Budgetary changes in the Income Tax Law

Changes made through Finance Act 2022 & SRO

Changes in definition
 Mobile financial services included in the definition bank transfer
 Charitable purpose for the advance of any other object for general public utility
requires approval of NBR
 Definition of export (outside Bangladesh)and deemed export (inside Bangladesh
through B2B LC) have been inserted (previously no definition of export in the ITO)
 Definition of Research and development has been inserted
 Supply of goods means transfer of the right of goods by way of sale, exchange or
otherwise including sale under hire purchase agreement or finance lease- Inserted
 Tax day for an assessee, who is an individual and has not submitted return before,
30 June following the end of the income year
 Definition of Amalgamation amended in terms of shareholding %
 Shareholders holding 75% in the amalgamating company become shareholders of
amalgamated company (previously 90%)
Tax rates for individual – No change
Category Threshold Rate
First @0%
300,000 / 350,000
/450,000/475,000
as the case may be

Resident
Next 100,000 @5%

Next 300,000 @10%

Next 400, 000 @15%

Next 5,000,000 @20%

Balance @25%

Non Resident (except non- Any Amount @ 30%

resident Bangladeshi)
Other changes related to individual Tax

 Statement of assets, liabilities and life style: Every individual assessee, being resident
Bangladeshi, shall furnish in the forms and manners as prescribed, a statement in respect of all
local and global assets and liabilities of the person or the spouse, minor children and
dependents of the person as on the last date of the income year if the person-
(a) has, in the last date of the income year, a gross wealth exceeding taka forty lakh; or
(b) owns a motor car; or
(c) has made an investment in a house property or an apartment in the city corporation
area.

 A loan or gift received from son or daughter through banking or formal channel shall not be
considered as income from other sources.
Investment Rebate
New Previous

Investment Tax Rebate Total Taxable Income Investment Tax Rebate

Up to Tk. 1.5 million 15% of eligible amount

15% of eligible amount (Ceiling of
investment rebate has been
removed) Over Tk. 1.5 million 10% of eligible amount
.

Investment rebate shall be 7.5% of eligible amount if fails to submit tax return under section 75.
Eligible amount is the lowest of the following:
 Actual investment
 20% of total income (previously 25%)
 Tk. 10 million
Sec-19F: Special tax treatment in respect of undisclosed
offshore assets
 The scope to disclose any undisclosed investments in securities (19AAAA), movable &
immovable property in the country (19AAAAA) have been removed
 Newly introduced section 19F - No questions shall be raised as to the sources of undisclosed
assets located outside Bangladesh If an assessee pays, before the submission of return of
income applicable for the assessment year 2022-2023, tax at the rate specified below:
Type of Asset
Tax Rate

Any cash or cash equivalents, bank deposits, bank notes, bank accounts, 7%
convertible securities and financial instruments if repatriated to Bangladesh
through banking channel
Penalty for any offshore asset not disclosed in the return

 Where any person being a resident Bangladeshi is found to be the owner of any offshore
asset not disclosed in the return and the assessee offers no explanation about the nature and
source thereof or the explanation offered is not satisfactory, the Deputy Commissioner of
Taxes shall, after ensuring a reasonable opportunity of being heard, proceed to recover from
such person the amount of penalty equal to the fair value of such offshore asset.

 DCT shall have the authority to recover the penalty under this section by confiscating or
selling any asset held by or on behalf of the assessee.

 DCT shall have the power to conduct an offshore investigation, where he has reason to
believe that an assessee has offshore assets not disclosed in the return.
 Corporate Income Tax
New Rate
Previous
Type of Entity Rate, if fails to
Regular Rate Rate
comply the condition*
Listed company that issued shares more than 10% of paid up capital shares
20% 22.50% 22.50%
through IPO
Listed company that issued shares 10% or less than 10% of paid up capital
22.5% 25% 22.5%
through IPO
Non-listed company 27.50% 30% 30%
Listed bank/insurance/NBFI 37.50% Not Applicable 37.50%
Non-listed bank/insurance/NBFI 40% Not Applicable 40%
Mobile Financial Services – Listed 37.50% Not Applicable 37.50%
Mobile Financial Services – Non listed 40% Not Applicable 40%
Merchant bank 37.50% Not Applicable 37.50%
45%+2.5% Not Applicable
Cigarette/Bidi/Tobacco manufacturing company 45%
(Surcharge)
Not Applicable
Listed mobile phone company 40% 40%
Non-Listed mobile phone company 45% Not Applicable 45%
Dividend income 20%
One person company 22.5% 25% 25%
Cooperative Society 15% Not Applicable 15%
Private university/medical and dental college/engineering university/university of
15% Not Applicable 15%
information and technology
Other than company, i.e., association of persons, any artificial person created by
27.5% 30% 30%
law and other taxable entities

Condition: All receipts & income must be transacted through bank transfer. Each single transaction related to expenses and investment exceeding Tk. 5 lacs
and annually Tk. 36 lacs must be transacted through banking channel.
Revised Corporate tax rate for textile sector (Ref: SRO 159)

Income from business from yarn production / yarn dying /printing reduced to 15%
tax rate for the period from 1 July 2022 to 30 June 2025
 Section 29: Deduction from business income

 Creation of special reserve (5% of income) created by Financial Institutions

deleted
 Revenue expenditure allowed for research and development in place of
scientific research
 Capital expenditure allowed for research and development in place of
scientific research

Section-30: Deduction not admissible in certain cases

Perquisite limit increased. Perquisite in excess of Tk. 1,000,000 lac will be
inadmissible (Previously Tk. 550,000)
 Section-32: Capital Gain

 Exemption on capital gain arises from transfer of capital asset in a scheme of

amalgamation (no such exemption earlier)

 Consideration received by shareholders of the amalgamating companies in any

manner other than the shares of the amalgamated company shall be subject to
applicable tax.

 Tax exemption on capital gain from government securities has been withdrawn
 Section 35 (3): Audited Accounts with IT Return

 Audited financial statements to be accompanied with return of income for

companies as defined in clause 20 of section 2 of ITO 1984
 Company" as defined in the Companies Act, 1913 or Companies Act 1994 and includes-
 a body corporate established or constituted by or under any law for the time being in force;
 any nationalized banking or other financial institution, insurance body and industrial or
business enterprise;
 an association or combination of persons, called by whatever name, if any of such persons is
a company as defined in the Companies Act, 1913 or Companies Act 1994
 any association or body incorporated by or under the laws of a country outside Bangladesh;
 any foreign association or body, [ not incorporated by or under any law], which the Board
may, by general or special order, declare to be a company for the purposes of this
Ordinance;
 Previously reference was given to definition of Companies Act only.
Section 42: Loss carry forward for amalgamated company

In a scheme of amalgamation, the amalgamated company shall have the right to

carry forward the accumulated loss and the unabsorbed depreciation of the
amalgamating company as if the loss or the unabsorbed depreciation, as the case
may be, has been the accumulated loss or the unabsorbed depreciation of the
amalgamated company in the income year in which the amalgamation took place
(New insertion)
Section 44: Exemptions
 New conditions for availing exemptions or reduced rate:
The income of a person for the relevant income year shall not be exempted from tax;
or subject to reduced rate of tax in an assessment year if the person fails to-
(i) submit the return of income as required under section 75; or
(ii) comply with any provision of Chapter VII of this Ordinance; or
(iii) receive all the receipts which is subject to tax exemption or reduced rate of tax,
through bank transfer
Provision of receiving the receipts through bank transfer shall not be applicable
N
- for an assessee being individual having gross receipts not exceeding Taka one crore e
w
in an income year:
- for income derived from agriculture or farming
Section 49: Income subject to TDS

Two more types of income included in the TDS list

 income derived from the operation of inland ships;
 income derived from the operation of commercial vehicle

Section 52: Deduction from payment to contractors etc.

The rate of tax shall be fifty percent (50%) higher at the time of making payment

 if the payee fails to submit proof of submission of return at the time of making the payment (previously
12 digit TIN was mandatory)
 if the payee does not receive payment by bank transfer (new insertion)

Withholding entity includes hotel, resort, community center and transport agency having annual turnover
exceeding Taka one crore
Sec 52, Rule-16- Deduction of payment to contractors etc.
Rule 16 - Table-1 – No change

SL Descriptions New Rate Old Rate

1. Where the payment does not exceed Tk 50 lakh 3% 3%

2. Where the payment exceeds Tk 50 lakh but does not exceed Tk. 2 crore 5% 5%

3. Where the payment exceeds Tk 2 crore 7% 7%

Revised Table 2 of Rule 16
SL Descriptions New Rate Old Rate

1. In case of oil supplied by oil marketing company 0.6% 0.6%

2. In case of oil supplied by dealer or agent (excluding petrol pump) of oil marketing 1% 1%
companies
3. In case of supply of oil by any company engaged in oil refinery 3% 3%
4. In case of company engaged in gas transmission 3% 3%
5. In case of company engaged in gas distribution 3% 3%
6. In case of industrial undertaking engaged in producing cement, iron, or iron 2% 2%
products, Ferro alloy product except MS Billets
7. In case of industrial undertaking engaged in the production of MS Billets 0.5% 0.5%
8. In case of locally produced MS Scrap 0.5% 0.5%
9. In case of supply of rice, wheat, potato, onion, garlic, peas, chickpeas, lentils, ginger, 2% 2%
turmeric, dried chillies, pulses, maize, coarse flour, flour, salt, edible oil, sugar, black
pepper, cinnamon, cardamom, clove, date, cassia leaf, jute, cotton, yarn and all
kinds of fruits
10. In case of supply of books to a person other than the Government, or any authority, 3% As per slab
corporation or body of the Government, including all of its attached and sub-ordinate
offices

11. In case of supply of trading goods to a trader 5% As per slab

12. In case of supply of industrial raw materials to a manufacturer 4% As per slab

 Section 52AA: TDS on certain services
Description of payment New Rate Previous Rate
SL
< BDT2.5m > BDT2.5m
1 Advisory or consulting service 10% 10% 15%
Professional service, technical service fees or technical assistance fees 10%
2 10% 12%
(i) Catering services
(ii) Cleaning services
(iii) Collection and recovery
(iv) Private security services
Proof of submission of tax return

(v) Manpower supply services

Otherwise 50% higher TDS
Payment by bank transfer

(vi) Creative media services

(vii) Public relation services (a) Commission or fees 10% 10% 12%
3
(viii) Event management services (b) Gross receipt 2% 1.5% 2%
(ix) Training, workshops etc.
(x) Courier services
(xi) Packaging & shifting services
(xii) Other similar services

4 Media buying agency services (a) Commission or fees 10% 10% 12%
(b) Gross receipt 0.65% 0.5% 0.65%
5 Indenting commission 8% 6% 8%
6 Meeting or training fees/honorarium 10% 10% 12%
Mobile network operator, technical support service provider,
7 service delivery agent engaged in mobile banking operations 12% 10% 12%

8 Credit rating agencies 10% 10% 12%

 Section 52AA: TDS on certain services (contd.)
Description of payment New Rate Previous Rate
SL
< BDT2.5m > BDT2.5m
9 Motor Garage or workshop 8% 6% 8%
10 Private container port or dockyard 8% 6% 8%
11 Shipping agency commission 8% 6% 8%
Stevedoring/berth commission (a) Commission or fees 10% 10% 12%
12
Proof of submission of tax return

(b) Gross receipt 5% 1.5% 2%

Otherwise 50% higher TDS
Payment by bank transfer

(i)Transport service, carrying service, vehicle rental service;

(ii) Any other service under any sharing economy platform

13 including ride sharing service, co-working space providing 5% 3% 4%
service and accommodation providing service.;

14 Wheeling charge for electricity transmission 3% 2% 3%

15 Internet Service 10%
Service delivery agents engaged in mobile financial services or channel 10%
16 partner of mobile financial services - -

Any other service which is not mentioned in Chapter VII and is not a
17 service provided by any bank, insurance or financial institutions. 10% 10% 12%
 Section 52Q: TDS on income remitted from abroad

 No TDS on income of ocean going ship

Any business income derived by an ocean going ship being Bangladeshi flag carrier for the period
from the first day of July, 2022 to the thirtieth day of June, 2030, if it is received in foreign currency and
brought into Bangladesh as per existing laws applicable in respect of foreign remittance

Section 53BB: TDS on export proceeds

The Bank, through which export proceeds of goods of an exporter is received, shall deduct tax at
the rate of 1% (one percent) of total export proceeds at the time of crediting the proceeds to the
account of the exporter. (previously export of knit wear, woven garments, terry towel, carton and
accessories of garment industry, jute goods, frozen foods, vegetables leather goods packed food
were subject to tax @ 0.5%. Now all items are subject to tax @ 1%)

Section 53BBBB deleted and included in 53BB

 Section 53F. TDS from interest on deposits
Type of payee New Rate Previous Rate Remarks

Where the payee is a company 20% 10% 50% higher if no proof of

tax return is submitted

Where the payee is a person other than a 10% 10% 50% higher if no proof of
Proof of submission of tax return

company tax return is submitted

Otherwise 50% higher TDS
Payment by bank transfer

Public university, or an educational institution 10% 10% 50% higher if no proof of Applicable for
whose teachers are enlisted for Monthly Pay tax return is submitted saving
Order (MPO), any professional institute deposits or
established under any law and run by fixed deposits
or any term
professional body of Chartered Accountants,
deposit
Cost and Management Accountants or
Chartered Secretaries
Where the payee is recognized provident fund, 5% 5% Previously 5% to fund
approved gratuity fund, approved was applicable. No
superannuation fund or pension fund issue of approval of NBR

Above provisions are not applicable to interest or share of profit arising out of any deposit pension scheme sponsored by the
Government or by a Bank with prior approval of the Government.
 Section- 53HH. Collection of tax from lease of property
and 53J – TDS on Water Body

 53HH. Collection of tax from lease of property

 Any registering officer responsible for registering, under the Registration Act, 1908 (XVI of
1908), any document in relation to any lease of immovable property for not less than ten
years shall not register such document unless tax is paid at a rate of four per cent by the
lessor on the lease amount of such property.
 Previously there was scope limitation on registration of lease of immovable property and
collection of tax based on areas which is now widen.

 Section- 53J. Deduction at source from rental value of water body or vacant land or plant or
machinery
 TDS @ 5% on rental value of water body included
 New insertion of Section - 53Q & 53R
 Section - 53Q – Collection of tax from motor vehicle plying commercially
 The person responsible for the registration and fitness renewal of motor vehicles shall not
register or allow fitness renewal unless, a challan of advance tax at the specified rates is
attached with application. Now AIT will be collected based on seating capacity / carrying
capacity/AC or Non AC status
 Motor vehicle plying commercially excluded from the section 68B- advance tax for the owner
of motor car which was based on engine capacity.

 Section 53R. Collection of tax from inland ships

 The person responsible for granting a certificate of survey or renewing a certificate of survey
under the Inland Shipping Ordinance, 1976 shall not grant or renew such certificate of survey
unless a challan of advance tax computed at the specified rate is attached with application
by the inland ships carrying passengers, carrying goods etc.
Section 56- TDS on Non Resident

Category New rate Previous rate

Bandwidth payment 10% -
Any other payment 20% 30%
Section-57. Consequences of failure to deduct /collect
tax
 Penalty of Tk. 10 lacs for non compliance with any provision of Chapter VII (Sec 48-
Sec 74) except failure to deduct tax, short deduction or failure to deposit after
deduction or collection) – New provision

 Interest @ 2% per month will be calculated on tax due other than penalty amount.
Previously interest was applicable on entire amount.

 Individual responsible for approving the payment and organization shall be jointly
responsible to pay tax, penalty and additional amount. This provision is not
applicable for government authority, its unit, project where government has financial
interest - New provision
 Section 75: Return of Income
Return filing “not mandatory - Changes
New Provision Previous Changes

An educational institution that receives An educational institution receiving Educational institution that receives
government benefits under Monthly government benefits under Monthly government benefits under Monthly Payment
Payment Order (MPO) and does not Payment Order (MPO) Order (MPO) and having English version
have English version curriculum curriculum

Public university Public university No change

Recognized provident fund, an Fund If the fund is not recognized then return filing is
approved gratuity fund, a pension fund, mandatory
an approved super annuation fund

Non-resident company having no fixed A non-resident, not being a non- Withdrawn from exemption list
base in Bangladesh is now excluded resident individual, having no
from exemption list permanent establishment in
Bangladesh;
Non-resident individual having no fixed A non-resident individual having no No change
base in Bangladesh fixed base in Bangladesh
Any class of persons which the Board Any class of persons which the No change
may, by order in official gazette, exempt Board, by order in official gazette,
from filing the return. exempt from filing the return
Section 82C: Minimum Tax
New inclusion in the TDS on foreign remittance of service fee (Sec 52Q) -
Minimum Tax
AIT for commercial vehicle (Sec 53Q)

Collection of tax from inland ships (Sec 53R)

AIT on import of raw materials of beverage concentrate

New inclusion in the

Interest income of approved fund (New Inclusion)
final settlement of
tax liability
 Section 82D: Spot Assessment
 The Deputy Commissioner of Taxes may assess the tax liability of such person on the
spot if
 a person is found to have taxable income or
 required to submit tax return or
 required to comply with any provision of the Ordinance and the person has failed to
perform or comply with requirements of the Ordinance,

 Where assessment of an assessee being individual having income from business or

profession is made under this section applying regular rate and the asseesee pays tax
accordingly then no question as to the initial capital up to five times of assessed
income

 Previously it was applicable for assessee not being a company, for income from
business or profession in shopping centre, commercial market or having a small
establishment.
 Section 100: Tax Liability of Directors for Company

 If a private limited company is wound up or has discontinued business for three

successive years and there is any pending tax liability, every person who was
director in respect of the income year is jointly and severally liable for the payment of
the tax liability
 Section 111A: New Provision for Start Up Sand Box
 Notwithstanding anything contained in this Ordinance, the provisions of this section shall
have overriding effect over all other provisions of this Ordinance.
 Growth years” means-
 a period of three years that starts with first day of July 2023 and ends with the thirtieth
day of June 2026 (applicable for the entity incorporated between July 2017 to June
2022 and obtained registration by June 2023)
 a period of five years that starts with first day of July of the year following the year of
incorporation (applicable for the entity incorporated after 1 July 2022)
 Startup” means a limited company with annual turnover not exceeding Taka 100 crore in
any financial year and that-
(ii) works towards deployment or commercialization of new products, process or service driven by
innovation, development and technology or intellectual property;
(Innovation” means the process of creating value by offering novel solution or making a significant improvement to any
prevailing solution to any significant problem or a set of problems)

(iii) is not a subsidiary of another company holding fifty percent or more of its shares;
(iv) is not a resulting company of a scheme of amalgamation or demerger
 Section 111A: Start Up Sand Box
 Sections 30 (Deduction not admissible in certain circumstances) and 30B (Treatment of
disallowances) shall not be applicable for growth years
 Loss set off and carried forward to the next assessment year and so on for not more than
nine successive assessment years
 The rate of minimum tax as provided in sub-section (4) of section 82C for growth years of
a startup registered under this section shall be 0.1% (zero point one percent)
 Exemption from all type of reporting under section 75 except submission of filing return
 Must have registration with NBR
 A startup shall not be eligible for registration under this section, if –
 It is incorporated prior to first day of July 2017;
 It is incorporated between first day of July 2017 and thirtieth day of June 2022 and fails
to get registration by the thirtieth day of June 2023;
 It is incorporated on or after first day of July 2022 and fails to get registration under this
section by thirtieth June of every year following the year of its incorporation.
 Section 117A - Power to verify and enforce deduction or
collection of tax
 Substantial power given to tax official who is empowered in writing by the Commissioner of Taxes, Director
General of Inspection or Director General of Intelligence Cell to verify deduction or collection of tax at
source or to enforce the provisions of Chapter VII (payment of tax before assessment) of this Ordinance, -
 Free access to the premises, places, products, books of accounts and records
 Access to any information, code or technology
 Extract the data, images by breaking through password protection
 May impound and retain any such books of accounts, documents, electronic records and systems;
 May be accompanied by experts;
 Where any empowered authority is obstructed, hindered or unassisted by any person, the person in
whose premise or place the authority has entered or intended to enter shall be liable to a penalty not
exceeding Taka 50 lakh.

Previously, provision of taking experts, breaking of password protection and penalty not included.
Section 143 -Other modes of recovery
DCT may issue notice in writing requires any person who is responsible for supplying
gas, electricity, water or any other services to disconnect or discontinue such supply
within 21 days from the date of receipt of such notice.

Section 152 I -Application for alternative resolution of

disputes.
Any dispute has already been filed in the form of Writ petition shall not be a subject
of ADR.
Section 184A - Proof of submission of return
 Requirement of 12 digit e-TIN has been replaced by proof of submission of return
 New inclusion
 opening and continuing bank accounts of any sorts with credit balance exceeding Taka ten lakhs;
 selling of any goods or services by any digital platforms to consumers in Bangladesh.
 Exclusion
 obtaining registration, change of ownership or renewal of fitness of a bus, truck, prime mover, lorry etc.,
plying for hire;
 A person not being an individual shall, instead of furnishing a proof of submission of return, furnish a system
generated certificate containing name and Taxpayer’s Identification Number (TIN)
 The proof of submission of return shall be-
 an acknowledgment receipt of return prescribed by the Board; or
 a system generated certificate containing name and Taxpayer’s Identification Number (TIN) of the person
and the year for which return has been submitted; or
 a certificate issued by the Deputy Commissioner of Taxes containing name and TIN of the person and the
year for which return has been submitted.
 Penalty (New)
 Person responsible to process document or making payment is liable to pay a penalty not exceeding Taka
ten lakh as imposed by the Deputy Commissioner of Taxes.
Section184C. Displaying proof of submission of return

 Display of 12 digit e-TIN has been replaced by proof of submission of return

 An assessee having income from business or profession shall display the proof of
submission of return as defined in section 184A at a conspicuous place of such
assessee's business premises

 Penalty of Taka not less than Tk. 5,000 and not exceeding Tk. 20,000 for not
displaying proof of submission of tax return
Amortization of pre-commencement expenditure

 Para 10B of third schedule newly included

 The rate of amortization of pre-commencement expenditure shall be 20%
(twenty percent) following straight line method
 Pre-commencement expenditure” means expenditures not covered in
paragraphs 1 to 10A of this Schedule and incurred wholly and exclusively for
setting up of the business prior to the year of commercial operation and
includes expenditure for feasibility study, construction of model and prototypes,
and experimental production.”।
Changes in Sixth Schedule Part A- Exclusion from total
income
 Deleted from Six Schedule Part A
 Para 28 - 50% rebate on export income
 Para 34 - Income from fisheries, poultry, production of seeds, marketing of locally
produced seeds, cattle farming, dairy farming, horticulture, frog farming, mushroom
farming, floriculture
 Para 42 - Income from poultry farming

 New Inclusion in Six Schedule Part A

 Any business income derived by an ocean going ship being Bangladeshi flag carrier for
the period from the first day of July, 2022 to the thirtieth day of June, 2030, if it is received
in foreign currency and brought into Bangladesh as per existing laws applicable in
respect of foreign remittance.
Other changes on Tax Rules

 Rule 21 (1): Statement of TDS on Salary Form replaced

 Rule 23 (3): Annual Return of Statement Form u/s 108 replaced
 Rule 38B: Spot Assessment Deleted. Included in the section
 Exemption and Reduced Tax rates on export earnings (Ref: SRO
158)
Exemption Individual , Firm and Hindu Undivided Family -50% exempted
Other than Individual , Firm and Hindu Undivided Family –Reduced rate of 12%
/Reduced Rate
Other than Individual , Firm and Hindu Undivided Family income earned by other person
from export of products in factory certified by leadership in Energy and Environmental
Design (LEED) – Reduced rate of10%

Exclusion Exemption not applicable for transportation service, mobile telecommunication services,
internet and internet related services

Validity 1 July 2022 to 30 June 2028

Reduced rate for poultry and fish farming (Ref: SRO 157)

 Income from poultry farm, shrimp or fish hatchery, fish farming are subject to reduced rate
 Up to 10 lac – 0%
 Next 10 lac – 5%
 Next 10 lac – 10%
 Balance – 15%
 Thank You
For any query
Mr. Nurul Wahab, CPA (USA), FCMA, FCA– Managing Partner
nwahab@awahabco.com

Kazi Mahboob, FCA – Partner

k.mahboob@awahabco.com

Authorized Training Employer of ICAEW

Member Firm of LEA Global