Salient Features of Finance Act,2022 (Income Tax portion) Paper presented by Ranjan Kumar Bhowmik rev Former Member National Board of Revenue + This presentation has been prepared on the basis of publicly available sources i.e. Finance Act,2022, budget speech, salient features at NBR website, SRO etc. in respect to the changes made at Income Tax Ordinance, 1984 as well as Income Tax Rules, 1984, +It provides only an overview of the major changes at Finance Act,2022 and related SRO. +As the changes will be clarified by the NBR through ‘Paripatra’, so the contents of this presentation should not be used for reference as its substitute.* National Budget at a glance + Changes at tax rate + Changes at TDS + Changes at Individual tax matter + Changes at Corporate tax matter + Changes at tax free income Try eoseeql FY 2021-22) g | | Pareles era) BEBE Change Total Size of Budget «678,064 5,93,500 | 14.2% * ‘Total Revenue Earnings | 4,33,000 3,89,000 11.3% * — Earnings from NBR 3,70,000 | 330,000 121% * ‘Budget Deficit 2,45,064 2,04,500 19.84% * GDP Growth 75 72 34% * Inflation 86 | 58 | 180%Searce of Recspn 2021-22 ‘incre Toa) “Total Estimated Receipt 3.70.009 g “Tea Estimated Receipt 5.80.00 1,21,020(32.71%) 1,01,958 (81.80%) ee 40,264 (18.81%) B 42,838 (12.98%) assesses) — BY) sys0s (2.50%)Nature of the company Previous tax rate | New taxrate | Nonisted Companies 30% 275% 30% 27.5% [psy NGO WD ‘Preconditions to avail new tax rate: [jJAll sales/receipts must be through banking channel Otherwise [2} In case of investment and expenditure, per transection | previous tax rate ‘exceeding Tk. 5,00,000 must be through banking channel will be and altogether year transecion exceeding Ti-3600.000 | _applcable ust be through banki \, [Finance Act,2022] expenditure, ‘exceeding Tk. 500,000 must be through banking channel and hogeer yearly wansecton exceeding Tk36:00 600 must be Violation of serialnumber 2 and 8 wil lead to tax rate 22.5% [1110% or less than 10% paid-up capital through IPO [JAI salesireceipts must be through banking channel \ [B] Incase of investment and expenditure, per transection ‘exceeding Tk. §,00,000 must be through banking channel and altogether yearly transection exceeding Tk.36,00,000 must be through banking channel. Violation of serial number 2 and 3 will lead to tax rate 25% (Finance Act,2022}‘On 18Tk. 10,00,000 (On next Tk. 410,00,000 1 Onnext Tk 410,00,000 | On balance \ [SRO no 157 dated 01/6/2022 through deletion of related SRO no 254 & 255 dated 16/8/2015] 'No question as tothe source of any undisclosed asset located cutside of Bangladesh shal be raised by any authorty if an assessee repatates to Bangladesh and pays, before the submission ofretum or revised return during the period between 01/7/2022"30/6/2023 for the assessment year 2022-2023, tax at the rate specie inthe following table: [ Description of the Asset Tax ote "any cath or cash equivalents, bank depos, ‘bank nates, bank accounts, convertible securities and financial instruments repatriated | abroxd under tis scheme the bank to Banglacesh responsible for crediting tothe account ofthe ‘The provisions ofthis section shallot apply to_|asSss0e shall deduct tax @7% before ‘cases where any proceeding has been drawn on | ceding and give a certificate of such ‘ccountoftax evasion or criminal actvies | dedution to the assessee. ‘Under any provision of this Ordinance or any ‘other aw by titieth une, 2022. Te | Where an assesee reparites any sum from vwrare ary resident Bangladesh found to be te oan of any ofshore az not aeclosed in me retu, the OCT sal procee to recover from such person the amount of penalty equal ote far Value of such csrere asset. The DCT shal have te autor to recover the pera by conscatng oF selng any asset Pld by” on bea ote ssesoe. [Section: 19F + Section 196]Teed] Reference Rate Upww Tk 50,00,000- 3% 1S Tk Sac but-=Tk 2erore [5% 1%, {i srg TS @ 2% — eater ce >eingons arenas Ereroe Tos @0soe a ea ‘tts ance perth cn rts einor aes Dat wes enti Paton ussite sienna oe 3) sgoeds means Afanster ot the Fight of goods ‘oy way of ‘tal or exchange Including sale ‘onder re purchase agreement or ‘nance leaseBeasestgee REE Table of TCS © Inland ships engaged in carrying ‘Taka 125 per passenger passengers in inland water % Cargo, Container (multipurpose) and Taka 170 per gross tonnage Coaster engaged in carrying goods in inland water © Dump barge engaged in carrying Taka 125 per gross tonnage. ‘g00ds in inland water BIWTC will collect tax at the time of registration or fitness. [section: 538]The eligible limit of investment allowance has been reduced from 25% to 20%. Side by side rate of investment tax credit fixed at single percentage of 15%. Earlier it was 10% if income exceeds Tk. 15,00,000 and 10% if income does ot exceed Tk. 18,00,000. Now no matter whatever may be the income. The ‘ew formula will be as follows: Y [Section 44(2)(c(D] > Income from export business of individual, partnership firm and HUF willbe 50% exempted from 01/7/2022 to 30/6/2028 [SRO no 158 date:01/6/2022) > No authority, other than income tax authority, Taxes Appellate Tribunal ‘and Honorable Supreme court, have right to raise question about ‘assessment. Assessee will be relieved as same fle wil not be audited by different authorities. (section 94)Changes at corporate tax matter ‘ The term export has been defined which will include service export ‘and supply of locally manufactured raw materials and other inputs to export oriented industry under internal back to back L/C. [section 2(284)] + The ceiling of perquisites raised from Tk.5,50,000 to Tk. 10,00,000 Isection. 30()] + Ifany company employed at least 10% of total staff employed or more than 25 employees [previously it was more than100 employees] from ‘3 gender, then the company will get some tax concession. [Finance Act,2022] % The reduced tax rate of RMG 10% or 12% will also be applicable for any type of export oriented companies. On the other hand,50% income exemption facility in case of export oriented companies is withdrawn through deletion of 6" Schedule(Part-A) Para-28. [SRO no 158 date:01/6/2022 +6th Schedule(Part-A) Para-28] sina ALE AAO csnatamtii! > Definition of amalgamation has been changed. Previously minimum ‘90% shareholding was required for amalgamation but this year the shareholding requirement has been reduced to 75% [Section; 2(2)(c) & (2)] > Consideration received through shares is tax-free but itis received in any manner other than shares, then it shall be subject to tax at applicable tax rate, Y [Section:32(5A)] > Ina scheme of amalgamation, the amalgamated company shall have the right to carry forward the accumulated loss and unabsorbed depreciation of the amalgamating company. [Section:42(8)](cena SAR D teeeemneedl ‘Startup means company having annual tumover not exceeding Tk. 100 crore and not 2 subsidary or resuting company of a scheme of amalgamation/demerger ‘& Registration with NBR isa must, Not eliaibe for reastration if incorporated prior to OL July 2017 or incorporated between 01 July 2017 to 30 June 2022 but fais to get req)stration by 30 June 2023 or incorporated on/after Ot July 2022 but fails to get registration by 30th June of every year following the year of the incorzration, ‘© Growth years means 3 years Duly 2023 to June 2026) forthe entity incorporated ‘between July 2017 to June 2022 and 5 years (starting from Juy ofthe year folowing the year of incorporation) for the entity incorporated on or after 01 uly 2022 ‘© Sections 30 and 308 shall not be applicable for growth years. ‘& Seting off and carrying forward losses over a period of 9 years. ‘ Rate of tum over tax 0.1% in pace of 0.6%. ‘Exemption from al other types of reportng except submiting income tax retum. Changes at tax free income pariedare | xing proviion ww ooesan cn a S| a a Dae (6 Seta) pr byanocean gang sip ing Borgaces Rag tartar ft reeked in Taxable Tastee 6" SebedulePar) pare foreign remieaes 1The proof of submission of retum shall be furnished in the following cases- applying for a loan exceeding Tk. 5,00,000 from a bank or a financial institution; ‘becoming a director or a sponsor shareholder of a company; ‘obtaining or continuing an IRC or ERC; ‘obtaining or renewal of trade license in city corporation or paurashava area; ‘obtaining registration of co-operative eocity obtaining or renewal of license or enlistment as a surveyor of general Ingurance; ‘obtaining registration, by @ resident, of the deed of transfer, baynanama or power of attorney oF salling of a land, bullding or an apartment situated Within a city corporation or a paurashava of a district headquarter or Cantonment board, where the deed valve exceeds Tk. 10,00,000 “obtaining or maintaining a creat card; ‘obtaining, ot continuing the membership of the professional body as a doctor, dentist, lawyer, chartered accountant, cost and management ‘Sccountant, engineer, architect or surveyor or any other similar profession ‘obtaining and retaining a license as a Nikah Registrar under the Muslim Marriages and Divorces (Registration) Act. 1974 (Litot 1974); ‘Fobtaining or continuing the membership of any trade or professional body; ‘obtaining or renewal of @ drug license, a fre license, environment clearance ‘certificate, BST license and clearance: ‘obtaining or continuing commercial and industrial connection of gas in any ‘area and obtaining or continuing residential connection of gas in city Corporation area; ‘obtaining or continuing a survey certificate of any water vessel including launch, steamer, fishing trawler, cargo, coaster and dumb barge etc. ying forhire: ‘Fobtaining the permission or the renewal of permission for the manufacture ‘of bricks by DC office ina district or Diractorate of Environment, as the case may be; ‘obtaining the admission of a child or a dependent in an English medium ‘School "providing education. under Intemational curriculum or English version of national curriculum, situated in any city corporation, district headquarter or paurashava:‘Sobiaining oF continuing the connection of electricity n a city corporation or Cantonment board ‘obtaining or continuing the agency or the dstributorship of a company; ‘obtaining or continuing a license for arms; ‘Sopening a letter of eredit for the purpose of import ‘opening postal savings accounts exceeding Tk. 6,00,000 ‘opening and continuing bank accounts of any sorts with eredit balance ‘exceeding Tk.10,00,000 “purchasing Sanchayapatra exceeding Tk. 5,00,000 ‘participating in any election in upazilla, paurashave, Corporation or Jatya Sangsad;, ‘participating in a shared economic activity by providing motor vehicle, ‘Space, accommodation or any other assets. receiving any payment which is an income of the payee classifiable under the heed "Salaries" by any person employed in the management or ‘administrative function or In any supervisory position in the production functions zilla parishad, city ‘receiving any payment which is an income of the payee classifiable undor ‘the head "Salaries" by an employes of the government or an authority, ‘corporation, body or units of the government formed by any law, order or Instrument being in force, if the employee, at any time in the income year, draws a basic salary of Tk.18,000 oF more; ‘receiving any commission, fee or other sum in relation to money transfor ‘through mobile banking or other electronic means or in relation to the recharge of mobile phone account, ‘receiving any payment by a resident from a company on account of any ‘advisory oF consultancy service, ‘catering. service, event management Service, supply of manpower or providing security service: ‘receiving any amount from the Government under the Monthly Payment (Order (MPO) If the amount of payment exceeds Tk.16,000 per month; ‘registration or renewal of agency certificate of an insurance company; ‘registration, change of ownership or renewal of fitness of a motor vehicle of ‘any types excluding two and three-wheeler, ‘raessing overseas grants oa non-government organization registered with NGO Affairs Bureau or to a Micro Credit Organization having license with Micro Creait Regulatory Authority; 13‘tsolling of any goods or services by any digital platforms to ‘consumers in Banglac “submitting application for the membership of a club registered ‘under Companies Act,1984 and Societies Registration Act, 18 ‘submitting tender documents by a resident for the purpose of ‘supply of goods, execution of a contract or rendering a service: ‘submitting a bill of entry for import into or export from Bangladesh; “submitting plan for construction of building for the purpose of ‘obtaining approval from Rajuk, CDA, KDA, RDA or other concerned authority in any city corporation or paurashava; END OF THE PRESENTATION!!