on
IncomeTaxAuthoritiesinBangladesh
Submitted to :
Submitted by :
Eftekhar Anam Rasel
Shantanu Das (Leader)
BBA, 29th Batch (MKT)
BBA, 29th Batch (MKT)
ID: 200712029
ID: 200712883
AUB, Dhanmondi Campus
AUB, Dhanmondi Campus
Dhaka, Bangladesh.
Dhaka, Bangladesh.
Md. Zahangir Alam
Sk. Saiful Islam
BBA, 29th Batch (FIN)
BBA, 29th Batch (MKT)
ID: 200710521
ID: 200710522
AUB, Dhanmondi Campus
AUB, Dhanmondi Campus
Dhaka, Bangladesh.
Dhaka, Bangladesh.
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Rajashwa Bhaban
Segunbagicha, Dhaka
Telephone: +88 02 933-3444.
http://www.nbr-bd.org
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Table of contents:
Serial
Topic
Page No.
Cover Page.......................................................................................
..........01
II
..................03
III
Table of contents..............................................................................
..................04
01
Letter of Transmittal..........................................................................
..................05
02
Acknowledgement
..................06
03
Background of NBR..........................................................................
..................07
04
..................08
05
11
06
13
07
14
08
Types of Taxation.............................................................................
15
09
Methodology .....................................
16
16
16
17
18
18
19
19
22
23
24
10
25
11
26
12
27
13
Conclusion........................................................................................
31
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Letter of Transmittal
August 12, 2010
To
Md. Shakhawat Hossain Selim
Faculty, School of Business
Asian University of Bangladesh
Dhanmondi Campus, Dhaka.
Subject: Submission of Assignment on Income Tax Authorities in Bangladesh.
Dear Sir
We are pleased to submit this Assignment-report on Income Tax Authorities in
Bangladesh for particular fulfillment of BBA Degree. This research program was
taken by the help of Three tax system of Bangladesh, written by M.A. Akkas, and
Income Tax written by Mr. Mahmud and Purohit Bhattacharjee. Here is the
report on the observational study of Income Tax authority in Bangladesh you asked
us to conduct last month.
We honestly believe that this report will fulfill the requirements of the project report
for BBA, which will help us a lot to gain sufficient knowledge about the Income Tax
authority in Bangladesh
We appreciate having this assignment. If you need any assistance in interpreting this
report or in implementing our recommendations, please feel free to contact us:
shantanudas@live.com, Contact No.: +8801717012777.
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Acknowledgement
We are very much grateful to the God first, who has given us all the abilities to
perform this chore. Next, we would like to thank our respected Teacher Md.
Shakhawat Hossain Selim, Faculty of Business at AUB Dhanmondi Campus who
gave us the chance to submit this Assignment Report & Presentation and also cooperated us with all kinds of rational suggestions, rehearsal and guidance.
We also like to express our gratitude to the honorable Campus Coordinator of AUB
Dhanmondi Campus, Professor (Adv.) Abul Kalam Azad- without whose
inspiration and company, this mission was not able to be accomplished.
At last but not the least, we are grateful to our ever-respected parents those who
always give us mental support and well wishes.
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Background of NBR
The National Board of Revenue (NBR) is the central authority for tax administration
in Bangladesh. It was established by President's Order No. 76 of 1972.
Administratively, it is under the Internal Resources Division (IRD) of the Ministry of
Finance (MoF). MoF has 3 Divisions, headed by 3 permanent Secretaries to the
Government, namely, the Finance Division the Internal Resources Division (IRD) and
the Economic Relations Division (ERD). The Secretary, IRD is the ex-officio Chairman
of NBR. NBR is responsible for formulation and continuous re-appraisal of tax-policies
and tax-laws, negotiating tax treaties with foreign governments and participating in
inter-ministerial deliberations on economic issues having a bearing on fiscal policies
and tax administration.
The main responsibility of NBR is to collect domestic revenue (primarily, Import
Duties and Taxes, VAT and Income Tax) for the government. Other responsibilities
include administration of all matters related to taxes, duties and other tax producing
fees. Under the overall control of IRD, NBR administers the Excise, VAT, Customs
and Income-Tax services consisting of 3434 officers of various grades and 10195
supporting staff positions (Approved set up as on 09 Feb., 2000 AD).
Negotiating tax treaties with foreign governments and participating in interministerial deliberations on economic issues having a bearing on fiscal policies and
tax administration are also NBR's responsibilities. The main responsibility of NBR is
to mobilize domestic resources through collection of import duties and taxes, VAT
and income tax for the government. Side by side with collection of taxes, facilitation
of international trade through quick clearance of import and export cargoes has also
emerged as a key role of NBR. Other responsibilities include administration of
matters related to taxes, duties and other revenue related fees/charges and
prevention of smuggling. Under the overall control of IRD, NBR administers the
excise, VAT, customs and income-tax services consisting of 3434 officers of various
grades and 10195 supporting staff positions.
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objectives,
such
as
redistribution
of
income,
price
stabilization
and
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The tax structure in the country consists of both direct (income tax, gift tax, land
development tax, non-judicial stamp, registration, immovable property tax, etc) and
indirect (customs duty, excise duty, motor vehicle tax, narcotics and liquor duty,
VAT, SD, foreign travel tax, TT, electricity duty, advertisement tax, etc) taxes.
The present land revenue system of Bangladesh has its base in the East Bengal state
acquisition and tenancy act 1950 which established a direct contract between the
taxpayer and the government.
The most important tax on the value of transferred property is the non-judicial
stamp tax (levied under the Stamp Act 1899), which has been in existence since
January 1899. Current rates of non-judicial stamp duty are provided in the First
Schedule of the Finance Act 1998, ranging from Tk. 4 to Tk. 10,000 in case of
absolute rate, or from 0.07% to 1.5% of the value of consideration in case of ad
valorem rate. The judicial stamp tax is being levied under the Court Fees Act 1870,
although the levy of court fees originated in the introduction of the Bengal Regulation
No. 38 of 1795.
The first sales tax was introduced in the former Central Provinces of India in 1938. In
Bengal, sales tax was adopted in 1941. In 1948, sales tax was transferred as a
central tax under the General Sales Tax Act of 1948. The Sales Tax Act 1951 came
into force on 1 July 1951 by repealing the Pakistan General Sales Tax Act of 1948.
Until 1982, sales tax was being collected under the 1951 Act, which was replaced by
the Sales Tax Ordinance 1982. The VAT law was promulgated by repealing the
Business.
Income tax was first introduced in the subcontinent by the British in 1860 to make
up the revenue deficit caused by the sepoy revolt, 1857. After independence of
Bangladesh, income tax was made effective under the Income Tax Act 1922 passed
on the basis of the recommendations of the All-India Income Tax Committee
appointed in 1921. Currently, income tax has been imposed under the Income Tax
Ordinance 1984 (ITO) promulgated on the basis of recommendations of the Final
Report of the Taxation Enquiry Commission submitted in April 1979. Income
taxpayers (assesses) are classified as individuals, partnership firms, Hindu undivided
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under Internal
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Types of Income
Income
Assessable Income
Taxable Income
Non-Assessable
Income
Non-taxable Income
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Classification of Tax
System
Single Tax
Multiple Taxes
1. Single Tax: Only one tax for everybody. Single tax is the poll tax or the head
tax or adolescent tax, which is imposed on a person simply because he is
there in the society.
2. Multiple Taxes:
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Types of Taxation
Types of Taxation
a) Direct Tax
b) Indirect Tax
a) Progressive Tax
b) Regressive Tax
c) Proportional Tax
a) Direct Tax: Direct tax is a sort of tax the impact of effect incidents and which fall
back on the person on whom it is imposed. i.e.: Income Tax, Marriage Tax etc.
b) Indirect Tax: Indirect taxes are those burden of which can be passed on others
through price vehicles.
c) Progressive Tax: The tax rate increases as the taxable income/amount
increases.
d) Regressive tax: The opposite of a progressive tax is a regressive tax where the
tax rate decreases as the taxable income/amount increases.
e) Proportional Tax: In between is a proportional tax, where tax is fixed as the
amount to which the rate is applied increases.
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Methodology
Among direct taxes, income tax is one of the main sources of revenue. It is a
progressive tax system. Income tax is imposed on the basis of ability to pay. The
more a taxpayer earns the more he should pay''- is the basic principle of charging
income tax. It aims at ensuring equity and social justice.
Sources of Income:
For the purpose of computation of total income and charging tax thereon, sources of
income can be classified into 7 categories, which are as follows:
Salaries
Interest on securities
Income from house property
Income from agriculture
Income from business or profession
Capital gains
Income from other sources.
1,65,000/2,75,000/3,25,000/3,75,000/-
Nil
10%
15%
20%
25%
For female taxpayers, senior taxpayers of age 70 years and above and retarded
taxpayers, tax payable for the
First
Next
Next
1,80,000/2,75,000/3,25,000/-
Nil
10%
15%
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Next
Rest Amount
3,75,000/-
20%
25%
For Companies
Publicly Traded Company
27.5%
37.5%
45%
45%
If any publicly traded company declares more than 20% dividend, 10% rebate on
total tax is allowed.
Tax Rebate for investment:
Rate of Rebate:
Amount of allowable investment is either up to 25% of total income or Tk.
5,00,000/- whichever is less. Tax rebate amounts to 10% of allowable investment.
Types of investment qualified for the tax rebate are:
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Assessment Procedures:
No. Heads
Section/Rule Rate
Salaries
3
4
Section 50
Chalan in
the name
of
Respective
deduction at average rate
Zone
deduction at normal rate or LTU
maximum rate whichever is
greater.
10%on interest or discount LTU
nil up to 1 lac, 1-5 lacs Zone-2
(1%), 5-15 lacs (2.5%), 15- (Partly) &
25 lacs 3.5% and 25 lacs LTU
and above (4%)
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7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
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25
26
27
28
29
30
31
32
33
34
35
36
Knitweare
&
Woven 53BBBB
garments
53C
Zone-2
Sale of goods by public Section
5% of the sale price
auction
(Rule 17D)
Courier Service (NonZone-6
Section 53CC 7.5%
resident)
Payment to film actors
5% of the amount paid Zone-2
Section
53D
and actresses
exceeding
(Rule 17E)
Tk. 36000/Cash subsidy
Section 53DD 5%
Zone-5
Commission Fees or
&
Zone-2
Section
53E 7.5% of the amount of
discount
paid
to
LTU
(Rule 17G)
commission.
distributors
Commission or charges
Dhk.Zonepaid to the agents of
6,
foreign buyers
Ctg.Zone-3
4 % on the amount of
and
Zone
Section 53EE
commission or charges.
of
Respective
Division
53F 10% of the amount of Zone-1
Interest
on
bank Section
deposits
(Rule 17H)
interest.
Real
Estate
&
In case of Bldg. 250 per sq. Zone-5
Developers
meter
Section 53FF
In case of land 5% of deed
value
Insurance commission
3% on the amount of LTU
Section 53G
commission
Commission paid to the
Dhk.ZoneSurveyors of General
2,
Insurances
Ctg.Zone-3
7.5% on the amount of
Section 53GG
and
Zone
commission.
of
Respective
Division
Transfer of property
Section
53H 5% of the value of the Survey
(Rule 17I)
property.
Zone
Interest on Post Office
No deduction if the amount Zone-2
Savings Bank Account
of
interest
does
not
Section 53I
exceeds Tk.1,50,000 and if
exceeds then 10% on the
amount of interest .
No deduction if monthly rent Zone-2
Rent of vacant land,
plant and machinery
is
below
15,000/Section
53J 3% (if monthly rent is
(Rule 17BB) 15,000 -30,000 Tk.) and
5% (if monthly rent is above
30,000 Tk.)
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3% of the
property.
value
of
the
Zone-5
LTU (only
(1) Resident individual 10%,
LTUs files)
non-resident individual 25%
all
others
(2) Company 15%
Zone-2
20% of the amount won.
Zone-2
Company - rate applicable to Zone-6
the
com.
Other
than
company - maximum rate.
Imposition of penalty
Attachment of bank accounts, salary or any other payment.
Filing of Certificate case to the Special Magistrate.
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Fiscal incentives :
Following are fiscal incentives available to a taxpayer:
a)
Tax holiday: Tax holiday is allowed for industrial undertaking, tourist
industry and physical infrastructure facility established between 1st July 2008 to
30th June 2011 in fulfillment of certain conditions.
Industrial Undertaking Eligible for Tax holiday:
(i)
An industry engaged in production of textile, textile machinery, jute
goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics,
sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide &
pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers,
compressors, basic raw materials of drugs, chemicals and pharmaceuticals.
(ii)
An industry engaged in agro-processing, ship building, diamond
cutting.
Physical Infrastructure Eligible for Tax holiday:
Sea or river port, container terminals, internal container depot, container
freight station, LNG terminal and transmission line, CNG terminal and transmission
line, gas pipe line, flyover, mono rail, underground rail, telecommunication other
than mobile phone, large water treatment plant & supply through pipe line, waste
treatment plant, solar energy plant, export processing zone.
Tourism Industry Eligible for Tax holiday:
Residential hotel having facility of three star or more.
b)
Accelerated depreciation: Accelerated depreciation on cost of
machinery is admissible for new industrial undertaking in the first year of commercial
production 50%, in the second year 30% and in the third year 20%.
c)
Income derived from any Small and Medium Enterprise (SME) engaged in
production of any goods and having an annual turnover of not more than taka
twenty four lakh is exempt from tax.
d)
Industry set up in EPZ is exempt from tax for a period of 10 years from the
date of commencement of commercial production.
e)
Income from fishery, poultry, cattle breeding, dairy farming, horticulture,
floriculture, mushroom cultivation and sericulture are exempt from tax up to 30th
June, 2011, subject to investing at least 10% of the exempted income that exceeds
one lakh Taka, in government bonds.
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f)
Income derived from export of handicrafts is exempted from tax up to 30th
June, 2011.
g)
An amount equal to 50% of the income derived from export business is
exempted from tax.
h)
Listed companies are entitled to 10% tax rebate if they declare dividend of
20% or more.
i)
Income from Information Technology Enabled Services (ITES) business is
exempted up to 30th June, 2011.
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Procedure of Assessment
Generally the followings steps are followed in case of Assessment of the Company
and the Corporation:
Step-1
Step-2
Step-3
Step-4
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Based on these concepts arises the pillars of Tax Protesters as well as Tax
Resistance:
Some of those attempting not to pay tax believe that they have uncovered
interpretations of the law that show that they are not subject to being taxed: these
individuals and groups are sometimes called tax protesters. An unsuccessful tax
protestor has been attempting openly to evade tax, while a successful one avoids
tax. Tax resistance is the declared refusal to pay a tax for conscientious reasons
(because the resister does not want to support the government or some of its
activities). Tax resistors typically do not take the position that the tax laws are
themselves illegal or do not apply to them (as tax protesters do) and they are more
concerned with not paying for particular government policies that they oppose.
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Tax evasion:
By contrast, tax evasion is the general term for efforts by individuals, firms, trusts
and other entities to evade taxes by illegal means. Tax evasion usually entails
taxpayers deliberately misrepresenting or concealing the true state of their affairs to
the tax authorities to reduce their tax liability, and includes, in particular, dishonest
tax reporting (such as declaring less income, profits or gains than actually earned; or
overstating deductions).
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Control of evasion:
Level of evasion depends on a number of factors one of them being fiscal equation.
People's tendency to evade income tax declines when the return for due payment of
taxes is not obvious. Evasion also depends on the efficiency of the tax
administration. Corruption by the tax officials often render control of evasion difficult.
Tax administrations resort to various means for plugging in scope of evasion and
increasing the level of enforcement.
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Conclusion
Though the rate of tax revenue is to GDP is very negligible, despite the government
is trying to maximize its tax revenue through different method. But the government
should also remind the cannon of convenience while collecting tax from assesses.
As we are living in a civilized society - should come forward to pay taxes to
government in order to conduct the administrative, defense and development
activities of the country. Otherwise we would not be able to prove ourselves as
civilized people.
Tax is the most important in the hand of the government to control the economy as
well as the inflection. It also helps in push money to the economy, develop certain
source of the economy and control some other activities of the economy. No
Government can run its and perform administration works without collecting tax as a
source of revenue. So, the Government imposes tax over the company and the
corporations. On the other hand Government can also intensive to the infant and
certain basic industry for protection through its tax policy.
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The End
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