Bangladesh Income Tax

Sohag Alam Suman ID-1330565

Md. Rakibul Hasib ID-1330442

Mithila Farjana ID-1330988

MEMBERS:

“Tax means the income tax payable under the ordinance & includes any additional tax, excess profit tax , penalty, interest, fees payable under this ordinance”- Section 2(62) of the ITO 1984.

Introduction

Type of Taxpayers Tax free Income Limit

Individual 250,000

Woman & 65 above aged taxpayers

300,000

Retarded taxpayers 375,000

Freedom fighters 425,000

Individual Tax Free Income

Personal Taxation scenario of Bangladesh

“Income from Salary” is the first one. Generally “salary” means periodical payment made for work to an employee from an employer for the services rendered to him

Basic Salary: The yearly increment is also computed on the basis of basic salary. Total amount of basic salary in a year is fully taxable.

Dearness Allowance: The total amount of dearness allowance is taxable and therefore included under the head of income from salary.

Bonus: It’s meant the payment of extra salary based on the basic salary or otherwise for festival like EID, Christmas or rewards for good performance.

Income from salary

Medical Allowance: The amount of 10% of the basic salary or taka.120000 annually, whichever is less shall be included in his income.

House rent Allowance: Amount exceeding 50% of basic salary or TK 25000 per month whichever is lower, shall be added with salary.

Conveyance facility: Higher up 60,000 or 5% of the basic salary will be added with salary income.

Employer’s contribution to Recognized Provident Fund: only the employer’s contribution will be added with salary, not the employees’ contribution.

Interest on Recognized Provident Fund: Interest exceeding 14.5% or 1/3rd of basic salary will be added with salary.

Life insurance premium up to 10% of the face value. Investment in savings Certifies. Employer’s & Employee’s Contribution to Recognized

Provident Fund. Self contribution and employer’s contribution to

Recognized Provident Fund. Contribution to Zakat Fund

Investment qualified for the tax rebate

“Income from house property” is the 3rd head of income among the heads mentioned in annual valve of property consisting of any building or lands thereof

Admissible expenses of house property Land development Insurance premium Interest on mortgage loan Annual tax Ground rent Repair & maintenance: 25 % of the annual value of the property residential purpose. 30% of the annual value of the property commercial purpose.

Income from house property

“Agriculture” refers to the production of goods though the growing of plants, animal & others life forms. Other agricultural income Income from cattle rearing Income from sale of palm juice and date juice Income from sale of seeds and grass. Income from land leased for agricultural purpose Herbal or medical plants Income from cultivation of flower and fruits Income from fisheries Income from ferry ghat, mooring terminal and fishing

Income from agriculture

Products cost Land development Insurance premium Maintenance Cost for Irrigation Plant Interest on mortgage loan Depreciation

Admissible expenses of agricultural

The income the head “Capital Gains” shall be computed after making the following deduction from the full value of the consideration received or accruing from the transfers of the capital asset or the fair market value thereof.

Any expenditure incurred solely in connection with the transfer of the capital asset such advertisement, brokerage, stamp duty, registration fees, legal expenses.

Income under Capital Gain

Tax payable on the total income excluding capital gains as per applicable rate.

Tax at the rate of 15% on the whole amount of such capital gains.

On disposal of capital assets within 5 years of acquisition, the amount of capital gain will be included with total income and taxed accordingly at regular rate.

Capital gains or tax at the rate of 15% on the capital gains, whichever is lower.

Capital Gain shall be taxed at the rate

Capital gain arising from the transfers of capital asset used for the purpose of business.

Capital gains arising from the transfer of government securities.

Capital gains arising from the transfer of capital being building or land to a new company.

Capital gains arising from the transfer of its capital asset to a new company.

Capital gains arising from the transfer of Securities approved by SEC & traded in Stock Exchanges in some specific cases

Tax Exempted Capital Gains

Tax avoidance is the minimization of tax liability by the tax payer or his agent by efficient tax planning. Tax is avoidance is high in Bangladesh now a days.

Common methods of tax evasion: Cash sales, False expenses, Concealment of additional sources, Forgery in documents, Maintenance of duplicate records .

Common methods of tax avoidance: Transfer of property with bad motive, Transfer of property to trust, Setting up private limited company for tax avoidance, Window dressing transactions

Tax Avoidance In Bangladesh

Social awareness program Broad band tax net Special watch-dog for excise and turnover taxes Reengineering custom duty net Simplified income tax system Penalty and reward Standardization of public utility price Updating anti evasion provision in the ITO, 1984

Strategies to prevent tax evasion and avoidance

Thank You