Income Tax at a Glance

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. Income Tax Authorities: Income Tax Authorities are :-

National Board of Revenue, Director-General of Inspection (Tax), Commissioner of Taxes (Appeals), Commissioner of Taxes, Large Taxpayers' Unit (LTU), Director General (Training), Director General, Central Intelligence Cell (CIC), Commissioner of Taxes, Additional Commissioner of Taxes (Appeal/Inspecting), Joint Commissioner of Taxes(Appeal/Inspecting ), Deputy Commissioner of Taxes, Tax Recovery Officers, Assistant Commissioner of Taxes, Extra Assistant Commissioner of Taxes, Inspectors of Taxes.

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. Tax Rate (Assessment Year- 2011-2012) : Other than Company : For individuals (other than female taxpayers, senior taxpayers of 65 years and above and retarded taxpayers), tax payable for the First Next Next Next Rest Amount 1,80,000/3,00,000/4,00,000/3,00,000/Nil 10% 15% 20% 25%

For female taxpayers, senior taxpayers of age 65 years and above, tax payable for the First Next Next Next Rest Amount 2,00,000/3,00,000/4,00,000/3,00,000/Nil 10% 15% 20% 25%

For retarded taxpayers, tax payable for the First Next Next Next Rest Amount 2,50,000/3,00,000/4,00,000/3,00,000/Nil 10% 15% 20% 25%

Minimum tax for any individual assessee is Tk. 2,000 Non-resident Individual 25% (other than non-resident Bangladeshi)

On Dividend income For Companies Publicly Traded Company Non-publicly Traded Company

20%

27.5% 37.5% 42.5%

Bank, Insurance & Financial Company

Cigarette manufacturing company (not listed with stock exchange) 42.5% Cigarette manufacturing company (listed with stock exchange) 35% Mobile Phone Operator Company Publicly Traded Mobile Operator Company 45% 35%

If any publicly traded company (excluding Mobile Operator Company) declares more than 20% dividend, 10% rebate on total tax allowed. Tax Rebate for investment : Rate of Rebate: Amount of allowable investment is either actual investment in a year or up to 20% of total income or Tk. 100,00,000/whichever is less. Tax rebate amounts to 10% of allowable investment. Types of investment qualified for the tax rebate are :-

Life insurance premium , Contribution to deferred annuity , Contribution to Provident Fund to which Provident Fund Act, 1925 applies , Self contribution and employer's contribution to Recognized Provident Fund , Contribution to Super Annuation Fund , Investment in debenture or debenture stock, Stocks or Shares, acquired through Initial Public Offering (IPO), Contribution upto Tk 60,000 to deposit pension scheme sponsored by any scheduled bank, Contribution to Benevolent Fund and Group Insurance premium , Contribution to Zakat Fund , Donation to charitable hospital approved by National Board of Revenue , Donation to philanthropic or educational institution approved by the Government , Donation to socio-economic or cultural development institution established in Bangladesh by Aga Khan Development Network ,

Donation to ICDDR,B, Dhaka Community Hospital, Donation to philanthropic institution- CRP, Savar, Dhaka, Donation upto five lac to (1) Shishu Swasthya Foundation Hospital Mirpur, Shishu Hospital, Jessore and Hospital for Sick Children, Satkhira run by Shishu Swasthya Foundation, Dhaka, (2) Diganta Memorial Cancer Hospital, Dhaka, (3) The ENT and Head-Neck Cancer Foundation of Bangladesh, Dhaka; and (4) Jatiya Protibandhi Unnayan Foundation, Mirpur, Dhaka; Asiatic Society of Bangladesh; Muktijudha Jadughar; Donation to National level institution set up in memory of liberation war; Donation to National level institution set up in memory of Father of the Nation; Donation to Prime Minister's Higher Education Fund; Any investment by an individual in Bangladesh Government Treasury Bond;

Who should submit Income Tax Return ?

If total income of any individual (other than female taxpayers, senior taxpayers of 65 years and above and retarded taxpayers) during the income year exceeds Tk 1,80,000/-. If total income of any female taxpayer, senior taxpayer of 65 years during the income year exceeds Tk 2,00,000/If total income of any retarded taxpayer during the income year exceeds Tk 2,50,000/-. If any person was assessed for tax during any of the 3 years immediately preceding the income year. A person who lives in any city corporation/paurashava/divisional HQ/district HQ and owns a building of more than one storied and having plinth area exceeding 1,600 sq. feet/owns motor car/owns membership of a club registered under VAT Law. If any person subscribes a telephone. If any person runs a business or profession having trade license and operates a bank account. Any professional registered as doctor, lawyer, income tax practitioner, Chartered Accountant, Cost & Management Accountant, Engineer, Architect and Surveyor etc. Member of a Chamber of Commerce and Industries or a trade Association. Any person who participates in a tender. A person who has a Taxpayer's Identification Number (TIN). Candidate for Union Parishad, Paurashava, City Corporation or Parliament elections. Any company registered under Companies Act, 1930 or Kv vbx AvBb, 1994. Any Non-government organisation (NGO) registered with NGO Affairs Bureau.

Time to Submit Income Tax Return: For Company By fifteenth day of July next following the income year or, where the fifteenth day of July falls before the expiry of six months from the end of the income year, before the expiry of such six months. For Other than Company Unless the date is extended, by the thirtieth day of September next following the income year.

Consequences of Non-Submission of Return

imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. 1,000/In case of a continuing default a further penalty of Tk. 50/- for every day of delay.

Assessment Procedures :

For a return submitted under normal scheme, assessment is made after hearing. For returns submitted under Universal Self Assessment Scheme, the acknowledgement slip is determined to be an assessment order. Return filed under Universal Self Assessment is of course subject to audit.

Appeal against the order of DCT : A taxpayer can file an appeal against DCT's order to the Commissioner (Appeals)/Additional or Joint Commissioner of Taxes (Appeals), to the Taxes Appellate Tribunal against an Appeal order and to Commissioner of Taxes of the respective taxes Zone for the revision of DCT's order. Tax withholding functions : In Bangladesh withholding taxes are usually termed as Tax deduction and collected at source. Under this system both private and public limited companies or any other organization specified by law are legally authorized and bound to withhold taxes at some point of making payment and to deposit the same to the Government Exchequer. The taxpayer receives a certificate from the withholding authority and gets credits of tax against assessed tax on the basis of such certificate.

Heads of Income Subject to deduction or collection of income tax at source with specified rates of deduction.

Table
Sl 1. Head of withholding Salaries [section-50] Withholding authority Any person responsible for making such payment. Any person responsible for making such payment. Any person responsible for issuing any security Withholding rate/ rates of tax Average of the rates applicable to the estimated total income of the payee under this head. Maximum rate Limitation

2.

3.

Discount on the real value of Bangladesh Bank bills. [section50A] Interest on securities [section-51]

10%

This shall not apply to the Treasury bond or Treasury bill issued by the Government or to any payment on account of interest payable on debentures issued by or on behalf of a local authority or a company.

4.

Payment to Any person responsible Upto Tk. 2,00,000/--Nil. contractors & sub- for making such contractors [section- payment. From 2,00,001 to Tk 5,00,000/52] [rule-16] ------------1% From 5,00,001 to Tk. 15,00,000/- ------- 2..5% From 15,00,001 to Tk. 25,00,000/- ------- 3..5% From 25,00,001 to Tk. 3,00,00,000/- ------4% where the payment exceeds Tk. 3,00,00,000 ----------5% in case of oil supplied by oil marketing companies upto Tk 2,00,000 -- Nil where the payment exceeds Tk 2,00,000 ------- 0.75% on indenting commission ----------------------7.5% on shipping agency commission ---------5% The principal officer of a company or the chief executive of any NGO or trust responsible for 10%

5.

6.

Payment on indenting commission or shipping agency commission. [section-52, rule-17] Fees for Doctors [section-52A(1)]

Any person responsible for making such payment.

7.

8.

9.

10.

11.

12.

making such payment. The government or any other authority, corporation or body or any company or any banking company or any insurance company or any co-operative bank or any NGO responsible for making such payment. Fees for professional Do or technical services or any service applying for professional knowledge [section52A(3)] Payment of certain The government or any services like other authority, stevedoring agency, corporation or body or private security any company or any service or any banking company or any service other than insurance company or the services any co-operative bank or mentioned in any NGO responsible Chapter VII of ITO for paying any [section-52AA] commission to a stevedoring agency or making any payment to a private security service. Clearing and Commissioner of forwarding agents Customs. [section 52AAA] Cigarettes Any person responsible manufacturing for selling banderols to [section 52B] any manufacturer of cigarettes. Compensation Any person responsible against acquisition for payment of such of property [section compensation 52C] Royalty or technical know-how fee [section-52A(2)]

10%

10%

Person certified by NBR having non assessable income or person having income exempted from tax

10%

10%

6% of the value of the banderols

13.

Interest on saving instruments [section 52D]

Any person responsible for making such payment

(a). 2% of the amount of such compensation against the immovable property situated within City Corporation, Paurashava or Cantonment Board (b). 1% of the amount of such compensation against the immovable property situated outside the jurisdiction of City Corporation, Paurashava or Cantonment Board 5%

No deduction to be made if the saving instrument is purchased by any approved superannuation fund or pension fund of gratuity fund or any recognized provident fund or any workers' profit participation fund.

14.

Brick Manufacturer [section 52F]

Any person responsible for issuing any permission or renewal of permission for manufacture of bricks.

Tk.30,000/- for one section brick field. Tk. 45,000/- for two section brick field. Tk. 60,000/- for three section brick field. 5%

15.

Commission of letter Any person responsible of credit [section for opening letter of

16.

17.

18.

52I] Renewal of trade license by City Corporation or Paurashava [section 52K] Freight forward agency commission [section 52M] Rental Power Company [section 52N]

credit. City Corporation or Paurashava.

Tk. 500/- for each trade license.

19.

20.

Foreign technician serving in diamond cutting industries [section 52O] Convention hall, convention centre etc. [section 52P]

Any person responsible for making such payment. Bangladesh Power Development Board during payment to any power generation company against power purchase. Employer.

15%

4%

5%

This rate is for 3 years from the appointment of such foreign technician and appointment to be completed by 30 June 2010.

21.

22. 23.

Service charges, remunerations, consulting fees, commissions remitted from abroad for services works done by persons living in the country [section 52Q] Importer [section 53] House property [section 53A] [rule 17B]

The Government or any 5% authority, corporation or body or any company or any banking company or any co-operative bank or any NGO run or supported by any foreign donation or any university or medical college or dental college or engineering college as user. Commercial banks or 10% financial institutions.

No deduction to be made against remittance sent by wage earners'.

24.

Shipping business of a resident [section 53AA]

The Commissioner of Customs. The Government or any authority, corporation or body or any company or any banking company or any co-operative bank or any NGO run or supported by any foreign donation or any university or medical college or dental college or engineering college as tenant. Commissioner of Customs or any other authority duly authorised.

5% Up to Tk. 20,000/per month [p. m] ---- Nil From Tk 20,001/- to Tk. 40,000/- p.m. -------3% More than Tk 40,000/- p.m.--5%

Tax at source will not be withheld for items prescribed in rule 17A. This does not apply if the owner of house property is given a certificate by the DCT regarding not having any assessable income during the year or is having income otherwise exempted from payment of income tax.

5% of total freight received or receivable in or out of Bangladesh. 3% of total freight received or receivable from services rendered between two or more foreign countries. 10%

25.

Export of manpower [section 53B, rule17C]

The Director General, Bureau of Manpower, Employment and Training.

26.

27.

28.

29.

30.

Export of Knit-wear and woven garments, terry towel, jute goods, frozen food, vegetables, leather goods, packed food [section 53BB] Member of Stock Exchanges [section 53BBB] Export or any goods except knit-wear and woven garments, terry towel, jute goods , frozen food, vegetables, leather goods, packed food [section 53BBBB] Goods or property sold by public auction [section53C] [rule 17D] Courier business of a non-resident [section 53CC]

Bank.

0.60% of the total export No deduction or deduction at a proceeds. reduced rate to be made if an exporter produces certificate from NBR regarding having fully or partly exempted income.

The Chief Executive Officer of stock exchange. Bank.

0.10%

--

0.70% of the total export proceeds.

No deduction or deduction at a reduced rate to be made if an exporter produces certificate from NBR regarding having fully or partly exempted income.

Any person making sale.

5% of sale price.

--

31.

Payment to actors, actresses, producers etc [section 53D] [rule 17E]

32.

Commission, discount or fees [section 53E] Commission or remuneration paid to agent of foreign buyer [section 53EE] Interest on saving deposits and fixed deposits [section 53F]

33.

Any person being a company working as local agent of a nonresident courier company. 1. The person producing the film, drama, advertisement, TV/radio programme or purchasing such programmes. Any person being a corporation, body including a company making such payment. Bank.

15% on the amount of service charge accrued.

--

10%

--

10%

7.5%

34.

Any person responsible for making such payment.

10%

This shall not apply on the amount of interest or share of profit arising out of any deposit pension scheme sponsored by the government or by a schedule bank with prior approval of the Government.

35.

Real estate or land development business [section 53FF]

Any person responsible for registering any document for transfer of any land or building or apartment.

In case of Building/Apartment constructed for residential purchases: (i) Tk. 2,000 per square meter for building or apartment situated at Gulshan Model Town, Banani, Baridhara,Motijheel and Dilkusha. Tk 8,000/- for those other than residential purposes; (ii) Tk. 1,800 per square meter for building or apartment situated at Dhanmandi, Defense Officers Housing Society (DOHS), Mahakhali, Lalmatia Housing Society, Uttara Model Town, Bashundhara

Residential Area, Dhaka Cantonment Area, Karwan Bazar Commercial Area of Dhaka and, Panchlaish, Khulshi Residential Area, Agrabad and Nasirabad of Chittagong. Tk 6,000/- for those other than residential purposes;

(iii) Tk. 800 per square meter where the building or apartment is situated in areas other than areas mentioned in sub-clause (i) & (ii). Tk 2,000/- for those other than residential purposes. In case of Land: 2% of deed value in case of property situated in any city corporation, paurashava or cantonment board. 1% of deed value in case of property situated in places other than any city corporation, paurashava or cantonment board. 5%

36.

Insurance commission [section 53G] Fees of surveyors of general insurance company [section 53GG] Transfer of property [section 53H]

37.

Any person responsible for paying such commission to a resident. Any person responsible for paying such fees to resident Any person responsible for registering any document of a person.

15%

38.

39.

40.

41.

This shall not apply to sale by a bank or a financial institution as a mortgagee empowered to sell; mortgagee of any property to the BHBFC; mortgagee to any bank of any property; transfer of any agricultural land in Bangladesh 1% of deed value in case of except land situated in any area property situated in areas other mentioned in paragraph [i] or [ii], than those mentioned above. of sub-clause [c] or clause [15] of section 2; Interest on deposit of Any person responsible 10% This shall not apply if the total post office & saving for making such amount of interest is paid to such bank account payment. payee or class of payees as [section 53I] specified by the Board. Rental value of The Government or any Up to Tk. 15,000/- per month -vacant land or plant authority, corporation -------------Nil. or machinery or body including its [section 53J] [rule units, the activities or From Tk 15,001/- to Tk 17BB] any NGO, any 30,000/- per month 3% university or medical college, dental college, More than Tk. 30,000/- per engineering college month ----------5% responsible for making such payment. Advertisement of The Government or any 3%. newspaper or other authority, magazine or private corporation or body or television channel any company or any [section 53K] banking company or any insurance company

2% of deed value in case of property situated in Dhaka, Narayanganj, Gazipur, CDA, KDA, RDA, any city corporation, paurashava or cantonment board.

42.

43.

44.

Collection of tax from sale of share at a premium over face value [section 53L] Collection of tax from transfer of shares by the sponsor shareholders or placement holders of a company listed on stock exchange [section 53M] Dividends [section 54]

or any cooperative bank or any NGO or any university or medical college or dental college or engineering college responsible for making such payment. Securities & Exchange 3% Commission

Securities & Exchange Commission/Stock Exchange

5%

The principal officer of a company.

Resident/ non-resident If the DCT certifies, deduction in Bangladeshi company ----- 20% this regard may not be made or made at a rate less than the Resident/ non-resident maximum rate. Bangladeshi person other than company -----10% Non-resident (other than Bangladeshi non-resident) person other than a company--25%. 20%

45.

Income from lottery [section 55] Income of non residents [section 56]

46.

Any person responsible for making such payment. Any person responsible for making such payment.

Non resident company at the rate applicable to a company. Non-resident non-Bangladeshi person other than a company --25% Non-resident Bangladeshi person at the rate applicable to a resident.

Major areas for final settlement of tax liability : Tax deducted at source for the following cases is treated as final discharge of tax liabilities. No additional tax is charged or refund is allowed in the following cases:-

Supply or contract work Band rolls of hand made cigarettes Import of goods Transfer of properties Export of manpower Real Estate Business Export value of certain items including knit and woven garments. Local shipping business Royalty, technical know-how fee Insurance agent commission Auction purchase Payment on account of survey by surveyor of a general insurance company Clearing & forwarding agency commission Transaction by a member of a Stock Exchange Courier business Compensation against acquisition of property

Premium value over face value of a share Income from transfer of securities of a sponsor shareholder. Winning from lotteries.

Tax Recovery System : In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:-

Imposition of penalty, Attachment of bank accounts, salary or any other payment, Filing of Certificate case to the Special Magistrate.

Advance Payment of Tax : Every taxpayer is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds Taka four lakh. Penalty and interest are imposed for default in payment of any installment of advance tax. Fiscal incentives : Following are fiscal incentives available to a taxpayer:a) Tax holiday : Tax holiday is allowed for industrial undertaking and physical infrastructure facility established between 1st July 2011 to 30th June 2013 in fulfillment of certain conditions. Industrial Undertaking Eligible for Tax holiday : (i) (a) active pharmaceuticals ingredient industry and radio pharmaceuticals industry; (b) barrier contraceptive and rubber latex; (c) basic chemicals or dyes and chemicals; (d) basic ingredients of electronic industry (e.g resistance, capacitor, transistor, integrator circuit); (e) bio-fertilizer; (f) biotechnology; (g) boilers; (h) compressors; (i) computer hardware; (j) energy efficient appliances; (k) insecticide or pesticide; (l) petro-chemicals; (m) pharmaceuticals; (n) processing of locally produced fruits and vegetables; (o) radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or preservation of food or disinfecting medicinal equipment); (p) textile machinery; (q) tissue grafting; or (q) any other category of industrial undertaking as the Government may, by notification in the official Gazette, specify. Physical Infrastructure Eligible for Tax holiday: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) deep sea port; elevated expressway; export processing zone; flyover; gas pipe line, Hi-tech park; Information and Communication Technology (ICT) village or software technology zone; Information Technology (IT) park; large water treatment plant and supply through pipe line; Liquefied Natural Gas (LNG) terminal and transmission line; mono-rail; rapid transit; renewable energy (e.g energy saving bulb, solar energy plant, windmill); sea or river port; toll road; underground rail; waste treatment plant; or any other category of physical infrastructure facility as the Government may, by notification in the official Gazette, specify. Accelerated depreciation: Accelerated depreciation on cost of machinery is admissible for new industrial

b)

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 and commencing commercial production or operation before December 31, 2011 is exempt from tax for a period of 10 years from the date of commencement of commercial production. Industry to be set up after January 1, 2012 will enjoy tax holiday for five years. e) Income from poultry is exempt from tax up to 30th June, 2013, subject to investing at least 10% of the exempted income that exceeds one lakh and fifty thousand Taka, in government securities or bonds. f) Income derived from export of handicrafts is exempted from tax up to 30th June, 2013. 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, 2013. (j) Income of a private power generation company subject to certain conditions included in private sector power generation policy of Bangladesh is exempted from tax for 15 years form the day of commencement of commercial production before June 30, 2013. Income of a private power generation company commencing commercial production from July, 2013 will enjoy tax holiday for 10 years subject to certain limits and conditions. Avoidance of Double Taxation Agreement : There are agreements on avoidance of double taxation between Bangladesh and 28 countries which are:(1) United Kingdom of Great Britain and Northern Ireland, (2) Singapore (3) Sweden (4) Republic of Korea (5) Canada (6) Pakistan (7) Romania (8) Sri Lanka (9) France (10) Malaysia (11) Japan (12) India (13) Germany (14) The Netherlands (15) Italy (16) Denmark (17) China (18) Belgium (19) Thailand (20) Poland (21) Philippines (22) Vietnam (23) Turkey (24) Norway (25) USA (26) Indonesia (27) Switzerland.

List of the Commissioner's/DG's (Income Tax Wing)

Sl. No. (1) 1. Name of the Office (2) Commissioner Taxes Zone-1, Dhaka Commissioner Taxes Zone-2, Dhaka Commissioner Taxes Zone-3, Dhaka Commissioner Taxes Zone-4, Dhaka Commissioner Taxes Zone-5, Dhaka Commissioner Taxes Zone-6, Dhaka Commissioner Taxes Zone-7, Dhaka Commissioner Taxes Zone-8, Dhaka Commissioner (in charge) Large Taxpayer's Unit (LTU) Commissioner Central Survey Zone, Dhaka Commissioner Taxes Zone-1, Chittagong Commissioner Taxes Zone-2, Chittagong Commissioner Taxes Zone-3, Chittagong Commissioner Taxes Zone-Rajshahi Commissioner Taxes Zone-Khulna Commissioner Taxes Appeal Zone-1, Dhaka Commissioner Taxes Appeal Zone-2, Dhaka Commissioner Taxes Appeal Zone-3, Dhaka Commissioner Taxes Appeal ZoneChittagong Name of the Officer (3) Mr. Dr. Mahbubur Rahman Ms. Rahela Chowdhury Mr. Md Sirajul Islam Mr. Dr. Md. Mahbabur Rahman Mr. Md. Abdur Razzak Mr. Pervez Iabal Mr. Syed Md. Mahbubur Rahman Mr. Kalipada Halder Mr. Md. Abdul Baten Add. Commissioner Phone No. (4) 8362944 8333855 (PA) 831 2416 831 2402 933 6788 934 6364 831 6049 835 0603 934 0075 831 2472 Fax No. (5) E-mail (6)

2. 3. 4. 5. 6. 7. 8. 9.

10.

Mr. Sanjit Kumar Biswas Mr. Ramendra Chandra Basak Mr. Md. Habibur Rahman Akhand Mr. Sultan Mahmud

717 4224

11.

031-715190

12.

031-710840

13.

031-725897

14. 15. 16.

Mrs. Rokeya Khatun Mr. Md. Dabir Uddin Mr. Mir Mushtaq Ali

0721812320 041-760669 933 7533

17.

Mrs. Rowshan Ara Akhter Mr. Liakat Ali Khan

833-3116

18.

833 3116

19.

Mr. Haidar Khan

031-714217

20.

21. 22. 23. 24. 25. 26.

Commissioner Taxes Appeal ZoneKhulna Director General Central Intelligence Cell Director General Tax Inspection, Dhaka Director General Tax Training Academy Commissioner Taxes Zone-Rangpur Commissioner Taxes Zone-Barisal Commissioner Taxes Zone-Sylhet

Mr. Chinmoy Proshun Biswas Mr. Md. Alauddin Mr. Kanon Kumar Roy Mr. Md. Meftahuddin Khan Mr. Balal Uddin Mr. Radhesam Roy Mr. M.A Jabbar

041-760349

833 1011 835 9444 933 3520 0521-61772 0431-72202 0821716403