Chapter 4

Assessee and Residential Status

Definition of Assessee:
• Generally assessee means the person who pay tax to the
government in assessment year. The person who has been
taxed to the previous year for income earned by him
treated as assessee. In the context of income tax in
Bangladesh, section 2(7) of the Income Tax Ordinance,
1984 defined assessee as a person by whom any tax or
other sum of money is payable under the ordinance and
includes
(a) Person against whom income tax case or proceedings
going on
(b) Person who is required to file income tax return
(c) Person who desires to be assessed and submit his income
tax return
(d) Person who is deemed to be an assessee or an assessee in
default under any provision of Income Tax Ordinance.
The following persons are included in this category:
i. The executor, administrator or other legal
representative of a non-residential person
ii. The local legal representative of a non-
residential assessee
iii. The person who is required to deduct tax at
source
iv. The person who fails to pay tax to the tax
authority after deducting it at source.
In this connection explanation of the following two
terms need to be kept in mind:
a) Who should submit Income Tax Return?
 If total income of any individual other than female
taxpayers, senior male taxpayers of 65 years and
above, retarded taxpayers and war wounded gazetted
freedom fighter during the income year exceeds Tk
3,00,000/-.
 If total income of any female taxpayer, senior male
taxpayer of 65 years and above during the income
year exceeds Tk 3,50,000/-.
 If total income of any Physically challenged taxpayer
during the income year exceeds Tk. 4,50,000/-.
If total income of any gazetted war-wounded
freedom fighter taxpayer during the income year
exceeds Tk. 4,75,000/-.
 If any person was assessed for tax during any of the 3
years immediately preceding the income year.
 A person who lives in any city corporation/paurashava/divisional
HQ/district HQ and owns motor car/owns membership of a club
registered under VAT Law.
 If any person runs a business or profession having trade license
and operates a bank account.
 Any professional registered as a doctor, lawyer, income tax
practitioner, Chartered Accountant, Cost & Management
Accountant, Engineer, Architect and Surveyor etc.
 Member of a Chamber of Commerce and Industries or a trade
Association.
 Any person who participates in a tender.
 Candidate for Paurashava, City Corporation, Upazilla or
Parliament elections.
 Any company registered under the Company Act, 1913 or 1994.
 Any Non-government organization (NGO) registered with NGO
Affairs Bureau.
b) Person/ physical status of Assessee:
Under section 2 (46) of Income Tax Ordinance, 1984
person has wider meaning and includes the
following:
i. An individual (Ind.)
ii. A Firm (Partnership) (F)
iii. An Association of Persons (AOP)
iv. A Hindu Undivided Family (HUF)
v. A Local Authority (LA)
vi. A company (Co.)
vii. Other Artificial Person as defined in ITO.
• Meaning of residential status
• The taxability of an individual in Bangladesh depends
upon his residential status in Bangladesh for any
particular financial year. The term residential status
has been coined under the income tax laws of
Bangladesh and must not be confused with an
individual’s citizenship in Bangladesh. An individual
may be a citizen of Bangladesh but may end up being
a non-resident for a particular year. Similarly, a
foreign citizen may end up being a resident of
Bangladesh for income tax purposes for a particular
year.
• In general residential status means the standing of
an individual as to his residence in the taxable
territory and for HUF, Firm and Company the
standing of the location of their management and
control during relevant income year.
Classification of assessee on the basis of residential
status
From the point of view of residence, assessee is
classified into two:
i) Resident and
ii) Non-resident
An individual whether resident or non-resident
depends mainly on the duration of his stay in
Bangladesh. On the other hand, for a firm and a
company, whether resident or non-resident
depends on the location of its management or
control during the relevant income year.
Methods of determining Residential Status:
(1) An individual
According to the section 2(55) (i) of Income Tax Ordinance,
1984 to be a residential assessee, an individual must fulfill
one of the following conditions:
a) If he stays in the country for a period of at least 182 days
during the income year, or
b) If he stays in the country for at least 90 days during the
income year and also had been in the country for a period
of at least 365 days during the four years preceding the
income year.
It is to be mentioned that residential status of an assessee is
to be determined separately for each income year. It is
not related to assessment year. It is also to be
remembered that the required duration of stay of an
assessee in the country for either 182 days or 90 days or
365 days is not necessarily be continuous.
2. Residential status of a Hindu Undivided Family,
Firm and Association of Person
A Hindu undivided family is said to be a resident in
Bangladesh if the control and management of its
affairs is wholly or partly situated in Bangladesh. A
Hindu undivided family is a non-resident in
Bangladesh if the control and management of its
affairs is wholly situated out of Bangladesh.
In the above explanation “control and
management” means de facto control and
management and not merely the right to control
or manage. Control and management is situated
at a place where the head, the seat and the
directing powers are situated.
3. Residential status of a Company
To be a resident, a company should fulfill one of the following
conditions:
a) It should be a company registered in Bangladesh under
companies act of 1913 or 1994 or a body corporate
established or constituted by or under any law for the time
being in force in Bangladesh having in either case its
registered office in Bangladesh. So a Bangladeshi company
will always be treated as resident.
b) In case of the other companies, they will be treated as
resident if the control and management of its affairs is
wholly situated in Bangladesh. In the above explanation
“control and management” means de facto control and
management and not merely the right to control or
manage. Control and management lies there where the
directing powers are situated (i.e., where the meetings of
directors are held usually).
How dose Residential Status affects taxes ?
Residential status of an assessee has an important
role in determination of total taxable income of
an assessee. According to Section 17 of the
ordinance, the incident of taxation depends on
the residential status and nature of the income.
Nature of Income Residential Status
Resident Non-resident

Income received or deemed to be received in Taxable Taxable

Bangladesh

Income accrued or arose or deemed to accrue or arise Taxable Taxable

in Bangladesh

Income accrued or arose outside Bangladesh Taxable Non-Taxable

Problem: Mr. A is a Bangladeshi citizen leaves for 1st
time on 5th December 2019 and comes back to
Bangladesh on 10th May 2020. Determine the
residential status of Mr. A.
Solution:
Income Year: 2019-2020
Assessment Year: 2020-2021
He went outside in 5th December and Come back 10th
June. During the income year his stayed in
Bangladesh as follows:
July 2019 = 31, Aug = 31, September = 30, Oct =31, Nov
=30, Dec = 5, May 2020 =21, June, 2020 =30.
Total stay in Bangladesh during income year 2019-2020
= (31+31+30+31+30+5+21+30)= 199 days.
According to the section 2(55) (i) (a) of Income Tax
Ordinance, 1984 to be a residential assessee, an
individual must fulfill the following conditions:
he should stay in the country for a period of at
least 182 days during the income year.
• Mr A stayed in Bangladesh for more than 182 days
i.e 199 days.
• Hence he is the ordinary resident as per sec 2(55)
(i) (a) of Income Tax Ordinance, 1984.
Problem:
Mr. X a foreign citizen, comes to Bangladesh during
the Income Year 2019-2020 and stays here for 96
days. Determine his residential status for the
assessment year 2020-2021, after considering his
stay in Bangladesh in past years.
Income Year No. of days
2014-2015 307
2015-2016 180
2016-2017 72
2017-2018 14
2018-2019 125
Solution:
According to the section 2(55) (i) of Income Tax Ordinance, 1984
to be a residential assessee, an individual must fulfill one of
the following conditions:
a) If he stays in the country for a period of at least 182 days
during the income year, or
b) If he stays in the country for at least 90 days during the income
year and also had been in the country for a period of at least
365 days during the four years preceding the income year.
Calculation:
Income Year: 2019-2020
Assessment Year: 2020-2021
During the income year income 2019-2020, he stayed 96 days. So
sec 2(55) (i) (b) of Income Tax Ordinance, 1984 will be applied
for him.
We have to determine the days of stay in Bangladesh during the
four years preceding the income year.
Total days of stay during the preceding four years of
Income year (2019-2020) are: (125+14+72+180)
=391.
• Explanation
• Mr. X was in Bangladesh for only 96 days (which is
more than 90 days) during the income year 2019-
2020 and 391 days (which is more than 365 days)
during 4 preceding income year. As he satisfies sec
2(55) (i) (b) of Income Tax Ordinance, 1984 , he
became resident of Bangladesh.
Tax Exempted Income
Tax Payer Current Slab (Tk.)

General Tax Payer 300,000

Women and senior citizens (65+) 350,000

Physically challenged persons 450,000

War-wounded gazette freedom 475,000

fighters
For parents or legal guardians of physically challenged
persons, the Nil Tax Limit would be increased by BDT
50,000.
General Tax Rate
Income Slabs (Current) Tax Rate (Current)
Up to Tk. 300,000 0%
Next Tk. 100,000 5%
Next Tk. 300,000 10%
Next Tk. 400,000 15%
Next Tk. 500,000 20%
On balance 25%
Tax rate for an association of persons is proposed at the
rate of 32.5%, previously it was as like as individual tax
rate. For an individual who is a non-resident (not non-
resident Bangladeshi), the rate of income tax would be
30% on his total income as before.
• To popularize the option of online payment of
taxes and online submission of tax return among
the taxpayers, he proposed a tax rebate of Tk.
2000 to all the taxpayers who will file their
income tax returns online for the first time.
Income Year, Tax Year, Tax Rate &
TIN
What is meant by Assessment Year
The year in which the tax is paid is called the assessment
year. According to Section 2(9) of IT Ordinance, 1984,
"assessment year" means the period of twelve months
commencing on the first day of July every year.
There are some exceptions to the above rule. The assessment
year may also be any such period which is deemed, under
the provisions of this Ordinance, to be assessment year in
respect of any income for any period.
The following are the cases where the assessment and the
income year become same:
i. Discontinued business or profession (section 89, 19(6))
ii. Person leaving Bangladesh for good (Sec. 91)
iii. Non-resident persons carrying an occasional shipping
business (Sec. 102)
iv. Non-resident persons carrying on air transport business
(Sec. 103A)
• What is meant by Income Year
The year of the income for which tax is levied is
called income year. In income Tax Act of 1922, it
was called previous year.
According to Section 2 (35) of IT Ordinance, 1984,
Income Year means the financial year (i.e.,
commencing on 1st July every year) immediately
preceding the assessment year or any other
accounting period as adopted by the assessee and
ending within the said financial year.
2[(35) ―income year means –
(a) the period beginning with the date of setting up of
a business and ending with the thirtieth day of June
following the date of setting up of such business;
(b) the period beginning with the date on which a
source of income newly comes into existence and
ending with the thirtieth day of June following the
date on which such new source comes into existence;
(c) the period beginning with the first day of July and
ending with the date of discontinuance of the
business or dissolution of the unincorporated body or
liquidation of the company, as the case may be;
(d) the period beginning with the first day of July and
ending with the date of retirement or death of a
participant of the unincorporated body;
(e) the period immediately following the date of
retirement, or death, of a participant of the
unincorporated body and ending with the date of
retirement, or death, of another participant or the
thirtieth day of June following the date of the
retirement, or death, as the case may be;
(f) in the case of bank, insurance or financial institution
the period of twelve months commencing from the
first day of January of the relevant year; or
(g) in any other case the period of twelve months
commencing from the first day of July of the relevant
year;]
Importance of income year and assessment year
A. Determination of income year has the following
importance:
i. Computation of total income
ii. Determination of tax burden
iii. Filling of tax return
• Computation of total income
Tax is charged on the income of the income year.
What are chargeable to tax are, therefore, the
income, profits and gains of the income year.
Thus, for the purpose of computing total income,
profits and gains, profits earned or losses
sustained before or after the income year are
irrelevant. So for the purpose of computation of
total income of assessee, the income year has
much importance.
• Determination of tax burden
• The tax liability of an assessee is determined at
the rate or rates prescribed in the Finance Act in
force for the assessment year. The income year of
an assessee will determine its corresponding
assessment year. So the tax burden of an assessee
depends on the determination of income year.
• Filing of tax return
• The date for filing of return of an assessee is fixed
on the basis of his income year. Thus
determination of income year is important.
B. Determination of Assessment year has the
following importance:
i. Exemptions
ii. Tax burden
iii. Different tax rates
Exemptions
• The provisions of exemptions and rebates of
assessment year are applied on the computation
of total income and tax credit income. So
determination of assessment year is vital.
Tax Burden:
Assessment year also has important bearing on the
tax liability of the assessee because the tax rate of
assessment is applied to calculate tax burden of
an assessee.
Different tax rate:
Different income years and consequently different
assessment years may be determined for different
sources of income of an assessee if the accounting
year of these sources of income are different. As
the tax rates for the different assessment years
are not similar, the tax burden is also bound to be
different.
Procedure for determining Income & Assessment
Year
The procedure for determining income year and
assessment year of a running business and newly
established business are different. For a running
business, the rule is that the “Financial Year” in
which the accounting year of a business closes is
the income year of that business.
For determining income year, for practical purpose,
student may follow the “Balance Approach”
shown in the next slide.
Tax Rates
Rates and slab of income tax for individual
(including non-resident Bangladeshi), Hindu
undivided family, partnership firm, fund, trust,
NGO and every other artificial juridical person
(except business of cigarette, bidi, jorda, gul and
all tobacco products) are as follows:
Tax Exempted Income

Tax Payer Current Slab (Tk.)

General Tax Payer 300,000

Women and senior citizens (65+) 350,000

Physically challenged persons 450,000

War-wounded gazette freedom fighters 475,000

For parents or legal guardians of physically challenged persons, the Nil Tax Limit would be
increased by BDT 50,000.
General Tax Rate
Income Slabs (Current) Tax Rate (Current)
Up to Tk. 300,000 0%
Next Tk. 100,000 5%
Next Tk. 300,000 10%
Next Tk. 400,000 15%
Next Tk. 500,000 20%
On balance 25%
Tax rate for an association of persons is proposed at the rate of
32.5% previously it was as like as individual tax rate.
For an individual who is a non-resident (not non-resident
Bangladeshi), the rate of income tax would be 30% on his total
income as before.
• Minimum tax for any individual category of
taxpayer has been proposed the same as the one
in previous year which is shown below:
SL# Location of taxpayer Minimum tax
(Taka)

1. Dhaka North City Corporation, 5,000

Dhaka South City Corporation and
Chittagong City Corporation
2. Other City Corporations 4,000

3. Areas other than City Corporation 3,000

• Corporate Tax Rates:
• A brief picture of the corporate tax rates proposed for the
assessment year 2020- 2021 and previous assessment year 2019-
2020 is shown in the table below:
SL# Particulars Assessment Year
2019-2020 2020-2021
a. Publicly traded companies (except banks, 25% 25%
insurance companies, financial institutions,
merchant banks, mobile phone operators and
tobacco-based product manufacturing
companies)
b Non-listed companies including branch offices 35% 32.5%
(except banks, insurance companies, financial
institutions, merchant banks, mobile phone
operators and tobacco-based product
manufacturing companies)*
c i) Mobile phone operator companies (not 45% 45%
publicly traded) *
SL# Particulars Assessment Year
2019-2020 2020-2021
c. ii) Mobile phone operator companies (publicly 40% 40%
traded by transfer of 10% share of paid-up capital
through stock exchange of which
maximum 5% must be through pre-initial public
offering)

d. Banks, insurance companies, financial institutions 37.5% 37.5%

(except merchant banks) which are publicly traded

e. Not publicly traded banks, insurance companies, 40% 40%

financial institutions (except merchant banks)

f. Merchant banks 37.5% 37.5%

g. Manufacturing companies and individuals 45% 45%

engaged in manufacturing of cigarette, bidi, jorda,
gul and all tobacco products
h. A Co-operative society registered under the Co- 15% 15%
operative Society Act, 2001
SL# Particulars Assessment Year
2019-2020 2020-2021
i. An association of persons Slab rate as like 32.5%
as individual tax
rate

j. Manufacturer & exporter of Knitwear and 12% (10% for 12% (10% for
Woven Garments ** factories having factories having
‘Green Building ‘Green Building
Certification’) Certification’)

k. Manufacturer of yarn related to production of 15% 15%

fabrics, (dying, finishing & conning of yarn),
(Manufacturing, dying, finishing & printing of
fabrics or engagement in any other activity in
similar nature) ***
l. Manufacturer of Jute Products **** 10% 10%
 e-TIN
• Electronic Taxpayer's Identification Number
(e-TIN) is provided by National Board of
Revenue (NBR). Each and every entity
(Individual or Corporate) must have the Tax
Identification Number who is eligible to pay
Tax according to the Income Tax Ordinance
1984.
• Requirement if e-TIN/ TIN in different cases
1. Opening of L/C
2. Renewal of Trade License
3. Submitting Tender documents
4. Submitting application for membership of a club
registered under Companies Act, 1994
5. Issuance/ renewal of license or enlistment of a
surveyor of general insurance
6. Registration for purchase of land, building or
apartment situated with in City Corporation
7. Registration/ change of ownership or renewal of
fitness of a car, jeep or microbus.
8. Sanction of loan
9. Issue of credit card
10.Issue of practicing license to a doctor, CA, CMA,
layer or income tax practitioner
11. registration of a company under Companies
Act, 1994 in respect of sponsor director
12. Renewal of membership of any trade body
13.Submitting plan for construction of building for
approval of RAJUK, CDA, KDA, RDA
14.Issuing of drug license etc.
Tax Assessment and Collection
• Assessment Procedure
The term ‘Assessment’ is used to mean the
determination of the amount of –
i) Total income of an assessee
ii) Total tax payable by an assessee
iii) Tax collection and
iv) Refund due to him.
So the term embraces both tax determination and
collection procedure followed by the assessor. It is a
continuous process starting from the assessment
and ends with the collection of tax. The steps of
assessment are: (i) Submission of tax return (ii)
Determination of tax liability (iii) Collection /
payment of tax and (iv) refund (if any).
Different steps of assessment is shown
in the following chart
a) Who should submit Income Tax Return?
i. If total income of any individual other than female taxpayers, senior male
taxpayers of 65 years and above, retarded taxpayers and war wounded
gazetted freedom fighter during the income year exceeds Tk 3,00,000/-.
ii. If total income of any female taxpayer, senior male taxpayer of 65 years and
above during the income year exceeds Tk 3,50,000/-.
iii. If total income of any gazetted war-wounded freedom fighter taxpayer during
the income year exceeds Tk. 4,75.000/-.
iv. If any person was assessed for tax during any of the 3 years immediately
preceding the income year.
v. A person who lives in any city corporation/paurashava/divisional HQ/district
HQ and owns motor car/owns membership of a club registered under VAT
Law.
vi. If any person runs a business or profession having trade license and operates
a bank account.
vii. Any professional registered as a doctor, lawyer, income tax practitioner,
Chartered Accountant, Cost & Management Accountant, Engineer, Architect
and Surveyor etc.
viii. Member of a Chamber of Commerce and Industries or a trade Association.
ix. Any person who participates in a tender.
x. Candidate for Paurashava, City Corporation, Upazilla or Parliament elections.
xi. Any company registered under the Company Act, 1913 or 1994.
xii. Any Non-government organization (NGO) registered with NGO Affairs Bureau.
• Time to submit Income Tax Return: [Section
75(2) of the Ordinance]
(a) For Company Taxpayers:
• By fifteenth day of July next following the income
year or, where the fifteenth day of July falls before
the expiry of six months from the end of the
income year, before the expiry of such six months.
• (b) For Other Taxpayers:
• Unless the date is extended, by the Thirtieth day
of November next following the income year.
Thank You