Paper presented by: Ranjan Kumar Bhowmik scma Former Member National Board of RevenueWhat does salary mean ? Classification of Salary Perquisites Salary Income Computation Tax on tax Salaries exempt from payment of tax Investment Tax Rebate calculation Present tax rate TDS from salary Reporting obligationDefinition of Salary There is no exhaustive definition of salary at Income Tax Ordinance, 1984. Only an inclusive definition is given where “salary” includes the following:~ Pay or Wages Annuity Pension-Fully tax free as per 6th Schedule (Part-1) Para-4 Gratuity—Partly tax free up to Tk. 2.5 crore as Per 6th Schedule(Part-1)Para-5 Fees Commission Allowances Perquisites Profits in lieu of salary or wages Profits in addition to salary or wages. Advance Salary Leave encashment Bonus Overtime {Section 32(2) of Income Tax Act,202Taxable salary Income Computation The following payment will not be included in computing income from employment: [1] Any amount received from the employer against surgery of heart, liver, kidney, eye and cancer. However this exemption will not be applicable for shareholder director of any company, [2] Any conveyance allowance, travelling allowance and daily allowance which is expended wholly, necessarily and exclusively for the performance of the duties of the office. Se Tax free income from employment would be Tk.4,50,000 or 1/3” of gross income from employment whichever is lower. ‘e schedule(p para-27, LrNo tax on tax if salary tax is paid by the employer if salary tax is borne by the employer, then that tax will not be treated as perquisite in the hand of the employee and therefore there is no tax on tax issue in this case. Y S. 10 182/1999 dated 01-07-1999Salaries exempt from payment of tax 1. All allowances (except basic salary, festival allowance and bonus) of Govt. employee are exempted from payment of tax. Retirement benefit in the name of lump grant is also tax free. [SRO No: 211 dated 21/6/2017] 2. Salary income of any foreigne: employed in PPP project of Dhaka Elevated Expressway Is tax-free for 3 years with effect from 14/8/2015.——>> {S.R.0. no 358/2016 dated 30/11/2016] 3, Salary Income of any foreigner employed in industries set-up at Economic Zone and High Tech Park is 50% tax-free for first 3 years starting from the date of employment. ——PISRO no 298 + 300 dated 08/10/2015) 3. As per Private Sector Power Generation Policy of Bangladesh, income of any foreigner employed in a private power generation company of Bangladesh is tax-free for 3 years from the date of his arrival in Bangladesh. > [S.R.0, no 188/2009 dated 01/7/2009) 4, Any salary drawn by any foreigner from the contracting state or agency as per bilateral agreement between the Govt. of Bangladesh and Govt. of the contracting state or agency from any foreign aided development project is fully exempt from payment of tax. ———».{S.R.0, NO 207/1997 dated 08/9/1997} 5, Salaries af catagarized personnel of United Nations and ts agencies are tax free as per provison of schedule-1 (Article-V) Section-17 and schedule-2 (Article-Vi) section-18 of United Nations and Specialized Agencies (Privileges and Immunities) Act, 1975, _——» [NBR Circular No: NBR/Tax-7/Tax Policy/02/2006, dated 29/4/2007)Investment Tax Rebate According to 6th schedule(Part-3) para-t the following Investments and donations are eligible for tax rebate for resident individual and for non-resident Bangladeshi:- ‘% Life insurance premium of self spouse and dependent children subject to maximum 10% of policy value {Para-2(1)] ‘ Employee's contribution G.PF. in case of Govt, employee [Para-2(4)] + Both employee's and employer's contribution to Recognized Provident Fund [Para-2(5)] % Employee's contribution to approved superannuation fund in which the employee is a participant (Para-2(6)) ** Employee's contribution to benevolent fund and group insurance scheme [Para-2(12)] % Contribution to any DPS up to Tk. 1,20,000/ per year at any scheduled bank/financial institution. [Para-2(7)(c)] + Investment up to Tk.5,00,000 during the year in the following savings instruments [Para-2(7)] (1) Any sorts of savings certificates but the condition is that it must be hold till the maturity. (2) Unit Certificate and Mutual fund certificate issued by ICB or any financial institution, (3) Government Bond and Securities Investment in shares, debentures or mutual fund either primary or secondary listed with any stock exchange in Bangladesh [Para-2(8)] "Minimum tax After rebate, minimum tax for individual taxpayers are: 1) Tk.5,000/ in case of Dhaka & Chittagong City Corporation area. 2) Tk. 4,000/ for other city corporation area. +3) Tk.3,000/ for other areas If total income exceeds theDeduction of tax at source from salaries * The employer shall deduct tax at source at the time of paying salaries at an average rate applicable to the estimated total income of the employee. At the time of making such deductions, the amount to be deducted may be increased or decreased for the purpose of adjusting any excess or deficiency arising out of any previous deductions or failure to make deductions. * The amount deducted shall be deposited to the credit of the Govt. within 2 weeks from the end of the month of deduction. Section 86TAX ASSESSMENT o» RENTAL INCOME Paper presented by: Ranjan Kumar Bhowmik son Former Member National Board of RevenuePresentation outline > Meaning of house property and property > Ownership and assessment in case of co-owner > Annual Value and allowable deductions therefrom > Treatment of self occupied property > Total rental value computation >» TDS from rent > Tax free rental incomeHouse property means any building other than factory building (including furniture, fixture, fittings which is inseparable from the building) and land appurtenant thereto owned by the assessee and rented for commercial or residential purposes. \ Section 35(3) of ITO,1984.** The tax on rental income is upon the owner (either legal or beneficial) and not upon the occupant. ** Where property is owned by two or more persons and their respective shares are not definite and ascertainable, the co- owners will jointly be assessed as an Association of Persons (AOP) x Section 36(4) of ITO,1984.me tax is levied not upon the actual rental ve Inco! pon the notional value based ; property rather u oe > Annual value is defined at section 2(62) of IT A sum for which the property might reasona| let-out from year to year or annual 01 whichever is higher. > Where the property is let out and the rentis re owner, the annual value may be more than th reasonable rent determined by tl ‘is rent.Total rental value= Annual value + any advance rent or security money or any money or benefit received in advance adjustment of previous advance rent (if any) vacancy allowance Note: If the property remains vacant for a certain period, it must be notified to the DCT within 30th of every vacant month for availing vacancy allowance. \ Section 37 of IT Act,2023In computing t deductible fro Act,2023:-2. Land development tax; 3. Municipal tax; 4. Insurance Premium, 5. Where the let out property is acquired, constructed, repaired, renewed or reconstructed with loan from any bank or financial institution then the actual interest paid during the year on such loan; 6. Where the let out property has been constructed with borrowed capital from bank or financial institution and there was no rental income during the period of construction, the interest paid during the period of construction will be allowable in 3 equal installments from first 3 years of letting out;Tax is to be deducted @ 5% at source from any amount of house rent/office rent/hotel rent etc. as per section 109 and 110 by the following tenants: 6O NGO co ‘AoP. Any authority, Body corporate Project, program or activity where Govt. has any financial or operational involvement. JV or consortium Company Financial Institution Co-operative bank Co-operative society School, college, institute or University Hospital, clinic or diagnostic center Any trust or fund Firm Any PPP A foreign contractor, foreign enterprise or an association or body established outside Bangladesh. Any artificial juridieal person not covered aboveTax free rental income Rental income from house property held under trust or other legal obligation wholly for religious or charitable purpose is exempt from payment of tax as per 6% schedule (part-1) paragraph-11). However, this provision will not be applicable for NGO. END OF THE PRESENTATIONPaper presented by: Ranjan Kumar Bhowmik rcma Former Member National Board of RevenuePresentation outline Introduction Types of return form Mandatory requirement of filing return Persons who are not required to file return Place where Return is to be submitted Who will sign ? What documents to be submitted with return ? Tax day When amended and revised return can be filed ? Penalty for non-submission of returnIntroduction Every person who is required to file return of income shall have to fill-up the return form prescribed by the NBR, which shall also be verified in the manner indicated in that form. For individual assessee the return together with the statement of assets, liabilities and expenditure and also the life style statement shall collectively constitute a valid and complete return.relel-cwatstan gle elias as aaa lense couctuLsAfter filing return under universal self assessment scheme if any assessee finds that unintentionally tax has been computed/paid short, then he may file an amended return within 180 days from the date of filing return attaching the following: 1, awritten statement about the mistake. 2. a proof of tax paid along with interest @ 5% p.m. which was: computed/paid short. Y Ref: Section 180 * Assessee will get an opportunity to submit amended return against notice u/s 181 relating to any adjustment in respect of any arithmetical error in the return or incorrect tax or rebate computation. DCT can issue such notice within 1 year from the date of filing return. Ref: Section 181TIN de-registrationEND OF THE PRESENTATION!!Paper presented by: Ranjan Kumar Bhowmik rcma Former Member National Board of Revenue \PRESENTATION OUTLINES Introduction Principles of good tax system Cannons of Taxation Direct tax Vs. Indirect tax Legacy of Income Tax law Bangladesh tax structure Present tax rate Reduced tax rate with SRO reference > Tax reforms > > > > > > > >Introduction “Taxes are dues that we pay for the privileges of membership in an organized society." Tax is a compulsory payment made to the Government for services it provides us, though people may not be completely satisfied or convinced with these services. Income tax, as we all know, is a tax on income. VAT is also different from income tax in so far as in VAT, the incidence can be shifted but income tax is an ultimate burden, Income tax is an annual tax in the sense it is assessed on the income year basis. Income tax is a one stage tax and an income once taxedPrinciples of good tax system Good tax systemis basedCanons of Taxation Canons of Taxation are the main basic principles/rules set to build a'Good Tax System'. Adam Smith gave following four important canons of| taxation, they are: > Canon of Equity > Canon of Certainty > Canon of ConvenienceCanons of Taxation > Canon of Equity: Every person should pay to the government depending upon his ability to pay. » Canon of Certainty; The tax which an individual has to pay should be certain, not arbitrary. The tax payer should know in advance how much tax he has to pay, at what time he has to pay the tax, and in what form the tax is to be paid to the government » Canon of Convenience: The mode and timing of tax payment should be as far as possible, convenient to the tax payers. For example, land revenue is collected at time of harvest, income tax is deducted at source at the time of payment.ee} Meaning Nature of tax Taxable event Lew Shifting of burden Tax collection Direct tax Vs. Indirect tax Directtax Direct taxes are the taxes in which the incidence and impact falls on the same person/assessee. Direct tax is progressive in nature. At the time of earning income. Direct tax is levied and collected from the assessee ; fe borne by the assessee, Accordingly the burden cannothe shifted, Tax is usually collected after the income, for a year, Is earned. uel cae Indirect taxes are such type of taxes where incidence and impact fall on two different persons. Indirect taxes are regressive in nature. Purchase/sales/manufacture of oods and/or rendering services Indirect tax is levied and collected from the consumer but paid/ deposited to the national exchequer by the assessee/dealer, Tax burden is shifted tothe subsequent/ultimate user At the time of. ae or purchase or rendering of servicesLEGACY OF INCOME TAX LAWBangladesh Tax Structure: The tax structure of Bangladesh consists of both direct tax (income tax, gift tax, travel tax, land development tax, non- judicial stamp, registration, immovable property '@X, motor vehicle tax etc.) and indirect tax (customs duty, excise duty, narcotics and liquor duty, VAT, Turnover tax, SD, etc.). Analysis of revenue collection activities in Bangladesh reveals that tax revenue accounts for roughly 90% of total government revenue,Tax collection target of NBR for the fiscal year 2023-24 Direct Tax [Income tax, Gift tax and Travel tax Tk. 1,53,260 (35.6%) VAT Tk. 1,63,837 (38.1%) Import and other Duty Tk. 52,200 (12.01%) SD Tk. 60,703 (14.1%) =<"On the next Tk. 3,00,000/- of total income On the next Tk. 4,00,000/- of total income | On the next Tk. 5,00,000/- of total income [ Oe the Balance of total come “Hiker rabata, minienamn tax for individual taxpayers 276: 1) Tks,000/ in case of Dhaka & Chittagoné CHY Corporation area. 2) Tk. 4,000/ for other city corporation areas +3) Tc3,000/ for other areas if total income exceeds the minimum taxable ceiling. {31 Forti gene ar ‘physically handicapped persons threshold limit is Tk, 4,75,000/ FOU REEeteS n sdom fighter thresnoid limit is Tr.5,00,000. see | guardian of any physically challenged child or dependent will be -f both father and mother are assessee then any one can availTax Reforms: Some recent tax reforms are mentioned below: {a) Introduction of e-TIN: Formerly each tax payer had a local registration number called GIR (General Index Register) number. In 1994 nationwide unique 10 digit TIN (Tax payers ent number) has been introduced. Presently electronic 12 digit TIN has been Inked by the NBR replacing the old 10 digit TIN. (b) Expansion of withholding tax: Provisionally withholding tax was levied on increase the tax network it was gradually expan salary and contractors/suppliers. To ded, Now withholding tax is imposed ‘on 52 items. Major items include, contractors/supplies, importer, salary, bank deposit etc. (c) Simplification of tax assessment: Universal self assessment system has been widened and expanded. At present all categories of assessees are entitled to submit return under universal selfEND OF PRESENTATION!! TatlNDISPUTE RESOLUTION PROCEDURE Paper presented by: Ranjan Kumar Bhowmik recma Former Member National Board of RevenueDISPUTE RESOLUTION PROCESS. Gre no ecu oguras amos eee) CW keo) company ae eters pre Pe ee atin eral Coere ee ee Cee ueussts ‘Alternative ea Resolution 5 Sa ot) (if certifiedWabauero sty eset Cet) \ipibbabaete RGALLAD Lt toa saree’ ee Wa oie ls) rele yes days; Worker tac ergs pald before igdeabblcted tees fe] steal within. within 1o iS E] 3 = Taxes Appellate Tribunal Cress eres Runes Rae ta ei Crt Taxes Appellate Tribunal 1 the final fact finding wuthority.REFERENCE TO HONOURABLE HIGH COURT DIVISION c re} o fe) ct lo) pe ma © F oVU a ex © 2 co a onditions: ‘ax to be paid @ 15% on the difference between tax against Tribunal payable as per return and tax order: payable as per Tribunal order if at lhe tax demand Is below 10 Reference within akh; belo) : ax @ 25% on such difference if [Se eles ax demand is more than 10REVIEW TO COMMISSIONER OF TAXES ‘ No review if Tea appeal against pending before | DCT's | any ee authority or not (Gbses wa withdrawn or within 60 right to appeal days. is not waived.ALTERNATIVE DISPUTE RESOLUTION (ADR) Ff xin F Appeal di pending KOR Pee y LO Stain resolution by DCT y T Casa y by neutral authority, fi Tribunal or aeilictes Court Section-302+304ALTERNATIVE DISPUTE RESOLUTION (ADR) * Assessment of income above shown income eae Any order by appeal authority. + Application against DCT's assessment and any appeal pending before any appeal authority or court; * Application for ADR within 30 days from getting permission; * Application to appeal authority or court and obtaining permission from court. + To be appointed by NBR; + Neutral person with knowledge of tax law to be appointed as Facilitator; + Hearing both assessee or assessee's representative and CT's representative: + Make decision acceptable to both. Binding for all. If not agreed, disputed portion to be tried in the appropriate court.; = Decision within 3 months from the end of the month of filing ADR END OF THE PRESENTATIONSalient Features of National Budget,2023 (Income Tax portion) Paper presented by Ranjan Kumar Bhowmik rcma Former Member National Board of RevenuePresentation outline National Budget 2023-24 at a glance Changes at tax rate, wealth surcharge, rebate etc. New heads of income Changes at Individual tax matter Changes at Corporate tax matter Tax Audit procedure Changes at TDS Return and statement TIN de-registration Electronic tax systemSources of Receipts (In Crore Taka) 2023-24 2022-23 l ‘Total Estimated Receipts — 4,530,000 ‘Total Estimated Receipts ~ 3,70,000 1,53,260(35.6%) YY 1,21,020 (32.71%) 1,63,837 (38.1%) @ 1,41,192 (38.16%) LA 60,703 (14.1%) 2 58,524 (15.82%) Sepppemerstary DratyIncome slab Minimum tax On the 1* Tk. 3,50,000/- of total income [For woman & senior citizen Tk.4,00,000/ On the next Tk. 1,00,000/- of total income On the next Tk. 3,00,000/- of total income On the next Tk. 4,00,000/- of total income On the next Tk. 5,00,000/- of total income ‘On the balance of total income ‘After investment tax rebate, minimum tax for individual taxpayers are: 1) Tk5,000/ in case of Dhaka & Chittagong City Corporation area. 2) Tk. 4,000/ for other city corporation area, 3) Tk.3,000/ for other areas if total income exceeds the minimum taxable ceiling. a [1] Threshold limit for third gender tax payers & physically handicapped persom ls Tk. 4,75,000/ [2] Threshold limit for gazetted war-wounded freedom fighter 1s Tk.5,00,000. (3) Threshold limit for parents or legal guardian of any physically challenged child or dependent will be 50,000 ‘taka more for each child/ dependent. If both father and mother are assessee then any one ean avail this benefit. [Finance Act,2023)Up to 1500 ce or 75kw 1501 ce -2000 ce or 76kw-100kw 2001 ce -2500 ce or HOLkw-12Skw. 2501 c¢ -3000 ce or 126kw-150kw ‘3001 ce -3500 ce or ISTkw-175kw ‘exceeding 3500 ec or 175kw BORA Te Ree ace Ue UUme RLS 2. Carbon tax is not adjustable with income tax payment. [Section 68B of Income Tax Act,2023]* Tax free allowances would be Tk 4,50,000 or 1/3" of gross salary whichever is lower. [6" schedule(part-1) para-27] + The ceiling of DPS for getting investment tax rebate raised from Tk.60,000 to Tk.1,20,000 [sec. 30(e)] * Delay interest @ 4% per month will be applicable for late submission of retum. Previously the rate was 2% [section 174] + Interest @ 5% per month will also be applicable for submission of amended return. Previously the rate was 2% [section 180(2)] “ Return must be submitted under universal self assessment scheme for assessee other than company and person leaving Bangladesh. Previously return can be submitted under normal procedure also. [Section 170] i Audited financial statement becomes mandatory for partnership firm, AOP, nual turnover more than Tk. 3 crore and also for individual income from long term contract. [sec. 73]| Value of perquisites Income Tax Ordinanc A eeu Leal ead Rent fri mn i Rent free accommodation Rental value of the rent-free Rental value of the rent-free accommodation accommodation to be added directly in computing salary income. or 25% of basic salary whichever is less to be added in computing salary income. Full time car facility Full time car facility 5% of basic salary [1] Monthly Tk. 10,000 will be added in computing salary income in case of availing DE full time car facility up to 2,500 cc, yearly Tk. 60,000 whichever is higher is to be added in computing salary [2] Monthly Tk.25,000 will be added in income if full time car facility is computing salary income in case of availing provided by the employer. full time car facility above 2,500 cc. x [Section 33 of Income Tax Act, 2023]* New definition of company will also include the following: Chamber of commerce & industry tive society r SLSR NGO & MCO beta c tres mere etter EMM cone to teeters Govt. authority * All salary must be paid through banking channel as per new act. As per 1TO,1984, monthly cash salary payment was allowed up to Tk.19,999. {sec 55} % Previously revised return can be submitted at any time before assessment. But now it can be submitted, without reducing tax liability, before 1*' hearing date or before 6 months of time barred whichever is earlier.[section 175] * Tax depreciation on motor vehicle was allowable on Tk. 25,00,000 if the cost is more than Tk. 25,00,000 but now the limit is extended to Tk. 30,00,000.Royalty, technical service fees, technical knowhow fees, fees for using intangible asset was allowable expenditure up to 10% of disclosed net profit for 1st 3 Years and 8% in Subsequent years. Now as per new tax law it would be allowed 10% for every year. Business loss could only be set-off against any other business income during the year as per section 70(2) of new Income Tax Act,2023. At previous law business loss cannot be set-off against house property income and capital gain. Tax is to be deducted at source from interest on foreign loan. There was an SRO of non-deduction if the foreign loan is Govt. approved, The SRO is deleted this year, Tax return is to be submitted for Recognized Provident Fund and Approved Gratuity Fund from the assessment year 2023-24, Interest income of Recognized Provident Fund and Approved Gratuity Fund will now be taxable and tax is to be paid at the time of submitting return. Definition of perquisites changed. Incentive bonus will now be treated asDetail of team and SOPis provided in this section on the timeline and procedure that needs to be followed for audit. Asummary of the timeline is.as follows: Appointment of Noeste Inquiry Team Assensce writin within 7 days Audit Curator recommend to CT with anomalies in 7 Normal and best judgement f assessment if no revised return is submittedoof the deed Salue oF Tika 410,80, 000/- ‘he of the deed value or Taka 20,00,000/- B% of the deed FM of the deed ‘value.or Tahir value or Taka 12,00,000)- 00,000). 4% of the deed BY of the deed ‘yolue or Taka Agrabad and CDA Avensié of Chittagong, value or Taka 360,000/. Whichever ishigher '8,00,000/- eee Sita 4% of the deed value or Tako 3,60,000- 8% of the deed ‘valize oF Taka 8,001,000) Bi of the deed Postogalaand Gandarin of LDhaka “Bonargaon, Janapath, Shahboy, Heer fpath, Bunglomotor, Kakrail of Dhaka Nababpurand Fulbaria of Dhaka ir of the deel value or ‘Tako 600,000 Pr ofthe deed value or Taka 3,00,000) Bh of the deed value or Taka 6,00,000/. ‘Additional tax on any structure, building, flat, “Taka 600 per meter or 4% oF the ‘apartment or floor space deed value 8% of the deed value or Tk 800 per square meter Whichever whigherEre ne yg amet c ‘Uttara (Sector 1-9), Khilgaon (beside 100 feet road), Azimput, Rajarbagh (beside bishwa road) of ‘Dhaka, Baridhara DOHS, Bashundhara (Block A~ (reine cance 4% of the deed Si oF the deed value or Taka Plan een) eo) ‘G), Niketon of Dhaka, Agrabad, Halishohar, value or Taka Panchlaish, Nasirabad, Mehedibag of Chittagong, | %000/- 5,00,000/- ‘Gulshan, Banani, Dhanmondi, Baridhara DOHS, f Banani DOHS, Mohakhall” DOHS, Basundhars | Viet riuia Ee (Block A), Niketon and Baridhara of Dhaka ae Spee Rajuk Purbschal Residential Model 4% of the deed ‘8% of the deed ‘Town, Basundhara (Block: K-P), value of Taka, Whichever value or Taka Jill Residential Areo, Dhanmondi 240,000: _| istigher | 3,00,000/- ‘Kakral, Seguntbagiche,,Bijoynagar, Eskaton, Green Road, Elephant Rood, Fakiropoo, ‘Arambagh, Maghbazar (within 100 feet of main. | 4%of the decd 8% of the deed oad), Tejgoon Industrial Area, Sher-e value or Taka value or Taka Banglanagar Agargoon, Lalmatia, Cantonment of | 1.80-000/ 500,000/- [Dhaka and Kishi of Chittogong ‘okra, Segunbagicha, Bijoyragar, Eskaton, | yo: or the deed value The cut Getteeh Vhosd we (onside, one | oro eee ae poeta reel hundred feet of main road) of Dhaka an MAES Whichever ishigherName of the Area ‘Green Road (from Road 3108 of Dhanmondi Residential Area of Dhaka) Rate of tax as per katha (1.65 decimal) Previous Atoof the deed value of Taka 240,000/ enna) ‘8% of the deed value or Taka. 5,00,000/ Uttara (Sector 10 to 14), Nikunja| South), Nikanja (North), Badda Rehabilitation Area, Ganderia Rehabilitation Area, Syampur Rehabilitation Area, IG Bogan Rehabilitation Area, Tong Industrial Area of Dhaka Hol the deed value or ‘Taka 00,000 5% of the deed walue or ‘Taka 1,20,000/- ‘Syampur Industrial Area, Postagola Industrial ‘Area and Jurain industriol Area of Dhaka. Peolthe ded value or Taka 48,000 Biot the deed value or Taka | 1,00,000/. Khilgaon Rebabilliation Area (beside less than 100. feet road), Rajarbogh Rehabilitation Area (beside 40 feet and other internal rood) of Dhaka 4%aFthe deed value or Fak 72,000/. 8% of the deed value or ‘Taka 1,50,000/- Goran 40 feet ind Hajariboas Gavan esse 10 fet 098 ond Hajaibgh Tannery +hol the deed value or Taka 30,000). B% of the deed value or Takin 50,000/- ‘Additional tax on any structure, building, fla, “apartment or floor space L Taka 600 per square meter oF 4% of the deed Toke 800 per Square meter oF B% of the deed valueName of the Area ‘Within. the jurisdiction of RAJUK and Chittagong. itenaen eo (tier con) fre) Development Authority. (CDA) except areas specified 4% of deed value & ‘of deed in clauses {a} and (b valve Within the jurisdiction of Gazipur, Narayangan), Munshigan), Manikgan), Narsingdl, Dhaka ond Chittagong districts Jexcluding RAJUK and Chittagong 3% of deed valve 6% of deed Development Authority (CDA}} and within any City Whichever | value Conpornlion (eickiding Dhale Suth Caly Corse Iishigher and Dhaka Narth City Corporation) and Cantonment Board ‘Areas within the jurisdiction of a Pauroshova of any district | 500 or gona value paths Headquarter vale ‘Areas of any other Pouroahova Phof deed value 4% of deed value ‘Any other area not spenfied in clauses (a) (b) and (6) Tok deed valve 2% of deed Whichever shigherNew Inclusion ‘Online Return and Documents Submission Communication of order, Acknowledgement ee Demand notice, Certificate through | > line Virivol attendance or hearing belore income tax authority or Taxes Appellate TribunatDEDUCTION/COLLECTION OF INCOME TAX AT SOURCE Paper presented by: Ranjan Kumar Bhowmik eva Former Member National Board of RevenueWhy TDS 1.Pay As You Earn (PAYE) 2.Fiscal stability 3.Revenue certainty 4.Broadening tax base 5.Year round revenue collection by the Govt. 6.Time value of money 7.Reducing tax burden at the time of submitting returnTable of TDS Head Reference Base amount Contract seas. {3st 105 @ 24 surat (Gi SepeTor em ono {e}singe Ts ea nupphy ot Aedustial raw materias to.= ‘manutacturer 7] Slagie TOS @10% on supply ot tobacco, product [8] Single 705 @3% on supply of “entra high voltage power cable Up to Tk. 50,00,000/- If > Tk. 50 lac but <= Tk. 2 crore if>Tk.2 crore Minimum tax u/s 163 ‘B+ Tax to be deducted as per this section ‘ABTDS at import stage u/s 94 if goods are supplied on which tax Datsource pald u/s 4 then: Formula is BA Bedealer price x7% x 5% ‘Aedealer price x5% 1 5% ‘ss mentioned at section 34 exchange Including sale under hire e000 0 accooTable of TDS/TCS (a) Oil ‘supplied by oil marketing company engaged in marketing of petroleum oil and lubricant (b) Oil supplied by dealer or agent of oil marketing company (c) Oil supplied by Oil refinery (4) Gas supplied by Gas_ transmission company to gas distribution companyTable of TDS/TCS a a a a Q a a a Distributorship Commission 94 10% en ciacounl, commiasion. toes, dealer's promotional chargas or any other ‘name. Minimum 00/5163 eee eae vveeaccwtae ‘dstributors at» orice lower than MRP, then (@5% on FSH. 15% rom the payment in elation tothe ‘promotion of the company ots woods to any pervon in the destribution/marketing. ofthe goods ofthe company. Nowever incase ol cigarette the rate would be 3% ofthe difference between tha OP and Mae12} Local UC 97 | 3% lof the amount paid or credited in relation to Bank ‘purchase of goods for the purpose of trading or of | or Teselling after process or conversion 1% of the amount paid or credited in relation to | Institution goods invoiced to a person under a final of procurement of rice, wheat, potato, onion, /gatlic, peas, chick peas, lentils, ginger, turmeric, dried chills, pulses, maize, coarse flour, flour, salt, editable oil, sugar, black peeper, cinnamon, cardamom, clove, date, cassia leaf, computer, computer accessories, jute, cotton, yarn and all kinds of fruits, 13 | License fee or 98 10% other fees paid by mobile phone company to regulatory authorityIfthe payee is recognized provident fund, approved {gratuity fund, approved superannuation fund or pension fund23 eae Interest on securities Including Weasury bill /treasury bi Discount on Bangladesh Bank Bill Applicable highest rate Person responsible for Govounteg te ba IGW Service on International phone call 15% Tax to be’ deducted from IGW | by Bank Minimum tax u/s 163. 75% Tax to be deducted from | ICX/ANS by IGW. Incase of outgoing international call the ICX/ANS company shall deduct tax @7.5% on the whole amount SO paid. =Table of TDS/TCS center, community center, room, hall, hotel or restaurant 2 Any artificial juridical person not covered aboveTable of TDS/TCS Signing money paid by real estate developer gonial to land owner( A uy #5] 8] a] 5] ae (8) Company — {8} Other than company -.-- ‘Pre-shipment inspection service Profesional /vchnica services = 5g) ‘Exploration or driling in petroleum ‘operations service for making connectivity Sn ch esgmtes sat ootTable of TDS/TCS Si. Head Section Deducting No. |e Authority Real estate 126 Tk. 1600 or Tk. 1,500 or Tk. 1,000 or Sub-Registrar business Tk.700 or Tk.300 per square meter for residential building or apartment depending on the area Tk. 6,500 or Tk. 5,000 or Tk.3,500 or Tk.2,500 or Tk.1,200 per square meter for commercial space depending on the area 5% of the deed value of land at any area of Dhaka, Gazipur, Narayangonj, Munshugonj, Manikgonj, Narshindi & Chittagong district . 3% in other district.Table of TDS/TCS 130 | Tk. 45,000/- for one section Tk. 70,000/- for one and half section Tk, 90,000/- for two section ‘Tk. 150,000/- for automatic brickfield Tk. 3,000/- for Dhaka & Chittagong city corporation Tk. 2,000/- for other city corporation Tk. 1,000/ for pourashava at district headquarters. Tk. 500/- for other pourashava Business of a resident seine aE vi ecas Bangladesh if sorvice rendered between 2 oF more foreign countries then the rato is 3%) Customs. CommissionerConsequence of non-compliance + The deducting authority will be deemed to be an assessee in default and shall be personally liable to pay the taxes (sec. 143(1)] 1 f no PSR (other thai it to non-resident) and_ % Heer Wittoct bank wenee ct oreviton en a Pay Tos centre [sec a} “Additional 2% Ber month is also to be paid if it is not paid within the stipulated time.[sec. 143(3)] gl “Penalty not exceeding Tk. 10,00,000 may be imposed for being n r any other provision of chapter-7 other than non/short deduction deducted tax to Govt. treasury. [ sec. 143(2)] sit be treated fence which is punish: th imp See er ae ean an without reasonable cause.{sec. 315] r rw “ Revenue expenditure will be treated as busia Penalty and Prosecution Ranjan Kumar Bhowmi Ex-Member National Board of Revenue Introduction ‘There are provisions for imposition of penalties on fraudulent assessee at chapter XV (Section 123-133) and presecution at chapter XXI (section 164-171) of the Income Tax ‘Ordinance, 1984, 01 it points to iber: + The penalty is the additional amount of income tax though as per definition of tax at section 2 (62), tax includes penalty. The power to impose penalty is given mainly to the Deputy Commissioner of taxes (DCT) and in case of concealment of income and submission of fake audit report the power to impose penalty is also given to the Commissioner of Taxes (Appeal), Appellate Joint Commissioner of Taxes and Taxes Appellate Tribunal. ; 4 The power to impose penalty is subject to the prior approval of the Inspecting Joint Commissioner of taxes (ICT) except in the case of imposing penalty for failure to file return w/s 124. + Penal proceedings can be initiated by the DCT only in the course of any proceedings in connection with the regular assessment and no such proceedings can be started after completion of the assessment order. % If the penalty proceedings are not finalized but the assessment is completed there is nothing to bar the DCT to impose penalty. ‘> There is another restriction that assessee has been heard or has been given a reasonable opportunity of being heard before imposing penalty. % Where penalty is directly related to assessed income and the amount of income is revised subsequently, the DCT shall automatically revise penalty order at the time of revising the income [section 133A] # No prosecution can be instituted without prior sanction of the Board and Board has to compound such offences. The penal provisions are tabulated below: ~ SL | Grounds of | Referenc Amount of Penalty Penalty _ | e Section Penalty for| 123 | (a) 1.5 times of the amount of tax | 1) Penalty, cannot not (Read | payable (Maximum) imposed unless the maintaining with | (b) Tk.100 where the total income | assessee has _ beet accounts in| section | does not exceed the threshold limit | heard or has been the 35, Rule- | (Maximum) given a reasonabl prescribed Sand | (c) 50% of tax on house property | opportunity of being manner Rule-8A) | income or Tk.5,000 whichever is | heard. higher in case the owner of the house receiving monthly rent mare | 2) DCT shall not than Tk25,000 but violates rules | impose the penalty and order of NBR relating to | without the previous maintenance of tegister__and | approval of the UCT.St] Grounds of] Section |Amount of Fenalt Penal —— Failure toile | 124 _| fowortie eras retum, esse including “Ti 1,000! whichever is highe? et or Patong “Te $0 pr day of esl. given 3 wat not | opportuni Total amount of such penalty wi" Te hear. exceed Th 5,000 in cane of 8 ea individual assesce who was nat previously axenad SON of Init assessed tax or T1000 whichever is higher in case of existing Individual assessce failed to submit return Soe ey ih for a) statement w/s -Do- |_| 58,109 or 110 | [Fernon- 10% of last assessed tax or submission of Tk.S,000/ whichever is higher+ Tk. rouum ws. 1,000 per month for continuing 75A or default ‘statement w/s 108 or information us 108A a ee Tk25,0007 plus 500 per day =Do- ee during which the default continues. required u's 113, Penalty for) 124A | Tk20,000( maximum) 1) Penalty cannot be it imposed unless the assessee has been heard or has been = given oa reasonable opportunity of heard, 2) DCT shall not impose ‘the penalty without the previous approval ofthe Failure to| 124AA | Maximum Tk 50,000-but_where Do verify TIN TIN certificate submission is mandatory but the authority fails to comply it then maximum penalty js Tk.2,00,000/ 3 |Failuetopay| 125 |The amount of shorn fall Do advance tax maximum) 4 | Non 126 |The amount of tax subsequently compliance assessed (maximum) -Do- with _ notice ws 79, 80, 830) and 830) eslty& Povecuton (amend wp no 1203821) ‘ecpred by Rann Kiar cami ea Page Bef——— Pay) 137 25% of the short fall (maximum) “Do- 6. Pere Tax CPST TE WHE az onment evasion is detected after one year or more, then the amount of penalty Will increase by additional 15% for Do- each earlier assessment year 129A] Not less than Tk$0,000/ and not -Do- ‘more than Tk. 2,00,000/ 1298 | TK:1,00,0007- (fixed) -Do- DCT, AJCT, CT(Appeal) and Taxes Appellate Tribunal can impose such penalty. 9 | Revision of 133A | Where penalty is directly related penalty on with the amount of income then if the basis of ‘income reduced penalty will revised automatically be reduced. income 10. | Penalty for 137 ‘The amount of arrear tax | If the amount of tax on default in (maximum) switch, ay. Pied iy fully Logins of paler the order of any Appeal’ Tribunal’ ‘Court, the penalty shall automatically be sancelled | TL, | Failure to 7 2% Per month of the amount of tax |(l) The deducting deduct/collect to be deducted, collected or | authority will also be tax at source deposited ‘treated as an assessee in or having default, deductedicall 2) Expenditure will ected but fails be disallowed sper akan Section 30(a) and into national 3XKes) exchequer. 12 [Failure “10! 89) | The amount of tax sibsequenty give notice to assessed (maximum) No pre-condition. the DCT regarding the discontinuanc: € of business Ponaiy se Proscetion amended ts 3023001) ‘espera by Rana Kumar hom 0 Pape s.or6Failure to) ¥07HH submit statement of intemational transection as per section Maximum GF of the value of such intemational transection. The above-mentioned sections prescribe the maximum penalty (¢% section $7 where penalty is fixed). But the fact is that the cciling 0! that penalty must necessarily be imposed in every case, The discretion 0! 107EE ccopt section 124,128 and f penalty does not mean f the DCT to levy or not to levy a penalty is still preserved by the penalty sections mentioned above, Se Nature of Offence Reference Imprisonment Section 1. | Failure to deduct/collect tax at) 164(a) T year (Maximum) with or without fine ‘source or having deducted/collected but fails to deposit into national exchequer. 2. Non-compliance of notices ws 164(b) 1 year (Maximum) with or without fine. 77,79. $0 and $3 3. | Failure to file retum ws 7S or im | 16M) _| 1 year (Maximum) with or without fine. compliance with notice ws 77 and 93 4, | Refuses to furnish information | 16H(ee) | | year (Maximum) with or without fine. required ws 113 | S._| Refuses to permit inspection or) 168d) | 1 year (Maximum) with or without fine. to allow copies to be taken in accordance with the provisions : of section 114. © |Fails 10 fumish imformation | 16M(e) | | year (Maximum) with or without fine, required us 115 7 [Fails to comply with the] T6d(ee) | 1 year (Maximum) with or without fine. requirement w/s 116 8 Fails to comply with the | 164{cee) | | year (Maximum) with or without fine. requirement u/s 116A. 3, | Refuses to permit orobstructs the | 164(F) | 1 year (Maximum) with or without fine. income tax authority to exercise power ws 117. TO. | Makes false statement at the | 165(a) | Minimum months but maximum up to Verification of the retum or other 3 years with or without fine, documents. Pou) Premier amended to 022021) city Hangs Kam owen Ys Tage totsa rin] Willfully aids, abets, assists, | _165(b) | Minimum 3 months but maximum up t0 incites OF induces other person to 3 years with or without fine. deliver a false return, accounts, statements ete, 12. | Refuses to furnish information as | 165(@) | Minimum 3 months but maximum up to May be necessary for the purpose 3 years with or without fine. Of survey ws 115 13. | Deliberately using fake TLN, or| 165(A) | 3 years (Maximum) with or without fine |__| T.LN. of another person up to Tk. 50,000). 14, | Submitting fake audit report T6SAA | Minimum 3 months but maximum up to 3 years with or without fine up to Tk. 1,00,000 15. | Obstructs income tax authority to | 165(B) | 1 year (Maximum) with or without fine, discharge their function. 16. | Giving employment of foreign | 165C | Minimum 3 months but maximum up to national without valid work 3 years with or without fine up to Tk. permit $,00,000 17. | Conceals income or deliberately 166 Minimum 3 months but maximum up to furnishes inaccurate particulars. 5 years with or without fine. 18 |Conceals information or | ‘166A. 3 years (Maximum) with or without deliberately furnishes inaccurate fine. ___| information about the assessee. 19. | Disposal of property after the| 167 3 years (Maximum) with or without receipt of notice from TRO to fine, prevent attachment 20, |Disclosue of information in| 168 | 6months (Maximum) with or without contravention of the provisions fine, of section 163 Conditions: [1] No prosecution can be instituted without prior sanction of the NBR. {2] NBR has the power to compound offences. Penalty for not maintaining accounts in the presc! ner (section 123). ‘As per provision of section 35 income shall be computed in accordance with the method of accounting regularly employed by the assessee in case of the following heads of ineome: ~ 1. Income from business or profession. 2. Income from house property 3. Agricultural Income 4, Income from other sources. Medical practitioners known as doctors, surgeons, physicians, dentists, psychiatrists, homeopaths, veterinary surgeons other than medical practitioners, who do not make any separate charge for consultation but make a charge for the medicines supplied by them and legal practitioners (including income-tax practitioners) accountant and auditors, architects ‘and engineers, are to maintain accounts in the manner prescribed in rule-8. In case of house property income, the owner shall have to maintain accounts relating to details of rent received if monthly rent received exceeds Tk.25,000 and that rent must be deposited to his bank account (Rule-8A) salty f 4o file Income Tax Re rt Tenuly& Prowecuion tended po 028021) perry ai uma hh Ht Pipe sateThe Deputy Commissioner of Taxes has not the absolute power to impose penalty without giving due regard to see the circumstances which causes default on the part of the assessee to file the retum on time and if there is any reasonable cause for which he failed to file the retum on time penalty should not be imposed. Absence of reasonable cause is mecessary to justify a penalty. Mere non-furnishing of, or delay in furnishing @ retum of income is not enough, Imposition of penalty is not compensatory but punitive and the proceeding to impose penalty is quasi criminal. It is well settled that the liability to pay penalty does not arise merely on proof of default in filing the return on time and the discretionary power of the authority to impose penalty for failure to file return on time is to be exercised judicially and on consideration of all the relevant circumstances. Penalty may be imposed for not furnishing a retum within the time allowed in the notice calling for a return, even if the assessee does furnish a return after the expiration of the time allowed. ‘enalty for concealment of income (section 1 This section prescribes penalty for concealment of income An assessee who had deliberately filed an incorrect return submited a revised retum when the omission in the first return was on the point of being discovered and the DCT while assessing on the basis of the revised retum imposed a penalty under section 128 of 1.T. Ordinance, 1984 for concealment of income in the first return, Concealment of income in the original retum would be attracting penalty even if the assessee submits @ revised retum wis-78 before the assessment is completed. This section specifies the different nature of concealment and prescribed the 1um amount of penalty to be imposed depending on the nature and circumstances of the ‘of concealing particulars of income or for furnishing inaccurate particulars of income which includes suppression of any item of receipt liable to tax or showing such expenditure which bas not been actually incurred or claiming any deduction which is not legally allowable. For such type of concealment DCT shall impose @15% of the tax evasion, If the tax evasion is detected after one year or more, then the amount of penalty will increase by additional 15% for each earlier assessment year. Pes for default in payment of. This section gives discretion to the DCT to impose or not to impose a penalty when an assessee is in default in payment of tax including advance tax. It is not obligatory on the DCT to impose 2 penalty in every case where there is default in payment of tax and the amount of the penalty is also in his discretion, but the total amount of penalty should not exceed the amount of tax in arrear. ‘The penalty so imposed under this ordinance shall be in addition to any other liability of the assessee, which he has incurred in any other provisions under this ordinance or under any other law of the country. en A Poecition (aati pte 022021) ‘reared by Ranjan Kuma Bhowmi ca Page 6Income Year & Assessment Year Ranjan Kumar Bhowmik roux Former Member National Board of Revenue Income year: 11] As per section 2(85) of the Income Tax Ordinance, 1984, Income year is usually the financial year immediately preceding the assessment year. [2] But in case of bank, insurance and non-banking financial institution income year must be the English calendar year commencing from the 1" day of January. [3] And in case of foreign company including its branch or liaison office the OCT may allow & ‘similar income year for the purpose of consolidation. [4] Income yeat may be fess than 12 months in certain situations especially business ‘Starting, business discontinuance, person leaving Bangladesh, non-resident shipping etc, but usually it cannot exceed 12 months, ‘Assessment year: ‘Assessment year means the year following the financial year, Le. income year. Thus, the ‘assessment year always begins on 1* July and ends on 30" June every year. This period is also known as the financial year. Accordingly, itis the current financial year in which income of the immediately preceding financial year (known as income year) is assessed. As per Section 2(8) ofthe Income Tax Ordnance, 1864 he tenn “Assessment year” means the of 1; tt g tt d July every ye case shall be deemed to be the assessment year in tespect of the income ofthe broken period, From the following example, we can see how to find out the assessment year and tax day: Example income year | income year | Assessment year ended on 30.06.2023 30.08.2022 2022-23 2023-24 ‘01/10/21 to 30/8/22 s1iz202 | 2022 | 34.03.2023 | 01/4/22 to 31/3723 31.07.2023 | 01/8/22 to 31/7/23Thus, in those cases the assessment year and the income year may be the same. TRE exceptions to the normal rule of assessment year are discussed as under, If] Income of discontinued business [Section 83(2/|: Where any business, © of the peried from the Profession is discontinued in any assessment year, the income expiry of the last income year up tothe date of such discontmuance may be charged 10 taxin that assessment year. person is leaving [2] Persons leaving Bangladesh [Section 92)(b)}:Whenever 3°Y. Bangladesh and has no intention to come back. the DCT may proceed 10 ail the completed income years for which his assessments remain pending the broken period up to the probable date of his departure from Bangladesh. Here is deviation from the usual prectice as the assessment ofthe broken period may De completed before the commencement of the relevant assessment YE3t. ee {31 Income of non-resident shipping companies [Section 102(2]: Sector Arf the ITO, 1984, provides for the taxaton of income of non-resident shipping comBarie= the year in which they eam their income in , provided that such companies not have any representative here assess him for ‘as well a8 for The EndResident vs. Non-Resident Ranjan Kumar Bhowmik :ou Ex-Member National Board of Revenue The residential status of the assessee is to be determined on the basis of tax law. As per section 2(55) of ITO, 1984 a person is considered resident if he fulfills the following conditions: - or partly in Bangladesh during, the income year, SI. ] Category of | Conditions for being resident Analysis No | __ person 1 | Individual] Stay in Bangladesh for at least | The tests of residence here are alternative not cumulative 182 days in aggregate during | Each of the 2 tests requires the personal presence of the (Bangladesh | the income year. assessee in Bangladesh during the income year. Ifthe | ior OR assessee is continuously out of Bangladesh during the | Foreigner) | [Stay in Bangladesh for at least | whole year, he must be treated as noneresident in that 90 days in aggregate during the | year. income year + If the Ist criteria of 182 days have been fulfilled, he is to An aggregate siay of at least| be regarded as resident inespective of any other 365 days in Bangladesh in the | consideration. If anybody resides here for less than 90 course of 4 years preceding the | days then obviously, he is non-resident. Thus, a man may income year.) be resident in 2 different countries in the same year. although he can have only one domicile. 2 | @ HUF "| The control and management | Ifthe control and management is situated wholly outside rea) of its affairs is situated wholly | Bangladesh only then an HUF, firm or other AOP can be i ‘treated as non-resident. Since partial control is sufficient for the purpose of residence, a firm may have 2 places of residence; The residence of partners or individual members of a HUF is immaterial for the purpose of determining the residence of a firm or HUF. The place of control may be differen from the place where the sctual trading is carried on. Conirol of a business does not necessarily mean the carrying on of the ‘business and therefore the place where trading activities ‘or physical operations are carried on is not necessarily the place of control and management, Control and it_signif ireeti ‘Muanagement_signify the controlling and directive power and situated implies the functioning of such power _at_a particular place with some degree of performance. tt it id sontrol_and manage. The absence of the Karta from Bangladesh throughout the year does not by itself Iead 10 the conclusion that the HUF is a non-resident in that year, since the business of the family, though it is normally. controlled by the karta, may at a particular point of time be controlled by some one else. The same principle applies equally in case of firms and other AOPs. (Resident B nonresident Handout prepared by Ranjan Kumar Bhowmnik rok as amended upto 12/8/2021 Page of 6Category _of person Conditions for being ulz a To test residential status of an individual, helpful: An individual stays in Bangladesh for - resident Company |The control and management of its affairs is situated wholly in Bangladesh during the income year. “fadeshi company or @ foreign A company whether a Biase ines desh Oc at gs egistered at company whether itis register ee resident here in Bangladesh if the control and mana ¢ income its affairs is situated fully in Bangladesh during th year 4n the classical word, a company can not eat or sleep but can_keep house and do business and for the purpose of income tax a company resides where it really keeps house and does business, i.e. where the central management and control actually abides. While the location of control =a management is the sole test of residence for HUF, Firm and AOP, itis also a test for companies. lere controls mean de facto control _not merely de jure sontrol, The control and management, the head and brain, docs not reside where there is some ultimate power of sontrol_such_as the power to alter the Articles of lations by a special _resolution or the power to interfere with fundamental finance. A company may be resident in Bangladesh even though its entire trading operations are carried out from abroad, If the Management and control is situsted here, the company is resident here and it does not in the least matter where the actual selling and buying of the goods takes place. the following flow chart will be Non-resident Non-resident Bangladeshi (NRE) Foreigner (NRF) Yes No 1s the assesseeis Bangladeshi citizen? f i Non-resident year? 182 days or more duringthe income [——*| No foe five Yes 30 days or more esa ys Or mare fur ral OE MC) during 4 immediate year? [ve preceding years? Resident I “ >] Resident & nonresident Mand prepared by Ratan Kima Show>ik yous at amendedup to 12/0/2021 Page dotsf ax Incidence on the basis of residential statu Section 16 of ITO, 1984 is the charging section where itis clearly mentioned that income taxis to be charged on total income of the assessee. The liability to tax arises by virtue of the charging Section. The assessment order only quantifies the liability which is finally created by the charging section, Here total income as per section 2(65) means total amount of income as referred to in section 17 and includes any other income which is to be included in the total income of the assessee as per provision of The Income Tax Ordinance, 1984. ‘The principle underlying section 17 is to make the chargeability of income depending upon the locality of receipt or accrual, Section 43 also deals with the computation of total income by inclusion, in some cases, of other person's income. Depending on the residential status an assessee can be divided into 2 categories: - (G) Resident; and (Gi) Non-resident. The basic difference between resident and non-resident is tabulated below:~ Area ] Resident | Non-resident | Analysis Income The entire amount of | The income income accruing or| accruing or arising in any part of | arising in the world, | Bangladesh irrespective ‘of | only is whether itis | taxable in received in | Bangladesh. Bangladesh or not is taxable in Bangladesh. (a) A non-resident, unlike a resident, is mot chargeable in respect of income accruing or arising outside Bangladesh and not received in Banglades! (b) If an income is taxed on the ground of accrual or deemed accrual, it cannot be taxed again on the ground of receipt either in the Same year or in a different year. (c) As per 6" Schedule (Part-A) Para-48, foreign income of a Bangladeshi national irrespective of resident or non- resident, is exempt from payment of tax if it comes through official channel. Resident R nonresident Handout prepared by Ranjan Kumar Showmik rut as amended up to 12/8/2023 page a.ots7 a is =a tax |G) The ely exception is hon-aesidk \% | Tax General tax rate is ae aoe ee et | pai pplicable. | applicable by If any resident assessce proves to | | |e ae efaction of the DCT stat, he J has paid x in foreign country by | | deduction or otherwise on any income: him which has accrued or arisen. (0 | | Nutside Bangladesh with which there | | DCT, js no reciprocal tax treaty, ie? y subject to such rules as the NBR may | | in this behalf, deduct from ie payable by the assessee @ sum | fo the tax calculated on such doubly | taxed income at the average rate of tax of Bangladesh or the average rate of tx of the foreign country whichever is less, But NBR has not | yet make any rule corresponding to Tr 1 section 145 of ITO. 1984, J | Tnvestment | Investment tx rebate [Investment tx |The only: exception’ i non-resident | facility ts applicable rebate facility | Bangladeshi where investment tax | | is not | rebate facility is applicable like applicable | resident. = | | | | | Thus, the incidence of tax depends on residential status, A non-resident is entitled to partial exemption from chargeability to which a resident is not entitled to. Generally speaking, the incidence of tax is higher im the case of persons who are resident and lower in the case of non-t Double Taxation Avoidance Agreement (Sec. 144 read with 7th Schedule): DTAA is usually an agreement between 2 countries seeking to avoid double taxation by defining the taxing rights of each country with regard to gross border flows of income and providing tax credits of ‘exemptions to eliminate double taxation, ‘The Govt. of Bangladesh also may enter into an agreement with the Govt. of other countries for the avoidance of double taxation and the prevention of fiscal evasion. International désk of NBR is entrusted to negotiate the double taxation treaty with foreign countries to promote FDI in Bangladesh. Such an agreement comes into force through notification in the official Gazette. It will be treated as an international law and accordingly its legislative position would be over and. above our Bangladesh tax law. Fesident 8 noncresident Handout preparns by Ranjan Kumar howl wos as amended wp to 12/8/2021 Page sot 6 slSl |Name of the SRO Date of effect in No_| Countries Bangladesh No Date (assessment year commencing on or after 1] UK. 227-080 08/07/1980, o107/1978 2.| Singapore 124-L/82 2104/1982 1/01/1980 3 Sieien 382-83, [19/10/1983 ouo7/iess | 4,| Korea 433-4 O21 01984 1707/1984 5.| Canada 247-L/85 06/0671 985 ‘Q1/07/1982 6,| Pakistan DLS | LVOT/L9R8. 0170171980 7.| Romania 348-88 21/1988 010711989 8. Sei Lanka 365-LBS T0298 O1O7/I989 9,| France 21789 (04/01/1989 1/07/1989 10] Malaysia 67-1090 [asioz1990 | 01/01/1982 11] Japan 235-L91 ‘0608/1991 ‘OUOT/992 12 India [45-193 [2770271993 1/07/1993 13] Germany, [ind (01/01/1994 (01/01/1990 14) Netherlands 267-L94 14/09/1994 01/07/1995, 15] Italy, 6-97 [ 12/03/1997, ouo7igs0—_—*d 16, 72-197 1703/1997, 01/07/1997. 17, China 114-L97 13/05/1997 01/07/1998, 18! Belgium T1-L98 [1470171998 01/07/1998. 19] Thailand 222-L93 07/09/1998 01/07/1999 20! Poland 39/L/99 03/03/1999 Tarn72000 21] Philippines 56/1/2004 04/03/2004 01/07/2004 22) Vietam. 18/10:2004 0107/2005 23, Turkey — [ives 01/07/2004 24] Norway 127022006. (01/07/2006 25) Indonesia 60-1/2007 20/04/2007 (01/07/2007 26] USA 71-2007, 10/05/2007 01/07/2007, 27 Switzerland $2-2010 23/02/2010 01/07/2008 28 | Oman 16-2009 02/02/2009 01/07/2009 {only air service] 29 | Myanmar 313-L2012 18/102012 01/07/2012 30 | Mauritius TazL2012 | oN0s/2012 one7/2012, 31 | Saudi Arabia 103-L/2012, 15/04/2012 1/10/2011 32 | UAE 31-2012 _| 0509/2012 OUOTANZ 33 | Belarus 189-L/2014 08/07/2014 01/07/2014 34 | Kuwait 376-L:2018 25/2/1018 01/7/2019 35 | Bahrain 301-L/2017 16/10/2017 0172018 36 | Bhutan $6-1/2020 01/7/2020 37 | Nepal 372020 017772020 +38 | Czech Republic 304-L/2020 01/7/2021 ‘Resident & non-resident Handout prepared by Ranjan Kumar Showman sn amendadupto 12/8/2024 —PagmSof6e Taxation Avoidance Agreement nw Comparative Rates in Doubl Nieman | Maximamn jax) Sl. Name of the Permanent | Maximum tax aeetetor | rate for Royalties No. Country _| Establishment han ee See a i 10% Tux. Ta days|__slhsre_| 7.501% 10% 2.__| Singapore 183 days ao De {0 3._ | Sweden 183 days Oe 10% 4. [Korea 183 days 10%/15% 10% fie 5._| Canada 183 days 15% a al 6._| Pakistan 183 days 15% 15% ie 7._| Romania 183 days 10%6/15% 10% 5% 8._| Srilanka 183 da 15%. Be ca 9._| France 183 days: 10%/15% 10% we 10,_| Malaysia 183 days 15% 15% a 1, | Japan 6 months 10%6/15% 10% ates 12._| India 183 days 10%6/15% 10% we 13._| Germany 183 days 15% 10% te 14._| Netherlands ‘months 10% 15% 10% _ 10% 15._| Italy’ 183 days 109%6!15% 10%/15% To Wis% | 16._| Denmark 183 days, 1O%/15% 10% 10% 17. | China 6 months 10% 10% 10%. 18._| Belgium 183 days 15% 15% 10% 19. | Thailand 183 days 10%/15% 10%/15% 13% Poland 183 day 10%/15% 10% 10%. Philippines ‘6 months 10%/15% 15% 15% Vietnam 6 months 15% 15% 15% Turkey 12 months, 10% 10% 10% Norway 6 months 1O%ANI59% 10% 10% Indonesia 183 day 1O%/1S% 10% 10% USA 183 day 1O%/1S% 10% 10% Switzerland 183 days 10%/15% 10% 10% Oman Only airlines Myanmar 6 months 10% 10% 10% Mauritius 12 months 10% % 0% Saudi Arabia 6 months 10% 7.5% 10% UAE 6 months 5%4/0% 10% 10% Belarus months 1oveli2% 7% 10% Kuwait 183 days. 5%/10% 10% 10% Bahrain 183 days 10%a/15% 10% 10% Bhutan. 183 days 10%/15% 10% 10% 371 Ne 183 days LO%/IS% 10% 1S% ee Republic | 6 months TOP/S% 10% 10% Foreign tax credit is to be allowed on doubly taxed income (if any) at the average rate of tax of Bangladesh or the average rate of the foreign country, whichever is lower. That means such foreign tax credit shall not exceed the amount which would be arrived by applying the average rate of such tax to the doubly taxed income. The End Resident nonresident Handout preared by Ronan Kumar Showrkrot as need up 32/4/2031, pone cota Income Tax computation on House Pri Income Ranjan Kumar Bhowmik roux Former Member ‘National Board of Revenue ULntredustion ‘As per Income Tax Ordinance, 1984 house property means any building (including furniture, fixture, fittings etc.) and land appurtenant thereto owned by the assessee and rented for commercial or residential purposes. Property situated outside Bangladesh should also be assessed according to the same provision of section 24 of the Income Tax Ordinance, 1984. Rental income derived from vacant plots of land will not be treated as house property income rather it will be treated as income from other sources w/s 33.1f an assessee Jet out his machinery, plant or furniture along with building and the letting out building is inseparable from the letting of machinery, plant os furniture, the income must necessarily be assessed as income from other sources and in such a case there is 20 room for disintegrating the rent or assessing a part of the rent as income from house property. 2L Ownership of the property The tax on house property income is upon the owner (either legal or beneficial) and not upon the occupant. The mere existence of a dispute regarding the title to ownership of 3 certain Property cannot of itself hold up an assessment even if a suit has been filed, otherwise it would be open to an assessee to delay assessment indefinitely. The DCT has prima facie the power to decide whether the person sought to be taxed is the owner of the property. [3] Annual Value Income tax is Jevied not upon the actual income from the property but upon the notional income based an annual value, Thus, the annual value will be the higher one between rent received shown by the assessee and reasonable rent determined by the DCT. It may require some adjustments as shown below: Annual | Higher one Rent actually received/shown Reasonable | Adjusted for 1, Tenants’ expense bome by the Less landlord Add /2. Landlords’ expense borne by the Add Pepe by Rajan Kiar Bhowmi ss umendo upto 1BS2N23 sen mance A222 Pace t of