
Value

Tk. 18.50

Tk. 69.00

Value Addition

SD

VAT Leviable
Value

VAT
@15%

MRP

Tk. 6.90

Tk. 75.91

Tk. 11.39

Tk. 100

Tk. 18.50

36.63%

Depot/Trading Stage
Purchase Value

Value Addition

VAT Leviable Value

VAT@4%

MRP

Tk. 75.91

Tk. 20.24

Tk. 96.15

Tk. 3.85

Tk.100

Stages

VAT

Manufacturing

Tk. 11.39

Trading

Tk. 3.85

Total

Tk. 15.24

Manufacturer paying VAT at depot/trading


stage on basis of actual value addition
Manufacturing Stage
Input
Value
Tk. 50.5

Value Addition

SD Leviable
Value

Tk. 18.50

Tk. 69.00

Value Addition

SD

VAT Leviable
Value

VAT
@15%

MRP

Tk. 6.90

Tk. 75.91

Tk. 11.39

Tk. 100

Tk. 18.50

36.63%

Depot/Trading Stage
Purchase Value

Value Addition

VAT Leviable Value

VAT@15%

MRP

Tk. 75.91

Tk. 11.05

Tk. 86.96

Tk. 13.04

Tk.100

Value Addition

Tk. 11.05

14.55%

Stages

VAT

Manufacturing

Tk. 11.39

Trading (Actual)

Tk. 1.67

Total

Tk. 13.04

Power of Adjudication
Adjudication related to the cases of confiscation or levy of a monetary
penalty under VAT Act or any Rules made there under, shall be done:
Nature of Adjudication
(a) Confiscation of goods or
services and impose of
monetary penalty relating to
tax evasion

(b) Impose of monetary


penalty other than those of
clause (a)

Empowered Officers

Power

Commissioner

Value of goods or services


when exceeds Tk. 20 lac

Additional
Commissioner

Value of goods or services


when not exceed Tk. 20lac

Joint Commissioner

Value of goods or services


when not exceed Tk. 15 lac

Deputy
Commissioner

Value of goods or services


when not exceed Tk. 10 lac

Assistant
Commissioner

Value of goods or services


when not exceed Tk. 5 lac

Revenue Officer

Value of goods or services


when not exceed Tk. 1 lac

Divisional Officer

Full Power

VAT Appeal

Any VAT Officer or any person aggrieved by any decision or order given by
a VAT Officer may appeal within 90 days of giving such decision

Appeal to the Commissioner (Appeal), against the decision or order issued


by an Additional Commissioner or any VAT Officer subordinate to him

To Appellate Tribunal against any decision or order issued by


Commissioner, Commissioner (Appeal), or any VAT officer of equivalent
rank and status

Time of appeal can be extended another 60 days with satisfaction of


Commissioner (appeal)

10% deposit in case of appeal to Commissioner (appeal) & another 10%


deposit to Tribunal on basis of decision of Commissioner

Appeal deemed to be granted if not communicated within 2 years from the


date of receipt of appeal.

In case of Price Declaration disapproval/price revision by divisional officer


appeal to submit to the Commissioner within 30 days from date of price
approval

ADR (Alternative Dispute Resolution

ADR is the deriving of a resolution with discussion & mutual understanding among relative
parities in a different place, procedure outside of court or customs administration for
disputed VAT maters.
The cases which were evolved before introduction of ADR and under process, tax payer
shall have to apply to Commissioner, Commissioner (Appeal), Appellate Tribunal for
resolution. Pay order for service charge shall have to attach with application along with Tk.
500 non-judicial stamp that the case is yet to be finally discharged. The service charge will
be 50:50 ratio shared by taxpayer (50%) and customs authority (50%). The taxpayer portion
shall have to deposit at the time of application with pay order and customs authority portion
after mutual resolution passed by ADR facilitators. There is 13 members lead and including
a president appointed by Govt. as ADR facilitator committee. Members are usually selected
from renowned business men, expert lawyers, ex-customs officials etc.
If any cases are pending with High Court or Appellate Division of Supreme Court, there is
requirement for permission from court before ADR. The High Court or Appellate Division
can accept the application for ADR with due guideline for related authorities. Generally,
cases are filled to Supreme Court against order of Appellate Tribunal and Appellate Tribunal
is guided by court. After that Appellate Tribunal will send to facilitator of ADR with due
procedure.
The cases which were evolved after introduction of ADR, tax payer can file application for
ADR any cases pending for show cause notice, demand notices, tax determination and
price declaration matters from VAT Office to respective Commissioner. The commissioner
will send the application to ADR facilitator with due procedure completion.
The facilitator shall have to communicate the agreed resolution by 7 working days among
parties.

Unused or un-usable inputs/materials disposal

If any unused or un-usable inputs/materials in manufacturing, VAT


registered person shall have to apply in Mushak-26 at VAT circle
office

Investigation by Revenue Office within 7 days and forward to


divisional officer for decision

Divisional Office shall give decision within 15 working days

Rebate will be disallowed for that materials

Wastage or by product goods supply and disposal

Apply to divisional office

Price declaration for VAT able wastage or by product

Destroy in presence of VAT officer and environment officer etc. if it is


not salable

Report within 7 days after destroy or disposal

Contract Manufacturing

Contract Manufacturing is the manufacturing process where contract


based manufacturer produces brand names goods/products for the
Owner/Proprietor of the brand using the inputs supplied by the owner of the
brand names good or of his own inputs in exchange of consideration/value
of unit from the owner of the product.

Contract based Manufacturer means a contract based manufacturer, in


exchange of pon (consideration), using inputs supplied by the owner of the
brand named goods or of his own.

Contract Manufacturer shall submit a price declaration to divisional officer


in Mushak-1 for value or pon (consideration) received from owner of the
brand named goods.

The owner of the brand named goods/products shall be considered as the


producer and shall submit the value declaration for the product like regular
product considering VAT paid on consideration to Contract Manufacturer
as input.

Mushak-11 GA is issued for transferring inputs (raw materials, packing


materials etc.) from Owner/Producer of the brand to contract manufacturer

Contract Manufacturing

Contract Manufacturing is the manufacturing process where contract


based manufacturer produces brand names goods/products for the
Owner/Proprietor of the brand using the inputs supplied by the owner of the
brand names good or of his own inputs in exchange of consideration/value
of unit from the owner of the product.

Contract based Manufacturer means a contract based manufacturer, in


exchange of pon (consideration), using inputs supplied by the owner of the
brand named goods or of his own.

There should be a contract between brand owner & contract manufacturer

There are two mode of operations for contract manufacturing:

-Brand owner receives finished goods manufactured by CM at own


factory premises
-Brand owner receives finished goods manufactured by CM at sales
point or depot instead of own factory premises

Contract Manufacturing cont..


-Brand owner receives finished goods manufactured by CM at own
factory premises;

Brand owner shall transfer RM/PM to contract manufacturer through


issuing double carbonized Mushak-11GA challan from own factory
premises.

One copy of challan will be issued to contract manufacturer and other copy
will be kept at factory of brand owner

CM declares price for conversion charge received from brand owner and
pays VAT on conversion charge

For transferring FG to brand owner, Contract Manufacturer issues Mushak11.

Brand owner will take rebate for VAT paid for RM/PM procured and VAT on
conversion charge

Brand owner declares price and pays VAT on full value like regular
products

Contract Manufacturer keeps separate books and registers for contract


manufacturing.

Contract Manufacturing cont..


- Brand owner receives finished goods manufactured by CM at sales point
or depot instead of own factory premises;

Brand owner shall transfer RM/PM to contract manufacturer through issuing


double carbonized Mushak-11GAGA challan directly from procurement.

One copy of challan will be issued to contract manufacturer and other copy will
be kept at factory of brand owner

CM declares price like manufacturer including inputs value and pays VAT on
declared value

For transferring FG to brand owner sales point or depot, Contract Manufacturer


issues Mushak-11.

Contract Manufacturer will take rebate for VAT paid for RM/PM procured

Brand owner declares price and pays VAT on full value at sales points or
depots

Brand owners sales point or depots will take VAT rebate for VAT paid by CM

Contract Manufacturer keeps separate books and registers for contract


manufacturing.