Bangladesh Tax Handbook
2008-2009

Foreword
Editor: Humayan Kabir, ACA Obaidul Islam Khan, ACA The National Budget of Bangladesh for the year 20082009 was presented by the Finance Advisor Dr. A. B. Mirza Md. Azizul Islam on 28th June 2008 in the form of a Finance Bill and the Bill was nally approved by the Hon able President of the Government of Bangladesh to effect from 1st July 2008. We have attempted to summarize the salient features of the new Finance Ordinance 2008 and basic taxation laws/rules for the bene t of our clients, business houses and potential investors. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. The information contained in this handbook is based on taxation laws/rules, but not intended to be a comprehensive guide. Every effort has been given to ensure correctness of the information. However, readers should always seek speci c advice before acting on the information provided in the tax handbook. For further information and assistance you may contact our of ce:

Editorial Board: Baizid Md. Faiaz, MBA

Advisory Board: Nurul Haque, FCA Badrul Ahsan, FCA Fazle R M Hasan, FCA Faruk U. Ahammed, FCA

Green Sayera B-1, House : 125, Road: 2, Block: A, Niketon Society, Gulshan-1, Dhaka, Bangladesh Phone : 986 2802, Fax : + 880-2- 986 2819, E-mail : info@bcs-bd.com, nurul@bcs-bd.com

All right reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying recording, or otherwise without prior written permission of the Publisher.

Index
Particulars Page nos.
5-10 11 15 16 16 17 18 18 18 18 19 19 19 20 20 21 22 23 24 24 25-27 28-31 31 32 33 33 34 35 36 36 36 37 37 37-41 41 42 43 44 44 44 45-48 48 48 49-50 51 51 52 52 52

Changes in Taxation Laws 2008-2009 Income Tax Value Added Tax Summary in Taxation Laws 2008-2009 Income Tax Definitions Heads of Income Income Deemed to Accrue or Arise in Bangladesh Deemed Income Scope of Total Income Charge of Additional Tax Charge of Excess Profit Tax Income Exemption Limit Personal Tax Rate Structure Tax Rebate for assesses paying tax at the highest rate of 25% Minimum Tax (Individual) Incidence of Tax on Non-Resident Income fully Exempted from Tax subject to prescribed conditions and limitations Investment Allowance for Tax Rebate Income from Salary Income from House Property Income from Interest on Securities Income from Business or Profession Rates of Corporate Tax are as follows Allowable Deductions on income from Business or Profession Normal Depreciation Allowance Initial depreciation Accelerated Depreciation Deductions are NOT admissible in certain circumstances Capital Gains Exemption of Capital Gains from tax Capital Gain Tax Income from Other Sources Set-Off of Losses Carry forward of loss Carry forward of Depreciation Allowance Withholding Tax / Tax Deducted at Source (TDS) Tax Holiday for newly established industrial undertaking, Tourist Industry and Physical Infrastructure facility Tax Holiday for Hospitals New List of eligible sectors for Tax Holiday Advance Payment of Tax Payment on the Basis of Return Filing of Return of Income and Statement: Assessments Avoidance of Double Taxation Relief in respect of Foreign Income Value Added Tax Deduction of VAT at source Gift Tax Gift Tax Exemption from Gift Tax Provisions of the Gift Act shall NOT apply to following gifts made by Return of Gift Tax Rates of Gift Tax

Major Changes in Bangladesh Taxation Laws 2008-2009

Income Tax Value Added Tax

Accordingly. On the next Taka 275.000. individual assessees have to pay Taka 2.000. If minimum tax becomes less than Taka 2.000 of total income for Male On the rst Taka 180. Tax Exemption Limit: Changes in Taxation Laws 2008-2009 The ceiling of minimum tax exempted income for the individual assessee has been enhanced from Taka 150.000 of total income iv.000 as minimum tax. 2. Minimum Tax: Individuals Tk. On the rst Taka 165.000. On the next Taka 275. Personal Tax Rate Structure: The 5 tier Income slabs and Tax rates for individual assessee (Including Non-resident Bangladeshi) have been changed and that will be effective from Income Year 2007-2008 (Assessment Year 2008-2009) as per following table: Income Year 2007-2008 (Assessment Year 2008-2009) Income Slabs i. Minimum tax exempted income for female. persons aged 70 years & more and disabled assessees having only agricultural income has been enhanced from Taka 190.000 to Taka 1. On the next Taka 325.000 Minimum Tax (Individual): Minimum tax for individual assessees has been remained same as Taka 2.000.000 of total income 10% 15% 20% 25% 25% iii. 5 Bangladesh Tax Handbook 2008-2009 .000 of total income Not Applicable Tax Rates Nil Tax Rates Nil Nil Nil 10% 15% 20% 25% 25% Tk. persons aged 70 & above and Disabled assessees ii. whose income exceeding exemption limit of Taka 165.000 of total income v. On the balance of total income Non-Resident (Foreign) assessee Minimum Tax: Individuals 3.000 while for other assesees this limit is Taka 215.140.000 to Taka 180.Income Tax 1. On the balance of total income Non-Resident (Foreign) assessee Income Year 2006-2007 (Assessment Year 2007-2008) Income Slabs i.000 or negative after adjusting Investment Tax Credit.000 with effect from Financial Year 2007-2008 (Assessment Year 2008-2009).000 ii.000 to Taka 230.000 (as the case may be). the level of income to charge highest tax @ 25% has been raised from Taka 1. On the next Taka 325. persons aged 70 years & more and disabled assessee has been enhanced from Taka 150. On the next Taka 375. 2.000 or Taka 215.000 of total income for Female.000 of total income iv. while this limit for the individual female.000 of total income v. On the rst Taka 150.000 or Taka 180.000 or Taka 230.000 to Taka 165.000 of total income iii. On the next Taka 375. 2.125.

Bandarban. Period of Exemption For the rst three years (1st. excluding employer s contribution to recognized PF & interest thereon. Bandarban. 5th & 6th year) For the last one year (7th year) Rate of Exemption 100% of Income 50% of Income 25% of Income 7. 15. Khulna and Barisal divisions. and Khagrachari. subject to maximum of 25% (previously was 20%) of the total income. shall be exempted from tax at the rate speci ed as: a.000 6 Bangladesh Tax Handbook 2008-2009 . Tax Holidays applicable for a period of 5 years beginning with the month of commencement of commercial production or operation. Changes in ceiling of House Rent Income for TDS (Section 53A & Rule 17B) Monthly ceiling of House Rent income for TDS has been enhanced to Tk. tourism industry or physical infrastructure facility set-up between 1st July 2008 and 30th June 2011 (both days inclusive). shall be allowed. subject to certain cases. and hill districts of Rangamati.000. 2nd & 3rd year) For the next three years (4th. If the said undertaking is set-up in Dhaka and Chittagong divisions. Investment Allowance for Tax Credit: [Section: 44] Maximum ceiling for Investment Allowance has been enhanced from Taka 250.Income Tax 4. Rate of Exemption 100% of Income 50% of Income 25% of Income If the said undertaking is set-up in Rajshahi. Tax Holidays applicable for a period of 7 years beginning with the month of commencement of commercial production or operation. Period of Exemption For the rst two years (1st and 2nd year) For the next two years (3rd and 4th year) For the last one year (5th year ) b. and Khagrachari. whichever is lower. whichever is lower among the respective three above alternatives. 6. Changes in Taxation Laws 2008-2009 Conveyance Allowance: [Rule # 33C] Exemption limit for conveyance allowance receivable by an employee in cash has been extended to Taka 24.000 from Tk.000 to Taka 500. 5. Tax Rebate @ 10% (previously was 15%) on Investment.000 per annum from Taka 18.000. excluding the hill districts of Rangamati. and actual investment made by assessee. Tax Holiday: [Section: 46B] Exemption of Tax from the income and gains of newly established industrial undertakings. 20.

Part A] Certain exemptions have been granted through Sixth Schedule of ITO 1984: 3 3 3 Income from dividend of a Mutual Fund or a Unit Fund upto Taka 25.000 is only taxable [Para # 22A] Agricultural Income upto Tk. at a time. including IT support & Software maintenance support services. etc from 1st July 2008 to 30th June 2011 [Para # 33] Income from fisheries. production & marketing of seeds.Income Tax 8. if such income exceeds Taka 150. Income Tax Return for Govt.000 fully exempted. Provided that DCT shall not extend the date of submission of return in respect of Universal Self Assessment under Section 82BB. data entry.000 (previously it was Tk. frog & mushroom). Such Income in excess of Tk.400. dairy.000 [Para # 39] Income from Zero Coupon Bond received by a person [Para # 40] 3 3 3 3 3 3 3 10.000) [Para 29] Income from the business of Software Development and Information Technology Enabled Services (ITES). poultry. horticulture.000 at least 10% of the income shall be invested in Bond or Government Securities [Para # 34] Income from the export of handicrafts from 1st July 2008 to 30th June 2011 [Para # 35] Any amount paid by the Government as Tax on behalf of Petroleum Exploration Company under Production Sharing Contract (PSC) in the hands of oil and gas companies [Para # 36] Income from educational activities of private Agricultural College and University [Para # 37] Income from any building not less than five storied having at least ten flats and constructed between 1st July 2008 to 30th June 2013 in the speci ed areas [Para # 38] Income from any Small and Medium Enterprise (SME) having annual turnover not more than Taka 2. official engaged in higher education on deputation or employed under lien outside Bangladesh shall file Return or Returns for the period of such deputation or lien. call centre. Bangladesh Tax Handbook 2008-2009 7 . BPO services. floriculture and sericulture from 1st July 2008 to 30th June 2011. 50. 40. Employees living abroad [Section 75]: An individual being Govt. Changes in Taxation Laws 2008-2009 Enhancement of Computer Depreciation Rate and time for Accelerated Depreciation (Third Schedule) Computer and computer equipments Depreciation Rate has been enhanced to 30% from 20% Time limit for Accelerated Depreciation (Plant & Machinery) has been extended upto 30th June 2010. Exemption of Tax from Total Income: [Sixth Schedule. 25. data processing. farming (cattle. within 3 (three) months from the date of his return to Bangladesh. 9.

15. 4% Nil 2 3 Rental Power Company Monthly House Rent to Landlord: Rent upto Tk. 40.000 = Nil Rent from Tk. 40.000 53J & Rule 17BB Nil 3% 5% 53K 3% Nil Nil Nil Nil 7 Advertising bill of newspaper or magazine or private television channel.000 = 3% Rent exceeds Tk.000 4 5 Insurance Commission Office Interest on deposit of Post Savings Bank Account 53G 53I 5% 3% 10% (deductible only when total interest exceeds Tk. Changes in Withholding Tax/ TDS rates: [Section 52 and 53] Sl # Head of Deduction/ collection of Tax at Source 1 Trade License Section New TDS Rates Earlier TDS Rates FY 2008-2009 FY 2007-2008 52K Taka 500 for Taka 1.000 and TDS applicable on the excess of interest Tk. 30.000 for each each trade trade license license renewed issued/renewed by by City Corpn. 15. 20. 30.001 to Tk.000 52N 53A & Rule 17B Nil Rent upto Tk. 53 & Rule 17A Bangladesh Tax Handbook 2008-2009 8 .000 3 Rent Tk.Income Tax Changes in Taxation Laws 2008-2009 11.001 to Tk.) 6 Monthly Rental value of vacant land or plant or machinery : (not applicable for lease rentals payable to leasing companies) 3 Rent upto Tk.001 to Tk. 20. 35.000 3% Rent exceeds Tk. 15.000 3 Rent exceeds Tk. TDS from Importers 8 Sec. 35.000 = 5% 7.000 only. 150. 150. City Corpn.5% Nil Rent from Tk. 15.

payable at the time of registration and renewal Bangladesh Tax Handbook 2008-2009 9 . under section 53BBBB will no more be considered as Final Settlement of Tax (Section 82C) effective from 1st July 2008. dated 7th April.S.00) Ferrous waste and scrap of stainless steel (H. 2008.92.13.10) Changes in Taxation Laws 2008-2009 Section New TDS Rates Earlier TDS Rates FY 2008-2009 FY 2007-2008 3% 3% 3% 3% Nil Nil Nil ­ TDS @ 0. Introduction of new Annual Income Tax Return Form: [Rule 24. Code 7204. 12. 13. approved DPS under section 53F is withdrawn. shall be applied at same rate like resident assessees. except knit wear land woven garments. Presumptive Tax on AC Bus: As per SRO # 204-Ain/Income Tax/2008 dated 30th June 2008. 7106.00.xed @ 10% of tax X number of years tax avoided.21. ­ TDS from Interest of Scheduled Bank & Govt.12.xed at Tk. Code 8470.25% from export of any goods. Penalty for Concealment of Income: [Section 128] Penalty for concealment of income has been re.S. TDS on Dividend Income of NRBs will be @ 10% only (Section 54). ­ TDS on income of NRBs (Non-Resident Bangladeshi). new Income Tax Return Forms IT-11 GA (for Individual) and IT-11 GHA (for Company) have been introduced to amend earlier forms with Wealth Statement (IT 10B) and Life Style Statement (IT 10BB) and subject to unavailability of new forms assessee may use earlier Income Tax Return Forms.00) Gold Bullion (H.50.S. 14. the Income of CA Firms will taxable in the hands of the Firms effective from the Income Year 2008-2009 by omitting SRO # 150-Ain/1995 dated 28th August 1995 (Amended SRO # 183-Ain/1998 dated 19th August 1998 and SRO # 181-Ain/1999 dated 1st July 1999).000 effective from 1st July 2008. 7108.S.Income Tax Sl # Head of Deduction/ collection of Tax at Source Electronic Cash Register (H. Code 7106.00) Silver Bullion (H. Withdrawal of Exemption of Tax from Income of CA Firms: As per SRO # 205-Ain/Income Tax/2008 dated 30th June 2008. which would have been avoided with effect from 1st July 2008. Presumptive Tax on AC Bus has been re. 15. 5.91.00. effective from 1st July 2008. Code 7108. 25 & 25A] As per SRO # 88-Ain/Income Tax/2008. This will now be considered as Advance Tax. other than Dividend income.

Extension of Time to charge Tax at Reduced Rate Tax on Income of Jute Industry and Textile Industry: As per SRO # 206-Ain/Income Tax/2008 dated 30th June 2008 the Jute Industry and SRO # 207-Ain/Income Tax/2008 dated 30th June 2008 Jute and Textile Industries will continue pay tax at reduced rate of @ 15% on their income until 30th June. Bank balance. 10 Bangladesh Tax Handbook 2008-2009 . 83A and 83AA and Rule 38: Provision for ling Return under Self Assessment Scheme u/s 83A & Rule 38. company or other assessee has failed to show his/her/its legal income and investment in Land. in income Tax Return. 18. persons already enjoying such bene t will continue to get the same until end of 3 years. Building. However. Whitening Black Money: As per SRO # 208-Ain/Income Tax/2008 dated 30th June 2008. 17.Income Tax Changes in Taxation Laws 2008-2009 16. Withdrawal of Minimum Tax for Companies [Section 16CC]: Provision for charging minimum tax for companies u/s 16CC has been withdrawn. Cancellation of Provision for submission of Return u/s 82B. any individual. 19. they may get redemption by paying tax liability & penalty @ 7% on tax of Income Year 2008-2009 and get advantage to show that income as investment in prescribed form between 1st July 2008 and 31st October 2008. Stock etc. Car. 2011. 20. Assessment on the basis of Return u/s 82B and Self Assessment Scheme for Private Limited Companies u/s 83AA have been withdrawn effective from 1st July 2008. Withdrawal of provision on Foreign Technicians Tax-Free Income (6th Schedule): Provision for exemption of tax on income of foreign Technician for 3 years has been withdrawn effective from 1st July 2008.

Indenting Commission. Bangladesh Tax Handbook 2008-2009 11 .000. c. Jarda.Value Added Tax Value Added Tax 1. Examination of Return by Inspector or Superintendent or concerned authority within not more than 30 days (previous 60 days) has been re. 5. b.xed. Registration for Taxable goods or Services must have at least annual turnover Taka 2. Electronic Cash Register (ECR) or Computer. c. b. Exemption of VAT on supply of sample for export does not exceed Taka 20.000 (Previous Taka 2.400.000 (Previous 10.000. 3.400. b.000). Poultry. e. Rods & Iron. h. Fabrics.000). Expansion of VAT net: Changes in Taxation Laws 2008-2009 Income from the following businesses will be included in the scope of VAT: a. Dairy. Engineering Firms. and Fishing. Others: a. Repairing & Servicing of taxable goods. Services rendered by Academic & Training Institute except English Medium School. f. Enhancement of Area Regarding Turnover Tax & Cottage Industry: a. Offences & Penalties [Section 37]: Penalties will be imposed for not maintaining any documents. Silver Bullion. private Medical & Engineering college. d. d.000 and corresponding annual turnover does not exceed Taka 2. c. e.500. Turnover Tax @ 4% if annual turnover of taxable goods or services is less than Taka 2. Investment of Cottage Industry does not exceed Taka 1.400. VAT Return Form Mushok 19 format has been revised. 4. Scented Tobacco and Burnt Tobacco Relieve from the Scope of VAT: Income of the following sectors will not be included in the scope of VAT: a. g.000. VAT authority shall return the sample to its owner within 30 days. b. 2.

con gurable Leave Register (optional sub-module)         Con guration on leave types and total days in the year Storing leave application form Online veri cation of leave application forms Direct leave record entry form where online veri cation process will not be used Affecting the attendance register automatically by leave records Adjusting the leave at the year end (earn or lapse) Auto-posting of leave encashment into PayPack as an income item Leave management options are user-con gurable Training & Development (optional sub-module)  Creating annual training plan  Creating training courses and keeping training program records . Block: A.local & overseas training  Maintaining participants list in each training programs & keeping records of performance  Evaluate staff performance and recommend for training  Training cost budget and actual expense comparison  Auto-posting of staff performance achieved from training into Performance Appraisal process Performance Appraisal (optional sub-module)  Mechanisms for evaluating the performance of employees  Mechanisms for appraising the performance of employees  Exit interview with the staff . E-mail : info@bcs-bd. and between HQs and branch of ces in a company through a data synchronization utility support  Company wise and branch wise backup/restore support  Users activity audit trail  The central place of all HR Management Pack modules (PayPack and TaxTool) for data sharing. Bangladesh Phone : 986 2802. Niketon Society.986 2819. nominees photograph and signature in the system  Auto-generation of appointment letters  Employee grade matrix can be con gured with grade category. This is the base module for all these packages.Software Modules for Human Resource Management Employees data OT & LW P Hol iday s Leave encashment Emplo ye data es & ata es d ge loye acka Emp enefit p b Paym e nts E ees loy mp dat a g Traininance perform Emplo yees d ata a& dat ees kage ploy ac Em enefit p b Employees data & benefit package Employees database (default sub-module)  Keeping all the employee records and the organogram in a central database  Facility of keeping employees photograph. Fax : + 880-2. grade and step with payment amounts  Transfer and promotion history of employees  Manpower statement  Certi cate of service  Company s organogram and job description of employees  Multi-company operations and dataset keeping  Online operations between branches and HQs having LAN/WAN connectivity  Of ine operations among companies. Attendance Register (optional sub-module)  Provision for keeping attendance records  Online veri cation  Auto-posting of leave without pay into PayPack as a deduction in the salary or into Leave Register as a deduction in the leave available  Holiday calendars  Printing attendance statements with various parameters  Annual statements on hartal days  Employee-wise monthly statements on total number of days attended. For your queries and software presentation you may contact: Green Sayera B-1. Gulshan-1. absent and on leave  Integration with electronic attendance card systems  Automatic overtime (OT) calculation based on the company policy con gurable by the user  OT calculation methods and parameters and attendance options are user. Road: 2.com & nts me ons Pay ducti de Tax challan late. Dhaka. House : 125.

Summary in Taxation Laws 2008-2009 Income Tax Value Added Tax Gift Tax .

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Company: The company will be resident if the management of its affairs is situated wholly in Bangladesh in the income year. Summary in Taxation Laws 2008-2009 Assessee [Section: 2(7)]: Assessee means a person by whom any tax or other sum of money is payable under Income Tax Ordinance 1984. Examples of Accounting Year. a Hindu undivided family. b. d. Individual: An individual will be Resident: if he stays in Bangladesh for a period of or for the periods all together at least 182 days or more in the income year or if he stays in Bangladesh for a period of or for the periods all together at least 90 days or more in the income year and 365 days or more during the immediate four preceding years of income year. This is the immediate following financial year of Income Year. penalty. a firm. Income Year and Assessment year: Accounting Period / Year 1 2 3 4 5 Accounting Year: July 2007 to June 2008 Accounting Year: January 2007 to December 2007 Accounting Year: April 2006 to March 2007 Accounting Year: October 2006 to September 2007 Accounting Year: August 2006 to July 2007 Income Year Assessment Year 2007-08 2007-08 2006-07 2007-08 2007-08 2008-09 2008-09 2007-08 2008-09 2008-09 c. Other Association of Persons: They will be resident if its control and management of affairs is situated wholly or partly in Bangladesh in the income year. Basis of Residence [Section: 2(55)]: i. interest. e. Bangladesh Tax Handbook 2008-2009 15 .Income Tax 1. iii. or accruing or arising or received or deemed to be accrue or arise or to be received under any provision of IT Ordinance 1984 Tax [Section: 2(62)]: Tax means the income tax payable under the Income Tax Ordinance 1984 and include any additional tax. the twelve months ending on the date on which accounts are closed Assessment Year [Section: 2(9)]: Assessment Year means the period of twelve months beginning from first day of July of every year. ii. g. Firm. fee or other charge leviable or payable under the IT Ordinance 1984. a local authority. Definitions: a. Income [Section: 2(34)]: Income means any sum of income or gain from whatsoever source derived. excess profit tax. Person [Section: 2(46)]: Person includes an individual. an association of persons. Income Year [Section: 2(35)]: Income Year means the financial year immediately preceding the assessment year or when accounts are closed on a date within the financial year. f. Hindu Undivided Family. a company and every other artificial juridical person.

j. asset. namely: a. any business connection in Bangladesh. Any income which falls under the head Salaries. Income from Business or Profession [Section 28. b. iii. or in addition to. d. allowance. g. any leave encashment. Pension Fund and Superannuation Fund. Perquisites [Section 2(45). transfer of capital assets in Bangladesh. Any income accruing or arising. i. Perquisite means any payment made to an employee in the form cash or in any other form excluding: • basic salary • festival bonus • arrear salary • advance salary • overtime • leave encashment • leave fare assistance • incentive bonus maximum upto 10% of disclosed profit of relevant income year • contribution to a recognized Provident Fund. Salaries [Section 2(58) and 18]: Salary includes: i. d. any advance of salary. any annuity. f. Income from Other Sources [Section 33 & 34]. Anything paid in excess of allowable perquisite limit is taxed in the hands of employer. pension or gratuity. v. Heads of Income [Section 20]: a. whether directly or indirectly. any fee. commission. Income from House Property [Section 24 & 25]. if [Section 18(1)]: • • b. through or from [Section 18(2)]: • • • c. Any dividend paid outside Bangladesh by a Bangladeshi company [Section 18(3)] Any income by way of interest payable [Section 18(4)]: 16 Bangladesh Tax Handbook 2008-2009 . salary or wages. 30(e)]: Perquisite limit Taka 200. any property. Capital Gains [Section 31 & 32]. wherever paid.Income Tax h. e. right. ii. or it is paid by Bangladesh Government or local authority in the service of such government or authority. 3 Income Deemed to Accrue or Arise in Bangladesh: [Section 18] The following income shall be deemed to accrue or arise in Bangladesh. Interest on Securities [Section 22 & 23]. Salaries [Section 21].000. iv. Agricultural Income [Section 26 & 27]. any wages. 2. perquisites or profit in lieu of. 29 & 30]. it is earned in Bangladesh. Summary in Taxation Laws 2008-2009 Non-resident [Section: 2(42)]: Non-resident means a person who is not a resident. c. other source of income in Bangladesh.

unpaid trading liabilities/ loan etc.Income from Other Source [Section 19(3)] Unrecorded investment .Income from Other Source [Section 19(7)] Difference between the purchase price and fair market value .Income from Other Source [Section 19(2)] Unexplained expenditure . will be treated as deemed income. by the government.Income from Other Source [Section 19(4)] Ownership of any money. Any income by way of fees for technical services payable [Section 18(5)]: • • f.Income from Other Source [Section 19(10)] Cancellation of indebtedness . • • 4. jewellery etc.Income from Other Source [Section 19(5)] Income received from discontinued business .Income from Other Source [Section 19(8)] Salami or Premium . investments. .Income from Business or Profession [Section 19(14)] Receipt back of loss. bullion etc. Any income by way of royalty payable [Section 18(6)]: Deemed Income: [Section 19] Unexplained cash credits.Income from Other Source [Section 19(12)] Lotteries. or Summary in Taxation Laws 2008-2009 • by a person who is resident / non-resident in Bangladesh.Income from Business or Profession [Section 19(16)] Income from sale of depreciated assets having been used for agricultural purpose Income from Agriculture [Section 19(17)] 17 Bangladesh Tax Handbook 2008-2009 . etc.Income from Other Source [Section 19(1)] Unrecorded investment or possession of bullion.Income from Business or Profession [Section 19(6)] Receipt of Dividend . crossword puzzles etc.Income from Other Source [Section 19(9)] Goodwill. . . Income from Business or Profession [Section 19(15)] Income from sale of depreciated assets having been used for the purpose of any business or profession . . compensation or damages. bad debt or expenditure and unpaid trading liability etc.Income from Other Source [Section 19(13)] Income from Insurance Business . by the government.Income Tax • by the government. e. or by a person who is resident / non-resident in Bangladesh. or by a person who is resident / non-resident in Bangladesh.Income from Other Source [Section 19(11)] Managing Agency Commission . possession of bullion. which are mentioned below in brief with relevant heads of income and respective sub-section: i ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi xvii Unexplained Cash credit .

the bank shall pay @ 15% tax of such excess amount. accrue or arises or deemed to accrue or arises in Bangladesh.Income from Other Source [Section 19(24)] 5. declare or distribute dividend or bonus share equivalent to at least 15% of its paid up capital within 6 months following its income year. Such tax is payable in addition to tax payable under IT Ordinance 1984.Income from House Property [Section 19(22)] xxiii Income from transfer of export quota by Garments Industry .Income from Business or Profession [Section 19(23)] xxiv Investment by a private limited company or a public limited company in its equity received from share holder or director not being received by cross cheque . Income Exemption Limit: Tax exemption income limit of individual assesses enhanced from Taka 150. accrue or arises or deemed to accrue or arises in Bangladesh 18 Bangladesh Tax Handbook 2008-2009 . salvage or compensation moneys in respect of assets having been used for the purpose of any business or profession . 7. Non-Resident All income from whatever sources including received or deemed to be received in Bangladesh. 8.000 with effect from Income Year 2007-2008 (Assessment year 2008-2009). salvage or compensation moneys in respect of assets having been used in agriculture .000 for male individual assesses.Income from Agriculture [Section 19(19)] Income from sale of assets of capital nature .Income Tax Summary in Taxation Laws 2008-2009 xviii Income from receipt of insurance. it will be charged 5% additional tax on undistributed profit in addition to tax payable under IT Ordinance 1984. Char ge of Ad ditionalTax [Section 16B]: If a publicly traded company (other than banking or insurance company) does not issue. persons aged 70 & above and disabled assesses has been Þxed at Taka 180.Income from Other Source [Section 19(21)] xxii Un-adjustable security money taken from tenant . Char ge of Excess Pr Tax [Section 16C]: ofit If a banking company operating under Banking Companies Act 1991 shows a profit exceeding 50% of the aggregate sum of capital and reserve. or accrue or arises outside Bangladesh 6.Income from Business or Profession [Section 19(20)] xxi Unpaid Loan . while this limit for female. Scope of Total Income [Section 17] The total income of any income year of any person includes: Resident All income from whatever sources including received or deemed to be received in Bangladesh.000 to Taka 165. Here undistributed profit means accumulated profit including free reserve.Income from Business or Profession [Section 19(18)] xix xx Income from receipt of insurance.

000 as minimum tax. On the first Taka 165.000 of total income for Female On the first Taka 180.000 to Taka 230. individual assessees have to pay Taka 2. Minimum Tax (Individual): Minimum tax for individual assessees has been remained same as Taka 2. On the next Taka 375. Summary in Taxation Laws 2008-2009 Personal Tax Rate Structure: Taxable income slab and tax rates have been changed for personal income tax. On the first Taka 150.000 of total income iv. If minimum tax becomes less than Taka 2.000 of total income iii.000 of total income for Male On the first Taka 180.000 of total income for person aged 70 & above On the first Taka 180. On the balance of total income Non-Resident (Foreign) assessee Income Year 2006-2007 (Assessment Year 2007-2008) Income Slabs i.Income Tax 9.000 of total income v. On the next Taka 275.000 of total income for Disabled person ii.000 of total income Not Applicable Not Applicable Tax Rates Nil Nil Nil Tax Rates Nil Nil Nil Nil 10% 15% 20% 25% 25% Tk. On the next Taka 375.000. Tax Rebate for assesses paying tax at the highest rate of 25% Individual assesses paid tax @ 25% during the assessment year 2007-2008 with declaration of more than 10% higher income in 2008-2009 will get 10% tax rebate on tax attributable to that additional higher income declared in 2008-2009 assessment year. On the balance of total income Non-Resident (Foreign) assessee Nil 10% 15% 20% 25% 25% Tk.000 of total income v.000 Not Applicable ii.000 or Taka 180.000 of total income iii. On the next Taka 325.000 or Taka 230. On the next Taka 275. persons aged 70 years & more and disabled assessees having only agricultural income has been enhanced from Taka 190.000 Minimum Tax: Individuals Minimum Tax: Individuals 10.000 (as the case may be). Bangladesh Tax Handbook 2008-2009 19 .000 or negative after adjusting Investment Tax Credit. The Five-tier taxable income slabs and tax rates for individual assessees (Including Non-resident Bangladeshi) applicable for the assessment year 2007-2008 and 2008-2009 are as follows: Income Year 2007-2008 (Assessment Year 2008-2009) Income Slabs i. 2. whose income exceeding exemption limit of Taka 165.000 of total income iv. 11.000. On the next Taka 325. Minimum tax exempted income for female.000 while for other assesees this limit is Taka 215. 2.000 or Taka 215.

vi. Income from property held under Trust but shall not apply to NGOs registered with NGO Affairs Bureau [Para # 1] Any income derived from micro credit operations by NGOs registered with NGOAB [Para # 1A] Income of a religious or charitable institution derived from voluntary contributions. WPPF and approved superannuation fund) [Para # 21] 20 Bangladesh Tax Handbook 2008-2009 . b. not being a citizen of Bangladesh [Para # 7] Pension [Para # 8] Interest on government securities maximum upto Taka 5. xv.Income Tax Summary in Taxation Laws 2008-2009 12.000 [Para # 12] Interest on Debentures approved by SEC upto Taka 20. [Para # 2] Income of Local Government [Para # 3] Income of Provident Fund and other Funds [Para # 4] Traveling Allowances. iii. xii. ix.000 including exemption of interest on Govt. iv. A Bangladeshi non-resident is subject to tax at normal rate. xiii. etc. conditions and quali cations laid down therein: i. viii. d. vii. (to meet expenses wholly and necessarily incurred in performance of the duties of an of ce or employment of pro t) incurred [Para # 5] Income of Trustees on behalf of any recognized fund [Para # 6] Income of the personnel of the foreign missions. x. c. 13. A non-resident assessee (other than Bangladeshi non-resident) is liable to tax on his total income @ 25%. Income speci ed in Part-A of the Sixth Schedule (Exclusions from Total Income) of the Income Tax Ordinance 1984 are exempt and excluded from the computation of total income subject to limits. profits and gains which are received or deemed to have been received or are deemed to accrue or arise to him in Bangladesh. Incidence of Tax on Non-Resident: a. as applicable for a resident assessee. Securities of Taka 5000 [Para # 13] Share of Capital Gains of a Partner of a Firm [Para # 18] Income of a member of Hindu Undivided Family [Para # 19] Gratuity [Para # 20] Any payment received from Provident Fund and other Funds (PF. Income fully Exempted from Tax subject to prescribed conditions and limitations [Section 44(1) and Part A of Sixth Schedule]: Certain incomes are totally exempted from tax and they are not includable with other income even for rate purpose. v. A person who is a non-resident is liable to tax on the incomes. xiv. xi. ii. A non-resident assessee is not entitled to any sort of allowance and relief as are admissible to a resident assessee for the purpose of tax rebate.

if such income exceeds taka 150. as tax on behalf of Petroleum Exploration Company under Production Sharing Contract (PSC) [Para # 36] xxx Income from educational activities of private Agricultural College and University [Para # 37] xxxi. xxii.000 and at least 10% of income invested in bond & govt.Income Tax xvi. 5 & 6] b. Tax Rebate: Tax Rebate @ 10% of the eligible investment shall be allowed as Rebate. poultry. horticulture. Any amount paid by govt.000 [Para # 31B] xxvi. Income from any building not less than ve storied having at least ten ats [Para # 38] xxxii. securities [Para # 34] xxviii. Income from the export of handicrafts [Para # 35] xxix. Income from the business of Software Development and Information Technology Enabled Services (ITES) [Para # 33] xxvii. Income from Zero Coupon Bond [Para # 40] 14 Investment Allowance for Tax Rebate [Section 44 (2) & (3) and Part B of Sixth Schedule]: a. xvii. Income of Mutual Fund [Para # 30] xxiv.400. Maximum ceiling of Investment Allowance: Maximum ceiling for Investment Allowance is Taka 500. Income from Savings Instruments upto Taka 150. dairy.000 [Para # 29] xviii. xx. subject to maximum of 25% of the total income excluding employer s contribution to recognized PF & Interest thereon. Bangladesh Tax Handbook 2008-2009 21 . Income from sheries. farming (cattle. Income from any Small and Medium Enterprise (SME) having annual turnover not more than Taka 2. 4.000 [Para # 39] xxxiii. xix. frog & mushroom). oriculture and sericulture.000. c. xxi. Capital Gains from Machinery or Plant used in business or profession [Para # 31A] xxv. Investments eligible for Tax Rebate: i) ii) iii) Life insurance premium paid by an individual [Para # 1] Life insurance premium paid by Hindu Undivided Family [Para # 2] Contribution to Provident Fund and Other Funds [Para # 3. Interest on the balance in a Recognized Provident Fund [Para # 25] xxiii. Summary in Taxation Laws 2008-2009 Income from dividend of a mutual fund or a unit fund upto taka 25.000 [Para # 22A] Interest on tax-free Government Securities [Para # 24] Payment received on voluntary retirement [Para # 26] Income of indigenous Hillman [Para # 27] Income from export business [Para # 28] Income from agriculture upto Taka 50. production & marketing of seeds.

Income Tax iv) v) vi) vii) ix) x) xi) xii) Summary in Taxation Laws 2008-2009 Investment in Stocks and Shares [Para # 8] Investment in Debentures or Debenture-Stocks [Para # 9] Investment in Unit Certi cate etc [Para # 10] Contribution in any Deposit Pension Scheme (DPS) [Para # 11] Donation to organization for the welfare of the retarded people [Para # 11B] Donation to Zakat Fund [Para # 13] Contribution to Benevolent Fund and Group Insurance Scheme [Para # 17] Donation of Aga Khan Development Network [Para # 21] viii) Donation to a charitable Hospital [Para # 11A] xiii) Donation to philanthropic or educational institution [Para # 22] 15. Perquisites. allowances which are exempt from the payment of tax. Salary once included in any year on due basis or advance payment basis is not includible in the income of any other year.000 per month or 50% of basic salary or. perquisites. shall be included in income. includible as income under the head salary has been prescribed in rule 33A to 33J. though not due or before it became due to him. whichever is less. employer s contribution to a recognized provident fund or a fund to which Provident Fund Act 1925 applies and the interest thereon. iii. Income classi ed under the head Salaries: Salaries include the followingany salary due from an employer to the assessee in the income year whether paid or not. Basic salary for the purpose of determination of value of perquisites. etc. means the pay and allowances payable monthly or otherwise but does not include: dearness allowance or dearness pay unless it includes in the computation of superannuation or retirement benefits. any salary paid or allowed to him in the income year by or on behalf of an employer. allowances and benefits. 22 Bangladesh Tax Handbook 2008-2009 . allowances. A share-holder being director of more than one company shall be entitled to the benefit under rule-33 for one company only. if not charged to income tax for any earlier income year. any arrears of salary paid or allowed to him in the income year by or on behalf of an employer. ii. i. allowances and benefits includible as income of Salaried Persons: Extent of perquisites. House rent allowance receivable in cash [Rule # 33A]: House rent allowance in excess of Taka 15. annuities and benefits as referred to sub rule 1 of rule-33. Income from Salary [Section 21]: Any income classi able as salaries irrespective of its place of payment shall be deemed to be income accruing or arising income in Bangladesh if it is earned in Bangladesh or it is paid by the government or local authority in Bangladesh to a citizen in Bangladesh.

beverages or the like thereof provided at the office premises during the course of work. coffee. Deductions allowable in the determination of income from house property: The following deductions are allowable in determining the net income: Bangladesh Tax Handbook 2008-2009 23 . vii. ix.5% of basic salary shall be included in income.Income from House Pr ty [Section 24 & 25]: oper a. nothing shall be added in his income. the amount which would have been expended for this passage if not provided by the employer. Where free concessional passage for travel abroad is availed more than once in two years: The whole of the amount paid in cash. Where the passage is not in accordance with the terms of employment: The whole of the amount paid in cash and if not paid in cash.000 per annum the allowance so receivable in excess of Taka 24. whichever is less. vi. shall be entitled to the benefits under rule # 33 for one company only. Where the transport is provided free of cost or at a confessional rate: By an undertaking engaged in the transport of passengers or the carriage of goods of an employee of the undertaking in any conveyance owned or charted by the undertaking for the purpose of the transport of passengers. viii. if any.2005.Income Tax Summary in Taxation Laws 2008-2009 iv. Conveyance provided exclusively for personal or private use [Rule # 33D]: An amount equal to 7. if any. Rent free accommodation [Rule # 33B]: The rental value of the accommodation or 25% of basic salary. the amount which would have been expended by the employee if not provided by the employer.07. xi. v. made by employer exceeds the actual expenditure incurred by the employee. Conveyance allowance receivable in cash with no conveyance facility [Rule # 33C]: Allowable amount Taka 24. for such additional passage. being director of more than one company. 16. Allowable exemptions on the income of Sponsor / Shareholder Directors [Rule # 33(2) xii. Other benefits [Rule # 33J]: Equivalent amount shall be included in income.000 per annum shall be included in income. If no cash payment is made. x. Entertainment allowance [Rule # 33H]: The whole amount shall be included in income except for free tea. Medical expenses [Rule # 33I]: Receipts / receivable from employer in excess of actual expenditure shall be included in the income of the assessee. (b)]: As per SRO 207-Ain/2005 dated 06. Free or concessional passa for tra abr ad or within Bangladesh [Rule # 33G]: ge vel o Where free or concessional passage for travel abroad or within Bangladesh is provided by the employer to an employee (including the members of his household and dependents) shall be included in the income of the employee: Where the passage is provided in accordance with the terms of employment: An amount equal to the sum by which the cash payments. shall be included in income. b. The value determined by the tax authority will be treated as annual value. Income from house property whether used for commercial or residential purposes is taxable on the basis of its annual value. a shareholder. Additional conveyance allowance [Rule # 33E]: The whole amount shall be included in income.

000. ii. Interest receivable by him on debenture or other securities of money issued by or on behalf of a local authority or company. repair or renovation of the house property. Commission or charges deducted from interest by a bank realizing the interest on behalf of the assessee. Income from Interest on Securities [Section 22 & 23]: Incomes classifiable under the head Interest on Securities are: A. construction. Interest on Debentures approved by SEC upto Taka 20. 18. [Sixth Schedule. and 30% of annual value in case it is used for commercial purpose) Insurance premium Interest on mortgage or other capital charges Any tax not being a charge leviable on annual basis Ground rent vi) Land development tax vii) Interest payable on capital borrowed for the purpose of acquisition. Interest or annual charge payable outside Bangladesh shall not be allowed as deduction on which tax has not been paid or deducted at source.000 including exemption of interest on Govt. B. 17. ii. Securities of Taka 5.000. viii) Proportionate vacancy allowances ix) Interest payable during construction period to be allowed in 3 subsequent equal installments. profits and gains of any business or profession. iii. income of trade or professional association derived on account of specific services performed for its members. 24 Bangladesh Tax Handbook 2008-2009 . Para # 13] Provided that allowance or deduction on account of interest or commission in respect of or allocable to the tax-free government securities shall not be allowed.Income Tax i) ii) iii) iv) v) Summary in Taxation Laws 2008-2009 Maintenance allowances: (25% of annual value in case it is used for residential purposes. Interest receivable by the assessee on any security of the government or any security approved by the government. Interest payable on money borrowed for the purpose of investment in the securities. C. Deductions permissible in the determination of income from interest on securities are: i. Deduction will also not be allowed in respect of interest payable outside Bangladesh on which tax has not been paid or deducted. Income from Business or Profession [Section 28]: Income from business or profession includes the following: i. reconstruction. subject to owner s self occupied portion for which interest on borrowed capital not exceeding Taka 2.000.

bad debt or expenditure and unpaid trading liability as referred to section 19 (15). iv. if declared dividend or bonus share rate is less than 15% [section: 16B] Companies declaring dividend less then 10% or dividend not paid within the time xed by SEC ii. Insurance Institutions: Corporate Tax and Financial 45% 15% (on excess profit) 40% 35% 27.Income Tax iii. Companies not publicly traded Mobile Operator Company: If the company is converted into publicly traded company through at least 10% share for Initial Public Offering (IPO). receipt back of loss. v. i.5% 10% 5% on undistributed profit 37. Dental. Banks. 37. 19. vi. income from receipt of insurance. income from sale of asset of capital nature as referred to section 19 (20). Summary in Taxation Laws 2008-2009 value of any benefit or perquisite arising from business or exercise of profession. Rates of Corporate Tax are as follows: SL. Private University: Income accrued from private universities approved by University Grant Commission and other universities which are not public universities shall pay tax (other than Medical. If not converted into a publicly traded company with 10% share for IPO. vii. income from transfer of export quota as referred to section 19 (23). NO. Bangladesh Tax Handbook 2008-2009 25 . Engineering and Agricultural University). income from sale of asset of depreciated asset as referred to section 19 (16). Assessees Publicly traded Companies (other than Banks.5% 30% 10% 5% on undistributed profit 40% New Rate AY 2008-09 Previous Rate AY 2007-08 45% Excess Profit Tax (banks only): Profit in excess 15% 50% of Capital+ Reserve [section: 16C] (on excess profit) iii. iv. viii. salvage or compensation money as referred to section 19 (18).5% 35% 45% 15% 45% 15% v. Insurance & Financial Institutions): Normal Tax Rate (paying Dividend 10% or more) Rebate @ 10% on applicable tax in case where declared dividend is more than 20% Additional Tax.

NO. Resident Assessee: Including nonresident Bangladeshi: Company Shareholders. vii. 15% 15% 10 % 20% 10 % 15% 20% 20% 25% 15% 15% 25% 20% 10% 15% 10% 26 Bangladesh Tax Handbook 2008-2009 . Company shareholders of tax treaty countriy holding less than 10% of total shares of the company. Payment of Dividend: Payment of Dividend by companies formed under Company Act. ix. xiii. finishing and covering of yarn Textile Industries Jute Industries Industries set up between July 2002 and June 2005 and also not applying for tax holiday (This rate will continue for five years) Tax on Income Accrued from Research Institute under Trust Act. 1994 or by foreign companies (FED/702/2006/5743 and Finance Ordinance 2008) to: Non Resident Assessee: Other than non-resident Bangladeshi: Company shareholders of tax treaty country with more than 10% total shareholdings. Assessees Summary in Taxation Laws 2008-2009 New Rate AY 2008-09 15% 10% 15% Previous Rate AY 2007-08 15% 10% 15% Company engaged in Diamond cutting and Polishing industry Readymade Export oriented Garments Industries Companies which manufacture of yarn related production of fabrics. vi. 15% 15% 20% 15% 15% 20% xii. Individual. viii. x. xi. Remittance of Pro t to/by a Foreign Company Person or Individual.Income Tax SL. Company shareholders of non tax treaty countries. dying.

Income accrued outside Bangladesh to any of her citizen. xvi. Para 33) xv. if such income is brought into Bangladesh. securities and stock & shares of public companies listed with Stock Exchanges [Section 32(7)] Nil xvii. dated 13. Capital gain arising out of transfer of govt. etc. Part A. dated 13.09. Para 33) data entry. Para # 2(b)] 15% (Concessional rate 10% has been withdrawn) At applicable At applicable Where the capital gain arises as result rate on total rate on total of a disposal after not more than 5 income including income including years from the date of acquisition. In Case of a person other than Company: [Second Schedule. capital gain capital gain Where the capital gain arises as result of a disposal after 5 years from the date of acquisition. xiv.Income Tax SL.09. NO. At the rate applicable on total income including said income OR @ 15% on the capital gain whichever is lower Nil (SROAin/IT/2004. data processing. Assessees Summary in Taxation Laws 2008-2009 New Rate AY 2008-09 [Second 15% Previous Rate AY 2007-08 Tax in respect of Capital Gain: In Case of Company: Schedule. call centre. Nil Bangladesh Tax Handbook 2008-2009 27 . Para # 2(a)] Capital gain will be taxed as a block of income separate from other income of the assessee company at flat rate.04 Nil (6th SchedulePart A. Nil Income from business of software and IT Enabled Services (ITES) including IT (6th ScheduleSupport & Software maintenance services. BPO Services.04 At the rate applicable on total income including said income OR @ 15% on the capital gain whichever is lower Nil (SROAin/IT/2004.

plant or furniture being owned by the assessee and used for business or profession. 28 Bangladesh Tax Handbook 2008-2009 . machinery or plant. vi. plants. machinery. used in business or profession [Para # 1(vii)] Depreciation of building. ii. [Para # 1(xiii)] Bonus paid to employees including festival bonus [Para # 1(xiv)] The amount of bad debt. [Para # 1(xii)] Land development tax or rent. xi. under the stated circumstances and to the prescribed extent (Third Schedule. xiv. xv. Allowable Deductions on income from Business or Profession [Section 29(1)]: The allowable deductions which have been specifically mentioned are the following: i.2003-2004 and 2004-2005. allowable during the assessment years 2001-2002. viii.20022003. etc. xvii. Para # 10) [Para # 1(xi)] Obsolescence allowance and allowance on account of death or useless animals. is allowable for the earlier year under the stated circumstances and with the consent of the assessee [Para # 1(xvii)] Provision for bad and doubtful debt and interest thereon made by a commercial bank including the Bangladesh Krishi Bank. which is established to have become irrecoverable. subject to the specified conditions. [Para # 1(vi) Insurance premium for insurance against risk of damage etc. Rent for the business premises [Para # 1(i)] Repairs to hired business premises [Para # 1(ii)] Bank interest paid or any profit shared with a bank run on Islamic principles in respect of capital borrowed for the purpose of business or profession [Para # 1(iii)] Share of profit paid by a bank run on Islamic principles [Para # 1(iv)] An amount not exceeding 5% of the profit transferred to Special Reserve by financial institutions approved by the Government [Para # 1(v)] Repairs to own buildings. x. of buildings plant etc. v. demolished or destroyed. local rate. which is entitled to special depreciation is allowable at 20% of the original cost subject to stipulated conditions (Third Schedule. Para # 8) [Para # 1(ix)] Obsolescence allowance for building. xvi. whichever is less. iv. the allowances are admissible under Third Schedule [Para # 1(viii)] Investment allowance for a passenger vessel or a fishing trawler. ix. xiii. 2005-06 and 2006-07. xii. the amount which was established to be irrecoverable [Para # 1(xvi)] The amount for bad debt having been irrecoverable in an earlier year. iii. which has been discarded. machinery. furniture etc. vii. under the stated circumstances [Para # 1(xv)] The amount of bad debt written off as irrecoverable but deduction not allowed on the ground that it was not then irrecoverable.Income Tax Changes in Taxation Laws 2008-2009 20 . Rajshahi Krishi Unnayan Bank and Karmosangsthan Bank for a sum equal to 1% of the outstanding loan including interest thereon or the amount of actual provision.

Paypack. Financial Modeling. HR/Administration . Management & Financial Reviews IT Audit / Compliance Audit Business Advisory Services on corporate.Handholding of Accounting functions Handholding of Payroll functions Transaction / Payment Processing Employees and Corporate taxation matters Design and Implementation of Software like TaxTool. accounting and related matters Implementation of Fixed Asset Management Systems Handholding of Company Secretarial functions and Formation of company branch and liaison office Design and development of Financial systems and Manuals Salary Surveys / Pay restructuring Headhunting / Executive Search / Recruitment and Work Permit for Expatriates Imparting Training on basic Accounting and Computer systems . Asset. and Benipack Our Value Added Services Employees Provident Fund & Gratuity Fund Accounting functions Due Diligence Review. tax.

not being capital expenditure. Para # f(i)] On the first Taka 1. is ultimately recovered. xxiv. Ceiling of admissible expenditure has been prescribed in Rule 65 of Income Tax Rules. xxi. xxv. xx. maintenance or running of any institute for the training of industrial workers will be similarly deductible [Para # 1(xxiii)] Any expenditure laid out or expended on the training of citizens of Bangladesh in connection with a scheme approved by the National Board of Revenue [Para # 1(xxiv)] Expenses incurred in connection with visits abroad in a Trade Delegation sponsored by Government [Para # 1(xxv)] Subscription paid to a registered trade organization or to a recognized professional institution is allowable expenditure for the purpose of computation of income from business [Para # 1(xxvi)] Any expenditure. Expenditure incurred on the construction. xxii. 1984 [Section 30. subject to the stipulated conditions [Para # 1(xxi)] Any sum. which has been allowed. not oftener than once in every 2 years. Any expenditure. not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of the business or profession of the assessee [Para # 1(xxvii)] Allowance in respect of expenditure on publicity and advertisement [Section 30.000.000 of income from business or profession: 4% On the balance income xxix.Income Tax Summary in Taxation Laws 2008-2009 If any amount out of the provision for bad and doubtful debt and interest thereon. xxvi. Para # f(iii)] Any allowance in respect of expenditure on entertainment not in excess of the amount prescribed in this behalf. the amount so recovered shall be deemed to be profit of the year in which it is recovered [Para # 1(xviiiaa)] xviii. 1984 [Section 30. xxviii. xxvii. Para # f(ii)] The amount has been restricted upto 3 months basic salary or three-fourth of the actual expenditure whichever is less. not being of capital nature laid out or expended on any educational institute or hospital established for the benefit of employees subject to the stipulated condition [Para # 1(xxii)] Expenditure (including capital expenditure) incurred on any educational institution or hospital established for benefit of employees and their dependents is deductible provided no charge is made for the services rendered by such hospital or institution. : 2% Foreign travel expenses for holidaying and recreation incurred by business houses on account of their employees and their dependants not exceeding the amount prescribed in this behalf under Rules 65A of the Income Tax Rules. 30 Bangladesh Tax Handbook 2008-2009 . laid out or expected on scientific research related to the business [Para # 1(xix)] Any expenditure of a capital nature laid out or expended on scientific research related to the business subject to the stipulated conditions [Para # 1(xx)] Any sum paid to scientific research institute etc. xxiii. subject to sum exceeding taka 10.000 shall not be allowed as deduction unless such payment is made through bank. xix.

iron or steel flats for cargo. 12% The allowance is to be calculated on the original cost 12% 24% 24% Bangladesh Tax Handbook 2008-2009 31 . Normal Depreciation Allowance (Third Schedule.0% Turnover exceeding Taka 5 crore but not exceeding Taka 10 crore : 1.50% xxx Head Of ce Expenses for a Company not incorporated in Bangladesh. iii. motor launches and speed boats. allowable upto 10% the Pro t (Section 30g) Technical Assistance Fee / Royalty allowable upto 5% of the pro t (Section 30h) Incentive Bonus allowable upto 10% of the disclosed net pro t (Section 30j) 21. Para # 3): [section: 29(1) (viii) & (ix)] SL. ii.375% In respect of pharmaceutical industry: Turnover upto Taka 5 crore : 2. Class of Assets NO. (Section 30. Para # f(iv)} In respect of industry other than pharmaceutical industry: Turnover upto Taka 5 crore : 1. motor vessels. Rate/percentage of Remarks the written down value except as otherwise indicated 10% 20% 10% 20% i.75% Turnover exceeding Taka 10 crore : 0.Income Tax xxx Summary in Taxation Laws 2008-2009 Allowable expenditure on distribution of Free-Sample {(Rule: 65C).0% Turnover exceeding Taka 10 crore : 0. wooden cargo boats. a) Building (general) b) Factory building Furniture and fittings Machinery and plant: a) General rate b) Special ratesShips1) Ocean-going ships (new) 2) Ocean-going ships (Second hand) age at the time of purchase • Less than 10 years • 10 years or more 3) Inland ships including steamers.50% Turnover exceeding Taka 5 crore but not exceeding Taka 10 crore : 0.

being passenger vehicles or sedan cars. 32 Bangladesh Tax Handbook 2008-2009 . Class of Assets NO. Summary in Taxation Laws 2008-2009 Rate/percentage of Remarks the written down value except as otherwise indicated 20% 1) Batteries.10% of the cost. iv. whichever is later. 2) Machinery used in the production and exhibition of cinematographic films 3) Motor vehicles. 22.Income Tax SL. portable boilers. not plying for hire 4) Motor vehicles plying for hire 1) Professional and reference books 2) Aircraft. Para # 5A] Where any building has been newly constructed or any machinery or plant has been in Bangladesh after 30th June 2002.000. Computer & Computer Equipments 20% 20% 24% 30% 30% 30% 30% 30% 30% In case of motor vehicles.000. In the case of machinery or plant other than ships or motor vehicles not plying for hire 25% of the cost. Mineral oil concerns 1) Below ground installations 2) Above ground installations. not plying for hire cost for the purpose of depreciation is restricted to Taka 1. machinery or plant is used by the assessee for the first time for the purpose of his business or profession or the year in which commercial production is commenced. well-head tanks and rigs. that is to say. Initial depreciation: [Third Schedule. X-Ray and electrictherapeutic apparatus and accessories thereto. shall be allowed at the following rates: In the case of building . an amount by way of initial depreciation allowance in respect of the year of construction or installation or the year in which such building. drilling tools. aero-engines and aerial photographic apparatus 3) Moulds used in the manufacture of glass or plastic goods or concrete pipe.

Board is to give decision on the application within 45 days [Section 46A (3) or 46B (6)]. has been or is used in an industrial undertaking set up in Bangladesh between the first day of July. The undertaking must fulfill all the prescribed conditions and apply to Board in the prescribed manner for approval for the purpose of deprecation of this category within six months from the end of the month of commencement of commercial production. Payment of interest. has been or is used in the expansion unit of any existing undertaking or in the treatment and disposal of toxic and environmentally hazardous wastes or in the collection or processing of biodegradable waste or in the research and development in any industrial undertaking owned by a company. commission or remuneration by a firm or an association of persons to any partner of the firm or any member of the association as the case may be [Para # 30(b)] Bangladesh Tax Handbook 2008-2009 33 . Accelerated depreciation is also allowable on machinery and plant other than office appliances and road transport vehicles which having not being previously used in Bangladesh. salary. 24. In this case accelerated depreciation is allowed at 80% for 1st year (starts commercial production or operation) and 20% for the next following year [Para # 7A (1)]. Para # 7 & 7A] In the case of any machinery or plant (other than office appliance and road transport vehicles) which not having been previously used in Bangladesh.Income Tax Summary in Taxation Laws 2008-2009 23. Any payment made by an assessee to any person if tax thereon has not been deducted and credited in accordance with Chapter VII and VAT thereon has not been collected or deducted and credited in accordance with VAT Act. Deductions are NOT admissible in certain circumstances: [Section 30] The following expenditures are not admissible deductions in the determination on income from business or profession: i. Payment of salaries if tax is not deducted at the time of payment and paid thereon in accordance with section 50 [Para # 30(a)] ii. 1991 [Para # 30(aa)] iii. Accelerated Depreciation: [Third Schedule. 1977 and the thirtieth day of June 2010 (both days inclusive) accelerated depreciation allowance shall be allowed and computed as follows: For the first year in which the undertaking starts commercial production For the next following second year For the next following third year 50% of the actual cost of plant and machinery to the assessee 30% of the actual cost of plant and machinery to the assessee 20% of the actual cost of plant and machinery to the assessee The assets enjoying accelerated depreciation will not be eligible for any other depreciation under the Income Tax Ordinance.

Income Tax iv. Any expenditure exceeding 10% of the profit under the head office expenses by a company not incorporated in Bangladesh under Companies Act 1994 [Para # 30(g)] ix. In case of acquisition of asset: 34 Bangladesh Tax Handbook 2008-2009 . In determination of the gain on transfer of any expenditure incurred solely in connection with transfer of the capital asset and the cost of acquisition including expenditure. to any employee in excess of Taka 200. vii. technical know how fee or technical assistance fee exceeding 5% of the profit [Para # 30(h)] x. incurred for the improvement of asset are deductible from the sale value. if any.000 [Para # 30(e)] Provided that this ceiling shall not be applicable to an employer where perquisites were paid to an employee in pursuance of any government decision to implement the recommendation of a Wage Board constituted by the government. Any payment by way of royalty. xii. technical services fee. as defined under Section 2(45). Summary in Taxation Laws 2008-2009 Brokerage or commission paid to a non-resident if tax has not been deducted there from under section 56 [Para # 30(c)] Payment to a provident or other fund unless effective arrangement has been made for deduction of tax at source while making the payments from the fund which are taxable under the head Salaries [Para # 30(d)] vi. Any payment by way of salary or remuneration made otherwise than by crossed cheque or bank transfer by a person to any employee having gross monthly salary of Taka 15. Any expenditure by way of overseas traveling exceeding 1% of the disclosed turnover [Para # 30(k)] 25. in the case of sales and services liable to excise duty. 1984 which prescribes rates of income tax in certain special cases. The amount of expenditure in excess of the prescribed rates and as is not. Capital Gains: [Section 31] Any gains arising from transfer of a capital asset (both movable and immovable) as defined in Section 2(15) of the Income Tax Ordinance is chargeable to income tax in accordance with the Second Schedule.000 or more [Para # 30(i)] Any expenditure by way of incentive bonus exceeding 10% of the disclosed net profit [Para # 30(j)] xi. supported by excise stamp or seal in respect of the following items [Para # 30(f)] Entertainment (Rule # 65) Foreign travels of employees and their dependants for holidaying and recreation (Rule # 65A) Distribution of free samples (Rule # 65C) viii. Para # 2 of the Income Tax Ordinance. v. Amount of perquisites or other benefits paid.

When capital gain is equal or less than the cost of new asset. no tax shall be charged on the capital gain. Where actual cost to the previous owner can not be ascertained. ii. Transfer of capital asset used in the business with following rules: [Section 32(5)] A declaration shall have to be made before the assessment is made. By purchase the actual cost of the asset. fair market value of assets on the date on which it became the property of previous owner. the capital gain shall not be charged to tax as income of the year of transfer [Section 32(10)] iv. Where actual cost of the previous owner as reduced by depreciation allowance. Transfer of Stocks and Shares of a public company by a non-resident: Capital gain arising in the hand of a non-resident from transfer of stocks or shares of a listed company is exempted from tax provided such assessee is entitled to similar exemption in the country in which he is a resident [Section 31] Bangladesh Tax Handbook 2008-2009 35 . When capital gain is greater than the cost of new asset. then the capital gain shall not be charged to tax as income of the year of transfer [Section 32(11)] v. 26. Transfer of Buildings and Lands to a new company for setting up an industry and the whole amount of capital gain arising out of such transfer is invested in the equity of the said company. ii. Exemption of Capital Gains from tax: [Section 32] Capital gains or portion thereof arising out of transfer of certain capital assets are exempted from the income tax under certain circumstances and upon fulfillment of certain conditions. Following are the cases of full or partial exemptions: i. capital gain upto the extent of cost of acquisition of new asset shall be exempted and balance shall be charged to tax. A new capital asset for the purpose of business or profession has to be purchased within 1 year before or after the date of transfer.Income Tax Events i. Summary in Taxation Laws 2008-2009 Value of cost capital assets Actual cost of the previous owner as reduced by depreciation allowance. Transfer of Capital Asset of a firm to a new company: Capital gain arising from transfer of capital asset of a firm to a new company registered under companies Act 1994 and the whole amount of capital gain is invested in the equity of the said company by the partners of the firm. bequest or will or under a transfer on a trust or distribution of capital asset on liquidation of company or dissolution of a rm or association of persons. shall be taken to be the cost of acquisition in the hand of present owner. Capital gain arising out of transfer of Government Securities and Stocks & Shares of public companies listed with a stock exchange in Bangladesh is exempted from tax [Section 32(7)] iii. Property acquired by gift.

interest on securities. he is entitled to set-off the loss so sustained against his income. such as.Income Tax Assessee Summary in Taxation Laws 2008-2009 27. Royalties and Technical Services. 2. Income from letting of machinery. 7. Such loss can be set-off only against the Capital Gains. 9. 3. Loss on Capital Gains can not be set-off against income from any other head. 11. building etc. 5. 36 Bangladesh Tax Handbook 2008-2009 . Deemed Income [Section 19 (1. business or profession. profits or gains under any other head in that year. e. 21 & 24)] Income of any kind which is not classifiable under any other heads specified in Section 20 29. d. 8. Any speculative transactions undertaken by an assessee should be treated as a distinct and separate business and any loss incurred in those transactions should be set-off only against the income. total income including total income including said income OR said income OR @ 15% on the capital gain whichever is lower @ 15% on the capital gain whichever is lower 28. 4. 13. 10. 12. Capital Gain Tax: [Second Schedule] New Rate AY 2008-09 Previous Rate AY 2007-08 Tax in respect of Capital Gain: In Case of Company: [Second Schedule. Interest. f. c. Para # 2(b)] 15% 15% Applicable rate on Where the capital gain arises as result Applicable rate on total income including total income including of a disposal after not more than 5 capital gain capital gain years from the date of acquisition Where the capital gain arises as Tax payable at the Tax payable at the result of a disposal after 5 years rate applicable on rate applicable on from the date of acquisition. property. Set-Off of Losses: [Section 37] Whenever an assessee sustains a loss in any year under any of the following heads of income. profits or gains of that business. b. Dividend. furniture. Para # 2(a)] Capital gain will be taxed as a block of income separate from other income of the assessee company at flat rate In Case of a person other than Company: [Second Schedule. Any loss from Business or Profession shall not be set off against income from House Property in the year such loss crop up. Income from Other Sources: [Section 33] Following income of an assessee is assessable under the Income from Other Sources: a. plant. agricultural income and other sources.

because of there being no profits or of inadequate profits. 51. Discount of the real value of Bangladesh Bank bills. Carry forward of Depreciation Allowance: [Section 42(6)] Depreciation allowance which cannot be given full effect of.000 (Disabled Assessee). Carry forward of loss: [Section 38] Whenever an assessee sustains any loss under the head Business or Profession not being loss from speculation business and the loss cannot wholly be set-off against income under any other head i.000.5 or 37. interest on securities and income from other sources. 31. Loss cannot be carried forward for more than six successive assessment years.000. 32. if any.Income Tax Summary in Taxation Laws 2008-2009 30.000 (Assessee aged 70 & more). Bangladesh Tax Handbook 2008-2009 Rate of deduction (%) Nil Nil Nil Nil 10 15 20 25 27. In case of Supply of goods or execution of contracts / subcontracts: Where the cumulative exceed Taka 100. / Rule # 1 50 Particulars Salaries and benefits: ­ On first Taka 165. 55 & 56] SL.  Individual.000 (Female Assessee).e. 52. Section No. 53. ­ On next Taka 325. agricultural income.000. ­ On first Taka 180. of the following year. ­ On first Taka 180. Withholding Tax / Tax Deducted at Source (TDS): [Section 50. in any year. ­ On first Taka 180.  Company. property.000 (Male Assessee). ­ On next Taka 375. ­ On next Taka 275. unadjusted allowances or portion thereof as the case may be. salary. Interest on securities excluding treasury bond or treasury bill issued by the government. such unadjusted loss shall be carried forward to the following year to be set-off against the profits and gains of the same business or profession. The only exception in this regard is that the loss sustained in speculative business shall be carried forward to be set-off only against speculative profits. 54.5 or 45 whichever is applicable 10 2 50A 3 4 51 52 & Rule16 payment does not Nil 37 .000. effect shall first be given to business loss (Section 38) including loss from speculation business (Section 39). While setting-off loss on account of depreciation allowance. ­ On the rest of the balance. shall be carried forward to the next year or so on for succeeding years and be part of allowance for that year.

500.500. Engineers & Consultants. Subject to Private Security Service TDS @ 1. Where the cumulative payment exceeds Taka 1. (Rate shall be applicable for savings certificate purchased on 1st January. 2007 or thereafter).125% (tax @ 7. Payments on certain services like stevedoring agency. Collection of tax from Cigarette Manufacturers. 5 52(1) & Rule 17 52A(1) 52A(2) 52A(3) 52AA Indenting Commission. Where the payment exceeds Taka 200.75 3.000. 2004 or thereafter whose interest/profit accrued on 1st January.000 but does not exceed Taka 500. Compensation against Acquisition of Property. Commissioner shall collect for commission receivable by clearing and forwarding agents.000 but does not exceed Taka 2. Where the cumulative payment exceeds Taka 2.000. Section / Rule # Particulars Summary in Taxation Laws 2008-2009 Rate of deduction (%) 1 2.5 5 10 10 10 7.5% of 15% profit) on bill amount.500. Nil 0.000 but does not exceed Taka 1. Fees for services rendered by Doctors. Professional or Technical Services.Income Tax SL. Where the cumulative payment exceeds Taka 500. No.5 6 6 10 38 Bangladesh Tax Handbook 2008-2009 .000.5 6 7 8 9 10 52AAA 11 52B 12 52C 13 52D 7. Royalty or Technical Know How Fee.000. private security service agency. Interest on savings instruments. In the case of supplied by oil marketing company: Where the payment does not exceed Taka 200.000.5 3.5 4 Where the cumulative payment exceeds Taka 100.500. Accountants.000. Shipping Agency Commission.

Collection of tax by City Corporation at the time of Renewal of Trade License.015 0. discount or fees on account of marketing or distribution of goods.  for one and half section brick field. Collection of from freight forward agency commission. 12. 18. Collection of tax from export of any goods except knitwear and woven garments.000. Collection of tax from Member of stock exchanges. Subject to such payment exceeds taka 36. 52N 20 53 & Rule 17A 21 53A & Rule 17B Monthly rent upto Taka 20. Export of Manpower (Service charges). 500 per trade license 10 7. 10. Commission. Payment to actors and actress.5 5 5 7. 30 31 Bangladesh Tax Handbook 2008-2009 39 .5 4% 3 15 52 I 16 52K 17 52L 18 52M 19.000 Tk.  for two section brick field. Collection of tax from export of knitwear and woven garments.5 22 23 24 25 26 27 28 29 53AA 53B & Rule 17C 53BB 53BBB 53BBBB 53C & Rule 17D 53CC 53D & Rule 17E 53DD 53E Collection of tax from shipping business of a resident. No. Rental Power Company Collection of tax from Importers and Exporters. Payment of rent to Landlord:    Tk. Deduction from export cash subsidy.001 to Taka 40.25 0. Monthly rent from Taka 20. Monthly rent exceeds Taka 40.000. Commission of Letters of Credit. The Board shall specify from whom collection to be made.000.000 in the aggregate in any income year. Deduction or collection of tax at source from courier business of a non resident. Collection of tax on sale price of goods or property sold by public auction.000 Tk. Nil 3 5 5 10 0.Income Tax SL. Section / Rule # Particulars Summary in Taxation Laws 2008-2009 Rate of deduction (%) 14 52F Collection of the from brick manufacturers (at the time of permission for manufacture of bricks):  for one section brick field. Collection of tax on account of Trustee Fee.25 5 7.000 5 Tk.

000 and TDS applicable only on the interest in excess of Tk.000. Monthly rent exceeds Taka 30. 31 Section / Rule # 53EE Particulars Summary in Taxation Laws 2008-2009 Rate of deduction (%) 4 Commission or remuneration paid to agent or representative of a foreign buyer as per terms of L/C or under any other instructions. No.  Company beneficiary for tax treaty countries having less than 10% shareholding 40 Bangladesh Tax Handbook 2008-2009 . 32 53F 10 33 53FF Tk 250 per sq. Monthly rent from Taka 15. 20 10 20  Company beneficiary for tax treaty countries. bank or by way of profit on term deposits. Nil 3 5 3 39 53K 40 54 Advertising bill of newspaper or magazine or private television channel.000 Payment of rental value of vacant land or plant or machinery:    38 53J & Rule 17BB Monthly rent upto Taka 15.5 5 10 34 53G 35 53GG 36 53H 37 53 I Payment of insurance commission. meter 5% of deed value 3 7. Interest on deposit of Post Office Savings Bank Account. Deduction from Dividends:  Company beneficiary for non-tax treaty countries. leasing company or housing company. deductible only when total interest exceeds Tk. of property. financial institutions. 150. 150.001 to Taka 30. Collection of tax from persons engaged in real estate or land development business:  in case of building or apartment.  in case of land. Interest on Savings and Fixed Deposits or any term deposit maintained with schedule bank including a corporation. Payment of fees / remuneration to surveyor of General Insurance Company.000. Collection of tax on transfer. etc.Income Tax SL.000.

in certain cases: [Section 46B] A. Deduction from Income of non-residents:  Company. fertilizer. Bangladesh Tax Handbook 2008-2009 41 . Tax Holiday for newly established industrial undertaking.000 on the date of commencement of commercial production. high value garments (overcoats. computer and agriculture machinery etc. plastic. tourist industry and physical infrastructure facility subject to following conditions: i. steel. An additional 10% profit has to be invested each year within 3 months of closing the income year by purchasing shares of listed companies in Bangladesh. The Industrial Undertaking in the production of textile.5% 25 At applicable Rate for resident individual Resident Company with more than 10% shareholding. The undertaking is managed either by (i) a body corporate established by or under an act of Parliament having head office in Bangladesh or (ii) a company defined under companies Act 1913 or 1994 having subscribed & paid up capital of not less than Taka 1. Section / Rule # Particulars   Summary in Taxation Laws 2008-2009 Rate of deduction (%) 20 10 Applicable rate or 20% whichever is lower Rate applicable to company i. 37. 2008 to June. Condition for Tax Holiday: Period of tax holiday has been further extended for 3 years beyond 30th June.e. jute. 33. 2011 etc. melamine. Tourist industry as defined in the explanation to Section 46.  Non resident Bangladeshi.Income Tax SL. 2008 and 30th June 2011. 2008 in respect of industrial undertaking.   iv. sanitary. etc.  Person other company & non resident Bangladeshi. Providing on commercial basis. No. Individual: Resident 41 55 & Rule 17I 42 56 Income from lottery. Para # 2]  iii. jackets & suits). pharmaceuticals. physical infrastructure facilities. The undertaking is engaged in: [Section 46(B). ii.000. Tourist Industry and Physical Infrastructure facility set-up between the period of July. ceramics. The undertaking is set up in Bangladesh between 1st July. 30% of the tax exempted income to be invested in the same undertaking or for a new industry during the period of exemption or within one year of expiring tax holiday period.

excluding the hill districts of Rangamati. and the undertaking must be approved by the Board. b. Period of Exemption For the first two years (1st and 2nd year). c. Rate of Exemption 100% of Income 50% of Income 25% of Income Computation of Tax Holiday Income a. For the next three years (4th. An application shall be filed with the Board for approval of the undertaking within 6 months from the end of the month of commencement of commercial production or operation. Khulna and Barisal divisions. if any.Income Tax v. Rate of Exemption 100% of Income 50% of Income 25% of Income vi. Income of the said undertaking resulting from disallowance made under section 30 shall not be exempted from tax. 5th & 6th year). C. Summary in Taxation Laws 2008-2009 The undertaking is not formed by splitting up or by reconstruction or reconstitution of an existing business or by transfer to a new business of any machinery or plant used in Bangladesh at any time before commencement of the new business. Loss shall be carried forward to be set off against income from same undertaking in the following years. Tax Holiday for Hospitals: [SRO 204-Ain/IT/2005 dated 6th July 2005] a. 42 Bangladesh Tax Handbook 2008-2009 . For the last one years (5th year). Period of Exemption For the first three years (1st. for a period of 5 years beginning with the month of commencement of commercial production or operation. and Khagrachari. and Khagrachari. Period of Exemption: [Section 46(B). Loss sustained in a tax holiday undertaking shall not be set off against profits of taxable units. shall be allowed. Only normal depreciation allowance. Para # 1] If the said undertaking is set-up in Dhaka and Chittagong divisions. Any dividend distributed by a tax-holiday company to its shareholders out of its exempted profit shall not be exempt from tax. but not beyond tax holiday period. A newly established private hospital will be eligible for exemption of income for another 5 years subject to the following conditions: The hospital is owned by a company registered under the Companies Act 1913 or 1994. 34. e. For the next two years (3rd and 4th year). For the last one year (7thyear). Bandarban. and hill districts of Rangamati. If the said undertaking is set-up in Rajshahi. B. d. The profit and gain shall be computed under the head income from business or profession (section 28) b. Bandarban. Capital gains earned by tax holiday undertaking shall not be exempt from tax. 2nd & 3rd year). for a period of 7 years beginning with the month of commencement of commercial production or operation.

d.Steel from iron ore. j.Residential hotel having facility of three star or more. New List of eligible sectors for Tax Holiday: [Section 46B] i. c. j. Boilers & compressors. Flyover. n. Physical Infrastructure Facility: a. ii. g. Fertilizer. Gas pipe line. f. r. k. d. chemicals & Pharmaceuticals. Solar energy plant. kidney and cancer patients. 10% of the beds must be kept reserved for treatment of poor free of charge. jackets. The hospital has number of beds (i) 200 beds in case of general hospital (ii) 50 beds in case of specialized hospital for heart. 35. g. e. l.Textile. d. p. m. Export processing zone. Summary in Taxation Laws 2008-2009 The hospital is established between the period 1st July 1999 to 1st July 2008 in the private sector. Sanitary ware. Large water treatment plant & supply through pipe line. Sea or river port. High Value Readymade Garments (overcoat. b. CNG terminal and transmission line. Waste treatment plant. LNG terminal and transmission line.Petro chemicals. Computer hardware.Pharmaceuticals. s.Income Tax c. q. Plastic products. internal container depot (ICD) & container freight station (CFS). Insecticide & pesticide. Industrial Undrtaking a. Bangladesh Tax Handbook 2008-2009 43 . Container terminals.Melamine. Mono-rail & underground rail. The hospital is housed in a building constructed on the company s own land. l.Agricultural machine. f. Textile machinery. b Jute goods. c.Basic raw materials of drugs. suits). k. o. i. f. MS Rod & CI Sheet.Ceramics & sanitary ware. e. e. h Telecommunication other than mobile phone i. h.

Every company shall file a return of its income or the income of any other person for whom the company is assessable. b. iv.600 sft.000. on or before the date specified. runs a business or profession with trade license from a city corporation or pourashava. [Section 68] Advance tax is payable by an assessee during each financial year if the latest assessed income (assessment completed either on regular or provisional basis before the fifteenth May of the year) exceeds Taka 300. 15th December. one may submit an estimate of income of one s own and that the tax paid on the basis of the estimate does not fall short of 75% of the tax payable on regular assessment. on or before the date on which he files the return. the maximum amount which is not chargeable to tax and every person whatever his income in the income year who was assessed to tax for any year within three years preceding that year. Advance tax is payable in four equal installments on 15th September. Tourism Industry: Residential hotel having facility of three star or more and any other category of tourist industry facility as the Government may by notification in the official Gazette specify. owns a motor car. Advance Payment of Tax: [Section 64] ­ ­ The ceiling of the amount of income for payment advance tax is taka 300.000. resides in a city corporation or pourashava.e. owns a more than one story building with an area of more than 1. If one estimates that one s income during any financial year will be less than the last assessed income. Because. if the tax paid falls short he is liable for interest. Where a person is not required to file a return under sub-section 1 of section 75. [Section 73] 37. 76. 77 & 78] Every person whose total income during an income year exceeds the exemption limit i. Filing of Return of Income and Statement: [Section 75. 36. subscribes a telephone. shall furnish a return setting forth therein (along with such other particulars as may be prescribed) his total income and total income during the income year. Payment on the Basis of Return: [Section 74(1)] Every person who is required to file a return under Section 75 shall. iii. or divisional head quarters or district head quarters and fulfils any of the following conditions: i. is a member of club registered under VAT Act 1991. [Section 64] The new assesses have been exempted from the payment of advance tax unless their income exceeds taka 300. pay the amount of tax payable by him on the basis of such return as reduced by the amount of any tax deducted from this income or paid by him. 38. union parishad and operates a bank account. ii.Income Tax Summary in Taxation Laws 2008-2009 And any other category of industrial including as the government may be notification in to official Gazette specify. he is to file a return if he: a. 15th March and 15th June.000. Bangladesh Tax Handbook 2008-2009 44 . iii.

ITP. or assessment on the basis of such return does not result in refund. CA. if it is filed in accordance with the provisions of sub-section (2) of section 75 ­ The amount of tax payable shall be paid on or before the date on which the return is filed in accordance with section 74. he shall assess the total income and determine the tax payable by him on the basis of such return and communicate the assessment order to the assessee within thirty days next following: Provided that- ­ Such return shall be filed on or before the date as specified in clause (c) of sub section (2) of section 75. engineer. CMA. as the case may be. semi-government. Summary in Taxation Laws 2008-2009 is registered with a recognized professional body as a doctor. d. the receipt shall be deemed to be an order of assessment for the assessment year for which the return is filed. and ­ The amount of tax payable shall be paid on or before the date on which the return is ­ Such return does not show any loss or lesser income than the last assessed ii. Every individual shall furnish. has a tax payers identification number in accordance with the provision of section 184A. Assessments: i. Assessment on Correct Return: [Section 82] Where a return or a revised return has been filed under Chapter VIII and the Deputy Commissioner of Taxes is satisfied. that the return is correct and complete. ­ The Board or any authority authorized by the Board may select a number of such returns filed may refer to the DCT for the purpose of audit to make the assessment under section 83 or 84. member of a club or a trade association. without requiring the presence of the assessee or the production of any evidence. Bangladesh Tax Handbook 2008-2009 45 . along with the return or the certificate. In the case of a company the return will be accompanied by a statement of accounts audited by a chartered accountancy firm. participant in a tender floated by government. e. filed. 39. income. surveyor or any similar profession. is a candidate for an office of pourashava or a city corporation or a member of a parliament. Universal Self Assessment [Section 82 BB] ­ Where an assessee furnish a correct and complete return of income. his spouse and his minor children and dependants. dentist. autonomous body or local authority. a statement in the prescribed form and verified in the prescribed manner giving particulars of the total assets and liabilities of himself. ­ A return shall be taken to be complete. f. the DCT shall receive such return himself or cause to be received by any other official and issue a receipt of such return and. architect. He shall also furnish particulars of his personal and family expenditure as per proforma determined by the board to be called life-style as per rule 25A.Income Tax c. g.

The provision of sub-section (1) shall not apply in the case of deduction of tax from sale proceeds of building or lands as mentioned in clause (d) with respect to any investment made under sub-section (10) of section 32. ­ Auction purchase on which-tax is collectible under section 53C. 53H. Summary in Taxation Laws 2008-2009 Final Settlement of Tax Liability: [Section 82C] The settled liability scheme under section 82C was introduced in 1998. ­ Remuneration or reward.Income Tax iii. Taxes deducted or collected at source are treated as final settlement of tax liability on the deemed income under the scheme. 52. for which tax is deductible under section 52A(2). The above rules shall NOT apply to: The provisions of sub-section (1) of section 82C shall not apply in the case of supply of goods or execution of contract as mentioned in clause (a). ­ Export of manpower on which tax is deductible under section 53B. ­ Commission from clearing & forwarding under section 52AAA. 52B. whether by way of commission or payable to an insurance agent. Following classes of incomes/receipts are referred to under the settled liability scheme in respect of which tax has been deducted or collected at source: ­ ­ ­ ­ ­ Supply of goods or execution of contract on which tax is deductible u/s. on which tax is deductible under section 53G. ­ Import of Goods u/s. ­ Interest on savings instruments on which tax is deductible u/s. ­ Income from courier business of a non resident under section 53CC.T. ­ Amount on account of winnings referred to in section 19(13) on which tax is deductible under section 55. Transaction by a member of a stock exchange for which tax is collectible under section 53BBB. Shipping business of a resident on which tax is collectible under section 53AA. ­ Value of the property from which tax is collectible u/s.53 not being goods imported by any industrial undertaking as raw materials for its own consumption. 46 Bangladesh Tax Handbook 2008-2009 . with respect to a contractor of an oil company or a sub-contractor to the contractor of an oil & gas company as referred to in Rule-39 of the I. ­ Payment of royalty. Manufacture of cigarettes u/s. Rules. ­ Payment on account of survey by surveyor of a general insurance company under section 53GG. Certain incomes/receipts are treated as income under the scheme and taxes are collected or deducted at source from such incomes/receipts. 52D. Real estate or land development business u/s 53FF. technical know-how fee. ­ Export cash subsidy paid by the government for promotion of export under section 53DD.

pro ts and gains shall mean the net income. The expression income. allowances and depreciation as allowed for the purposes of sections 28. Assessment on the basis of Report of a Chartered Accountant: [Section 83AAA] Where a return or a revised return filed by a company is reasonable believed to be incorrect or incomplete. under Rule 39. 29 and 30 of the Ordinance. etc. investment. the Board may appoint a registered Chartered Accountant to examine the accounts of that assessee. 2. v. _ the option once exercised shall be treated as nal and shall be applicable to all assessments thereafter. Any person/company who resides out of Bangladesh and carries on business in Bangladesh under an agreement as a contractor to an oil company or as a subcontractor to the contractor to an oil company engaged in Petroleum Operations in Bangladesh for exploration and development of oil & gas may exercise an option for ascertainment of income. In such case his income. moneys. b. valuable articles. pro ts and gains from the operation of drilling of oil. shallow water seismic survey and other activities relating to petroleum operations. marine seismic survey.Income Tax Summary in Taxation Laws 2008-2009 An assessee shall not be allowed to take into account the full amount of income or receipts from which tax has been deducted or collected and considered as settled liability in explaining the nature and source.of any sum. Assessment and computation of Income of Contractor of an Oil company (Rule 39) 1. iv. The Chartered Accountant shall exercise the powers and functions of the DCT and after examining the accounts shall submit a report to the Board in writing. pro ts and gains derived from such operations shall. money. The income on payments or receipts represented by the tax deducted at source can only be allowed as a source of fund for explaining any investment. income. subject to the provision of this rule. compensations or reimbursable costs as stipulated in the Bangladesh Tax Handbook 2008-2009 47 . The Board shall forthwith forward the report to the Deputy Commissioner of Taxes and the Deputy Commissioner of Taxes after giving an opportunity to the assessee shall make the assessment on the basis of the report of the chartered Accountant and on the basis of the other evidences within thirty days after completion of hearing or consideration as the case may be and communicate the order within thirty days from the date of such order. the expression gross earnings shall include the total value of all fees. excess amount or expenditure referred to in section 19. For the purposes of the Rule 39: a. be deemed to be an amount equivalent to 10% of the gross earrings from such operations provided that: _ such option shall be exercised before the 30th day of September of the year of assessment in which such person is assessable for the rst time in Bangladesh. geophysical survey. pro ts and gains determined after considering all expenses.

Philippines. If any person who is resident in Bangladesh during any year can prove to the satisfaction of the Deputy Commissioner of Taxes that he paid income tax in respect of any income arising outside Bangladesh. Sweden. Assessment in the case of Deceased Persons u/s 92. viii. Government of Bangladesh has entered into agreement for the avoidance of double taxation with the following 24 countries: U. Netherlands. Assessment in the case of discontinued business u/s 89. ix. Singapore. South Korea. Spot Assessment u/s 82D and Rule 38B. Sri Lanka. Vietnam. Belgium. drilling and other equipment s into and out of Bangladesh (ii) vi. Germany. Italy. it is entitled to retain tax on such portion of the income there from as is calculated according to the percentage as embodied in the agreement. xi. Idiots. Japan. 41. Romania. vii. Thailand. Under the agreement. Denmark. Avoidance of Double Taxation: [Section 144] The Government of Bangladesh may enter into an agreement with the Government of other countries for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income leviable under the Ordinance and also under corresponding law of the other country. Malaysia. France. paid or payable on behalf of the said persons. Assessment in the case of Minors. which are. relief is available in respect of doubly taxed income. etc. not his responsibility. if any. as specified in the agreement. Assessment in the case of departure from Bangladesh u/s 91. India. xiii. Beneficiaries of any Trust. At present. whichever is the lower. 40.Income Tax Summary in Taxation Laws 2008-2009 agreement with the oil company. Provisional Assessment u/s 81. Lunatics. as reduced by the following amounts(i) amount constituting compensations or reimbursements exclusively for expenditures effected by the said person for the purchase of equipment s for the oil company. and amount constituting compensations or reimbursements exclusively for expenditures effected by the said person for the purpose of transporting or moving. u/s 95. Relief in respect of Foreign Income: [Section 145] Where there is no reciprocal arrangement for avoidance of double taxation. Best Judgement Assessment u/s 84. each dominion determines the total income of an assessee in the ordinary way under its own laws but in respect of the source of income or categories of transactions. xii. or in the agreement with the contractor to the oil company (whether in cash or in kind and whether received or not) derived from the operations referred to in sub-rule by the person but excluding the amount of tax. 48 Bangladesh Tax Handbook 2008-2009 . x. Norway and Turkey. Pakistan. China. Poland.K. he shall be entitled to deduction from Bangladesh income tax payable by him of a sum equal to the tax calculated on the double taxed income at the Bangladesh rate of tax or at the rate of tax of the foreign country . in fact. Canada. Assessment of Co-operative Societies u/s 47.

Non-Govt.00 S 020. Freight Forwards.00 S 019.20 S 024.00 Service Provider Rate of Deduction ( %) 4. Non-Government Organizations (NGOs).00 S 007. Bangladesh Tax Handbook 2008-2009 .00 S 029. Film Distributor.20 S 015. SemiGovernment.5 15 15 4. Silversmith and Gold & Silver trader. Nationalised Bank and Insurance Sector. Autonomous Body. Deduction of VAT at source: Summary in Taxation Laws 2008-2009 The authority for deducting VAT at source has been given to the Government. Courier & EMS Service.Value Added Tax Value Added Tax (VAT) 42.5 4. Sangstha (NGO). Sales Centre of Furniture:  At the time of production.5 1. Insurance or Limited Company.00 S 018.00 S 028.. Land Development Organization.  At the time of marketing.00 S 010. Private Bank & Insurance.5 15 4.5 4. Semi-Govt. Survey Sangstha.5 15 9 S 003 Motor Garage & Workshop.00 S 023. Building Construction Organization.00 Printing Press if value of material included. Medical Centre. The services on which deduction at source applicable are listed below: Head # Service Code # S 003. Auction. Advertisement Organisation: Govt.5 2.10 Goldsmith.5 1.5 15 15 1. Film Studio. Limited Company.. Bank.25 49 S 008 S 009 S 010 S 010 S 015 S 018 S 019 S 020 S 023 S 024 S 008. Private Organisation. Any Sangstha and Person.10 S 003. Printing Press if value of material not included. Dockyard. Others 15 4.20 S 004 S 007 S 004.10 S 010. Photo Grapher. S 026 S 028 S 029 S 026. Autonomous Organizations.10 S 009.5 15 15 4. Construction Works/Firms ( Builders).

25 15 4.00 S 045.00 S 063.00 S 051.00 S 062.  Others.25 2.5 4.10 S 064.20 S 065.10 S 036. Lottery ticket seller. Glass Sheet Manufacturer. Procurement Provider. English Medium School.00 S 061.00 Summary in Taxation Laws 2008-2009 Service Provider Rate of Deduction ( %) 2. Air Conditioned Tailoring Shop.00 S 064.Value Added Tax Head # Service Code # S 029.00 S 068. Coaching Centre.5 2.5 5.00 Bangladesh Tax Handbook 2008-2009 .0025 4.5 4.5 4. Electricity Supplier. Immigration Advisor.20 S 029.5 4.00 S 044. Buyer of Auction Goods.5 2. Consultancy rm and Supervisory rm.00 S 048.5 S 029 S 029 S 031 S 032 S 034 S 036 S 036 S 037 S 040 S 044 S 045 S 048 Dental Clinic. Transport Fare or Rent-a-car.00 S 070. Money Changer.5 4.00 S 069.5 2. Banking and non-banking service provider. Credit Card Supplying organization. Security Service Provider.30 S 031. Repairing or Servicing of Taxable goods. Architect.00 S 060.20 S 037.25 4.00 S 066. Amusement and Theme Park. Private Medical and Engineering College. Picnic Spot and Shooting spot.5 4. Engineering Firms.0025 15 1.5 15 15 4. Transport Contractor:  For carrying petrol and related goods.00 S 034.5 4.5 4.00 S 032.5 4.25 4.25 15 4.00 S 056. Pathological Laboratory.00 S 040. Participant of Board Meeting.00 S 036.5 4. Audit and Accounting Firm. Air-Conditioned Bus Service.00 S 057.00 S 053.5 15 15 15 5. Legal Advisors.00 S 067. S 049 S 050 S 051 S 053 S 056 S 057 S 059 S 060 S 061 S 062 S 063 S 064 S 064 S 065 S 066 S 067 S 068 S 069 S 070 50 S 049. Specialized Doctors. Air-Conditioned Launce Service. House clearing and Maintenance organization.00 S 050. Interior Designer or decorator.00 S 059.

to the Government or any local authority. for charitable purpose: (i) any University established under the law in force in Bangladesh or any educational institution including polytechnic institute. 5) by way of payment of policy of insurance or annuity for any person (other than wife/spouse) dependent upon him for support and maintenance upto Tk. to the following funds or institutions. in the opinion of the Deputy Commissioner of Taxes. 20. The Gift Tax Act 1990. upto 20% of the total income determined for the concerned year or Tk.000 are exempt from gift tax. his or her spouse. 100. Exemption from Gift Tax: [Section 4] Gift tax shall not be charged under the Act in respect of the following gifts made by any person: 1) 2) 3) of property situated outside Bangladesh. 44. not being a private religious institution or fund which does not ensure for the benefit of the public.000 on the occasion of his/her marriage.000 whichever is less.000. 4) to dependent relative upto Tk. own brothers and sisters. recognized by the Education Board or recognized or run by the Government. The value of property under gift other than cash shall be the value which. Gift means the transfer by one person to another of any immovable or moveable property voluntarily and without consideration of any money's worth. 7) under contemplation of death.20.Gift Tax 43 Gift Tax: Summary in Taxation Laws 2008-2009 The gift tax is leviable on gift made in any financial year on and from the 1st day of July 1990 at the prescribed in the schedule. to sons. (ii) any hospital recognized or run by the Government or any local authority or any hospital aided by the Government or any Local Authority. Bangladesh Tax Handbook 2008-2009 51 . The Government may by notification exempt any class of gift or any class of person from gift tax. father. daughters. it would fetch if sold in the open market on the date of gift. 20. mother. Methods of valuation of gift have been provided in the section 5 of the Gift Tax Act 1990. When a property is not saleable in the open market and its value cannot be determined according to the rules prescribed for the purpose. as are established in Bangladesh and approved by the Government for such purposes or to any institution established for religious or charitable purposes and registered under any law for the time being in force. (iv) such institutions or funds for religious or charitable purposes. gifts made in any financial year up to value of Tk. (iii) any flood or disaster management fund established or approved by the Government. 6) 8) under a will. In addition to the above exemptions.

1. On the balance of the value of all taxable gifts. 46.000 of the value of all taxable gifts. Tax on the basis of the return is payable on or before the date on which such return is furnished.000 of the value of all taxable gifts.Gift Tax 1) 2) Summary in Taxation Laws 2008-2009 45. Rates of Gift Tax: Particulars (Slab Amount of Taxable Gifts) On the first Tk. 500.000.000. Provisions of the Gift Act shall NOT apply to following gifts made by: [Section 20] a body corporate established or constituted by or under any law any institution or fund. Return of Gift Tax: [Section 3 & 7] Every person who had made taxable gift during any financial year of an amount as to render him liable to gift tax under the gift tax act shall before the fifteenth day of September of the corresponding assessment year furnish to the Deputy Commissioner of Taxes a return in the prescribed form and in the prescribed manner. On the next Tk. 2. income whereof is exempt from income tax under paragraph 1 and 2 of Part A of the Sixth Schedule of the Income Tax Ordinance 1984.000 of the value of all taxable gifts. Percentage Rate (%) 5 10 15 20 52 Bangladesh Tax Handbook 2008-2009 . 47. On the next Tk.

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