Lecture 2

Charge of Income Tax

And Computation of Total Income

Charge of Income Tax

(1)

Where an Act of Parliament provides, income tax shall be charged for any
assessment year at any rate or rates, Income tax at that rate or those
rates shall be charged, levied, paid and collected in accordance with the
provision of Income Tax Ordinance 1984 in respect of the total income of
the income year of every person.

(1)

Where under the provision of this ordinance income tax is to be deducted

at source, or paid or collected in advance, it shall be deducted, paid and
collected accordingly.

(3)

Notwithstanding anything contained is sub-section (1), Income tax shall

be charged at the rates specified in the Second Schedule in respect of
(i) a non-resident person, not being a company;
(ii) any income classifiable under the head Capital gains; and
(iii) any income by way of winnings

Scope of Total Income

(1)

The total income of any income year of any person includes

(a) in relation to a person who is a resident, all income, from whatever
source derived, which
(i) is received or deemed to be received in Bangladesh by or on behalf
of such person in such year; or
(ii) accrues or arises, or is deemed to accrue or arise to him in
Bangladesh during that year; or
(iii) accrues or arises to him outside Bangladesh during that year; and

(b) in relation to a person who is a non-resident, all income from whatever

source derived, which
(i) is received or deemed to be received in Bangladesh by or on behalf
of such person in such year; or
(ii) accrues or arises, or is deemed to accrue or arise, to him in
Bangladesh during that year.

(2)

Where any income of a person has been included in his total income
on the basis that it has been accrued or arisen, or is deemed to have
accrued or arisen, to him any year, it shall not be included again in his
total income on the ground that it is received or deemed to be received
by him in Bangladesh in another year.

Income deemed to accrue or arise in Bangladesh

The following income shall be deemed to accrue or arise in Bangladesh

(1)

any income which falls under the head Salaries, wherever paid if(a) it is earned in Bangladesh; or
(b) it is paid by the government or a local authority in Bangladesh to a
citizen of Bangladesh in the service of such Government of authority;

(2)

any income accruing or arising, whether directly or indirectly, through or

from(a) any business connection in Bangladesh
(b) any property, asset, right or other sources of income in Bangladesh;
or
(c) transfer of capital assets in Bangladesh;

Provided that in the case of a business all the operations of which are not carried out
in Bangladesh, only such part of the income as is reasonably attributable to the
operation carried out in Bangladesh shall be deemed to accrue or arise in
Bangladesh;

(3)

any dividend paid outside Bangladesh by a Bangladeshi

company;

(4) Any income by way of interest payable

(a) by the Government; or

Continued
(b) by a person, who is a resident, except where the interest is payable in
respect of any debt incurred, or moneys borrowed and used, for the
purposes of a business or profession carried on by such person outside
Bangladesh or for the purpose of making or earning any income from any
source outside Bangladesh; or
(c) by a person who is a non-resident when the interest is in respect of
any debt incurred, or moneys borrowed and used for the purpose of a
business or profession carried on by such person in Bangladesh or for
the purpose of making or earning any income from any source in
Bangladesh;

(5)

Any income by way of fees for technical services payable(a) by the Government; or
(b) by a person, who is a resident, except where such fees are payable in
respect of services utilized in a business or profession carried on by any
such person outside Bangladesh or for the purposes of making or earning
any income from any source outside Bangladesh; or
(c) by a person who is a non-resident where such fees are payable in
respect of services utilized in a business or profession carried on by such
person in Bangladesh or for the purpose of making or earning any
income from any source in Bangladesh.

continued
(6)

Any income by way of royalty payable

(a) by the Government; or
(b) by a person who is a resident, except where the royalty is payable in
respect of any right, property or information used or utilized for the
purpose of a business or profession carried on by such person outside
Bangladesh or for the purpose of making or earning any income from any
income from any source outside Bangladesh; or
(c) by a person who is a non-resident where the royalty is payable in
respect of any right, property or information used or services utilized for
the purposes of a business or profession carried on by such person in
Bangladesh or for the purposes of making or earning any income from
any source in Bangladesh.

COMPUTATION OF INCOME
Heads of income

(a)
(b)
(c)
(d)
(e)
(f)
(g)

For the purpose of charge of income tax and computation of total income,
all incomes shall be classified and computed under the following heads of
income:
Salaries.
Interest on securities.
Income from house property.
Agricultural income.
Income from business or profession.
Capital gains.
Income from other sources.