ASSIGNMENT on Income Tax Authorities in Bangladesh
Submitted to : Submitted by : Md. Shakhawat Hossain Selim Faculty, School of Business Course: Taxation [BBA-2603] AUB, Dhanmondi Campus Dhaka, Bangladesh. Shantanu Das (Leader) BBA, 29th Batch (MKT) ID: 200712883 AUB, Dhanmondi Campus Dhaka, Bangladesh. Eftekhar Anam Rasel Submission: 12-August-2010. BBA, 29th Batch (MKT) ID: 200712029 AUB, Dhanmondi Campus Dhaka, Bangladesh. Sk. Saiful Islam BBA, 29th Batch (MKT) ID: 200710522 AUB, Dhanmondi Campus Dhaka, Bangladesh. Md. Zahangir Alam BBA, 29th Batch (FIN) ID: 200710521 AUB, Dhanmondi Campus Dhaka, Bangladesh.
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National Board of Revenue – NBR
Rajashwa Bhaban Segunbagicha, Dhaka Telephone: +88 02 933-3444.
ffd8ffe000104a464 Topiic Page No.. 9460001020100e10 I 0e20000ffe20c5849 Cover Page....................................................................................... ??..........01 43435f50524f46494 II c4500010100000c4 Topic/Source of the ASSIGNMENT.................................................. 84c696e6f02100000 ..................03 III 6d6e747252474220 Table of contents.............................................................................. 58595a2007ce0002 ..................04 01 0009000600310000 Letter of Transmittal.......................................................................... 616373704d534654 ..................05 0000000049454320 02 Acknowledgement ????????????????????? 7352474200000000 ..................06 0000000000000000 03 Background of NBR.......................................................................... 0000f6d6000100000 ..................07 000d32d485020200 04 0000000000000000 Taxation and its history..................................................................... ..................08 0000000000000000 05 0000000000000000 Tax Authorities of Bangladesh ???????????................. 0000000000000000 ?????11 06 0000000000000000 Types of Income ?????????????????????... 0000000000000116 ?????13 07 3707274000001500 Classification of Tax systems........................................................... 0000033646573630 ?????14 00001840000006c7 08 Types of Taxation............................................................................. 7747074000001f000 ?????15 000014626b707400 09 Methodology0002040000001472 ?????????????..................................... ?????16 58595a0000021800 0000146758595a00 9.01 Sources of Income??????????????????... ?????16 00022c0000001462 58595a0000024000 9.02 Tax Rate??????????????????????? ?????16 000014646d6e6400 0002540000007064 9.03 Tax Rebate for investment ???????????????. 6d6464000002c400 ?????17 0000887675656400 9.04 Who should submit Income Tax Return? ................................. 00034c0000008676 ?????18 696577000003d400 9.05 Time to submit Income Tax Return ??????????...... 0000246c756d6900 ?????18 0003f8000000146d6 9.06 Assessment Procedure ????????????????.. 561730000040c000 ?????19 0002474656368000 9.07 Tax withholding functions ???????????????.. 004300000000c725 ?????19 452430000043c000 9.08 Major areas0080c67545243000 for final settlement of tax liability ???????. ?????22 0043c0000080c625 452430000043c000 9.09 Fiscal incentives ???????????????????.. ?????23 0080c74657874000 9.10 Avoidance00000436f70797269 of Double Taxation Agreement ????????. 6768742028632920 ?????24 10 3139393820486577
Table of contents:
11 Procedure of Assessment ???????????????.......... ?????26 12 Problems for collecting Income Tax.................................................. ?????27 13 Conclusion........................................................................................ ?????31
Letter of Transmittal
August 12, 2010 To Md. Shakhawat Hossain Selim Faculty, School of Business Asian University of Bangladesh Dhanmondi Campus, Dhaka. Subject: Submission of Assignment on “Income Tax Authorities in Bangladesh”. Dear Sir We are pleased to submit this Assignment-report on “Income Tax Authorities in Bangladesh” for particular fulfillment of BBA Degree. This research program was taken by the help of “Three tax system of Bangladesh”, written by M.A. Akkas, and “Income Tax” written by “Mr. Mahmud” and “Purohit Bhattacharjee”. Here is the report on the observational study of “Income Tax authority in Bangladesh” you asked us to conduct last month. We honestly believe that this report will fulfill the requirements of the project report for BBA, which will help us a lot to gain sufficient knowledge about the “Income Tax authority in Bangladesh” We appreciate having this assignment. If you need any assistance in interpreting this report or in implementing our recommendations, please feel free to contact us: [email protected]
, Contact No.: +8801717012777.
Sincerely on behalf of my Group,
Shantanu Das (Leader) ID: 200712883 BBA, 29th Batch (Marketing) Asian University of Bangladesh, Dhanmondi Campus, Dhaka.
ffd8ffe000 104a464946 0001010100 9700990000 ffe20c58494 3435f50524 f46494c450 0010100000 grateful to the God first, who has given us all the abilities to perform We are very much this chore. Next, wec484c696e6 would like to thank our respected Teacher Md. Shakhawat Hossain Selim, Faculty of Business at AUB Dhanmondi Campus who gave us the chance to submit thisf021000006 Assignment Report & Presentation and also co-operated us with all kinds of rational d6e7472524 suggestions, rehearsal and guidance. We also like to7422058595 express our gratitude to the honorable Campus Coordinator of AUB Dhanmondi Campus, Professor (Adv.) Abul Kalam Azad- without whose inspiration and company, thisa2007ce000 mission was not able to be accomplished. 2000900060 At last but not the we are grateful to our ever-respected parents those who 0310000616 least, always give us mental support and well wishes. 373704d534 6540000000 0494543207 3524742000 0000000000 0000000000 00000f6d60 0010000000 0d32d48502 0200000000 0000000000 0000000000 0000000000 0000000000 0000000000 0000000000 0000000000 0000000000 0000000116 3707274000 0015000000 0336465736 3000001840 000006c777
Background of NBR The National Board of Revenue (NBR) is the central authority for tax administration in Bangladesh. It was established by President's Order No. 76 of 1972. Administratively, it is under the Internal Resources Division (IRD) of the Ministry of Finance (MoF). MoF has 3 Divisions, headed by 3 permanent Secretaries to the Government, namely, the Finance Division the Internal Resources Division (IRD) and the Economic Relations Division (ERD). The Secretary, IRD is the ex-officio Chairman of NBR. NBR is responsible for formulation and continuous re-appraisal of tax-policies and tax-laws, negotiating tax treaties with foreign governments and participating in inter-ministerial deliberations on economic issues having a bearing on fiscal policies and tax administration. The main responsibility of NBR is to collect domestic revenue (primarily, Import Duties and Taxes, VAT and Income Tax) for the government. Other responsibilities include administration of all matters related to taxes, duties and other tax producing fees. Under the overall control of IRD, NBR administers the Excise, VAT, Customs and Income-Tax services consisting of 3434 officers of various grades and 10195 supporting staff positions (Approved set up as on 09 Feb., 2000 AD). Negotiating tax treaties with foreign governments and participating in inter-ministerial deliberations on economic issues having a bearing on fiscal policies and tax administration are also NBR's responsibilities. The main responsibility of NBR is to mobilize domestic resources through collection of import duties and taxes, VAT and income tax for the government. Side by side with collection of taxes, facilitation of international trade through quick clearance of import and export cargoes has also emerged as a key role of NBR. Other responsibilities include administration of matters related to taxes, duties and other revenue related fees/charges and prevention of smuggling. Under the overall control of IRD, NBR administers the excise, VAT, customs and income-tax services consisting of 3434 officers of various grades and 10195 supporting staff positions.
Taxation and its history Taxation- one of the major sources of public revenue to meet a country's revenue and development expenditures with a view to accomplishing some economic and social objectives, such as redistribution of income, price stabilization and discouraging harmful consumption. It supplements other sources of public finance such as issuance of currency notes and coins, charging for public goods and services and borrowings. The term “Tax” has been derived from the French word “Taxe” and etymologically, the Latin word “Taxare” is related to the term 'tax', which means 'to charge'. Tax is 'a contribution exacted by the state'. It is a nonpenal but compulsory and unrequited transfer of resources from the private to the public sector, levied based on predetermined criteria. According to Article 152(1) of the Constitution of Bangladesh, taxation includes the imposition of any tax, rate, duty or impost, whether general, local or special, and tax shall be construed accordingly. Rate is a local tax imposed by local government on its residents or the property owners of the locality, a duty is a tax levied on a commodity, and an impost is a tax imposed for an entry into a country. Under the provision of article 83 of the Constitution, "no tax shall be levied or collected except by or under the authority of an Act of Parliament". Bangladesh inherited a system of taxation from its past British and Pakistani rulers. The system, however, developed based on generally accepted canons and there had been efforts towards rationalizing the tax administration for optimizing revenue collection, reducing tax evasion and preventing revenue leakage through system loss. Taxes include narcotics duty (collected by the Department of Narcotics Control, Ministry of Home Affairs), land revenue (administered by the Ministry of Land and collected at local Tahsil offices numbered on average, one in every two Union Parishads), non-judicial stamp (collected under the Ministry of Finance), registration fee (collected by the Registration Directorate of the Ministry of Law, Justice and Parliamentary Affairs) and motor vehicle tax (collected under the Ministry of Communication).
The tax structure in the country consists of both direct (income tax, gift tax, land development tax, nonjudicial stamp, registration, immovable property tax, etc) and indirect (customs duty, excise duty, motor vehicle tax, narcotics and liquor duty, VAT, SD, foreign travel tax, TT, electricity duty, advertisement tax, etc) taxes. The present land revenue system of Bangladesh has its base in the East Bengal state acquisition and tenancy act 1950 which established a direct contract between the taxpayer and the government. The most important tax on the value of transferred property is the non-judicial stamp tax (levied under the Stamp Act 1899), which has been in existence since January 1899. Current rates of non-judicial stamp duty are provided in the First Schedule of the Finance Act 1998, ranging from Tk. 4 to Tk. 10,000 in case of absolute rate, or from 0.07% to 1.5% of the value of consideration in case of ad valorem rate. The judicial stamp tax is being levied under the Court Fees Act 1870, although the levy of court fees originated in the introduction of the Bengal Regulation No. 38 of 1795. The first sales tax was introduced in the former Central Provinces of India in 1938. In Bengal, sales tax was adopted in 1941. In 1948, sales tax was transferred as a central tax under the General Sales Tax Act of 1948. The Sales Tax Act 1951 came into force on 1 July 1951 by repealing the Pakistan General Sales Tax Act of 1948. Until 1982, sales tax was being collected under the 1951 Act, which was replaced by the Sales Tax Ordinance 1982. The VAT law was promulgated by repealing the Business. Income tax was first introduced in the subcontinent by the British in 1860 to make up the revenue deficit caused by the sepoy revolt, 1857. After independence of Bangladesh, income tax was made effective under the Income Tax Act 1922 passed on the basis of the recommendations of the All-India Income Tax Committee appointed in 1921. Currently, income tax has been imposed under the Income Tax Ordinance 1984 (ITO) promulgated on the basis of recommendations of the Final Report of the Taxation Enquiry Commission submitted in April 1979. Income taxpayers (assesses) are classified as individuals, partnership firms, Hindu undivided families (HUF), associations of persons (AOP), companies (publicly traded and private), local authorities, and other artificial juridical persons. Tax rates and scope of taxable income differ based on residential status of an assesses (resident or non-resident).
From fiscal or assessment year, (AY) 2000-01, there is a filing threshold of annual total income of Tk. 100,000 applicable for individuals (including non-resident Bangladeshis), partnership firms, HUF, AOP and assesses other than companies and local authorities. In case an identity of this group has a total annual income less than this level, he is not required to submit tax return but if someone's income is higher, he is to pay a minimum tax of Tk. 1,000. Bangladesh inherited a system of taxation from its past British and Pakistani rulers.
Tax Authorities of Bangladesh There are 3-divisions under the Ministry of Finance (MOF) and Secretary leads each division.
The Chairman of NBR (National Board of Revenue) is working
under Internal Resource Division (IRD).
NBR is the apex body of the Tax Administration. It consists of two parts: (1) Customs & VAT (2) Income Tax. Both are under the same authority. There are 4-members under NBR. Under the NBR, a Commissioner of Taxes is the head of the department and he is in charge of a taxes Zone. There are 8-Zones in Bangladesh.
ffd8ffe000104a4649460001020100ac00ac0000ffe20c584943435f50524f46494c450001 0100000c484c696e6f021000006d6e74725247422058595a2007ce00020009000600310 000616373704d534654000000004945432073524742000000000000000000000000000 0f6d6000100000000d32d48502020000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000116370727400000150 0000003364657363000001840000006c77747074000001f000000014626b70740000020 4000000147258595a00000218000000146758595a0000022c000000146258595a00000 24000000014646d6e640000025400000070646d6464000002c40000008876756564000 0034c0000008676696577000003d4000000246c756d69000003f8000000146d65617300 00040c0000002474656368000004300000000c725452430000043c0000080c675452430 000043c0000080c625452430000043c0000080c7465787400000000436f707972696768 74202863292031393938204865776c6574742d5061636b61726420436f6d70616e79000 0646573630000000000000012735247422049454336313936362d322e3100000000000 0000000000012735247422049454336313936362d322e3100000000000000000000000 0000000000000000000000000000000
Types of Income ffd8ffe000104a4649460001010100ac00860000ffe20c584943435f50524f46494c450001 0100000c484c696e6f021000006d6e74725247422058595a2007ce000200090006003100 00616373704d5346540000000049454320735247420000000000000000000000000000f 6d6000100000000d32d485020200000000000000000000000000000000000000000000 Income: 0000000000000000000000000000000000000000000000000001163707274000001500 means Income 000003364657363000001840000006c77747074000001f000000014626b707400000204 anything received in000000147258595a00000218000000146758595a0000022c000000146258595a0000024 cash or in kind000000014646d6e640000025400000070646d6464000002c40000008876756564000003 unless exempted by4c0000008676696577000003d4000000246c756d69000003f8000000146d65617300000 laws. 40c0000002474656368000004300000000c725452430000043c0000080c675452430000 1) Assessable 043c0000080c625452430000043c0000080c7465787400000000436f707972696768742 02863292031393938204865776c6574742d5061636b61726420436f6d70616e79000064 Income: Assessable 6573630000000000000012735247422049454336313936362d322e3100000000000000 Incomes are 0000000012735247422049454336313936362d322e3100000000000000000000000000 those 0000000000000000000000000000 incomes, which are included in the determination of total income of a taxpayer. 1.
Taxable Income: Taxable Incomes are those incomes that the tax is to be paid on those incomes. Non- Taxable Income: Non – taxable income is taken into total income for taxation rate purpose but no tax is to be paid on this part of income. 2) Non- Assessable Income: Non- assessable incomes are those incomes which are not included in the determination of total income of a taxpayer.
sessable Income n-Assessable Income n-taxable Income Taxable Income
Classification of Tax systems 1. Single Tax: Only one tax for everybody. Single tax is the poll tax or the head tax or adolescent tax, which is imposed on a person simply because he is there in the society. 1. Multiple Taxes: A system under which different types of taxes shall be levied by the govt. according to suitability. Ex. Income Tax, VAT.
Classification of Tax System Single Tax
Types of Taxation a) Direct Tax: Direct tax is a sort of tax the impact of effect incidents and which fall back on the person on whom it is imposed. i.e.: Income Tax, Marriage Tax etc. b) Indirect Tax: Indirect taxes are those burden of which can be passed on others through price vehicles. c) Progressive Tax: The tax rate increases as the taxable income/amount increases. d) Regressive tax: The opposite of a progressive tax is a regressive tax where the as the taxable income/amount increases.
tax rate decreases
e) Proportional Tax: In between is a proportional tax, where tax is fixed as the amount to which the rate is applied increases.
Types of Taxation a) Direct Tax
b) Regressive Tax b) Indirect Tax a) Progressive Tax
c) Proportional Tax
Methodology Among direct taxes, income tax is one of the main sources of revenue. It is a progressive tax system. Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more he should pay''- is the basic principle of charging income tax. It aims at ensuring equity and social justice.
Sources of Income: For the purpose of computation of total income and charging tax thereon, sources of income can be classified into 7 categories, which are as follows: Salaries Interest on securities Income from house property Income from agriculture Income from business or profession Capital gains Income from other sources.
Tax Rate (Assessment Year- 2008-09): Other than Company: For individuals other than female taxpayers, senior taxpayers of 70 years and above and retarded taxpayers, tax payable for the First 3,25,000/25%
Nil Next 3,75,000/-
2,75,000/10% Next 20% Rest Amount
For female taxpayers, senior taxpayers of age 70 years and above and retarded taxpayers, tax payable for the First 3,25,000/25%
Nil Next 3,75,000/-
2,75,000/10% Next 20% Rest Amount
Minimum tax for any individual assesses is Tk. 2,000 Non-resident Individual
25% (other than non-resident Bangladeshi)
For Companies Publicly Traded Company
Non-publicly Traded Company
Bank, Insurance & Financial Company
Mobile Phone Operator Company
If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is allowed. Tax Rebate for investment: Rate of Rebate: Amount of allowable investment is either up to 25% of total income or Tk. 5,00,000/- whichever is less. Tax rebate amounts to 10% of allowable investment. Types of investment qualified for the tax rebate are: Life insurance premium Contribution to deferred annuity Contribution to Provident Fund to which Provident Fund Act, 1925 applies Self contribution and employer's contribution to Recognized Provident Fund Contribution to Super Annuation Fund Investment in approved debenture or debenture stock, Stocks or Shares Contribution to deposit pension scheme Contribution to Benevolent Fund and Group Insurance premium Contribution to Zakat Fund Donation to charitable hospital approved by National Board of Revenue Donation to philanthropic or educational institution approved by the Government Donation to socioeconomic or cultural development institution established in Bangladesh by Aga Khan Development Network
Who should submit Income Tax Return? If total income of any individual other than female taxpayers, senior taxpayers of 70 years and above and retarded taxpayers during the income year exceeds Tk 1,65,000/-. If total income of any female taxpayer, senior taxpayer of 70 years and above and retarded taxpayer during the income year exceeds Tk 1,80,000/-. 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 a building of more than one storey and having plinth area exceeding 1,600 sq. feet/owns motor car/owns membership of a club registered under VAT Law. If any person subscribes a telephone. If any person runs a business or profession having trade license. Any professional registered as 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.
A person who has a Taxpayer's Identification Number (TIN). ction/Rule
Candidate for Union Parishad, Paurashava, City Corporation or Parliament. alan in the name of Time to Submit Income Tax Return:
For Company By fifteenth day of July next following the income year or, where the fifteenth day of July ction 50falls before the expiry of six months from the end of the income year, before the expiry of such six months.
duction at average rate For Other than Company Unless the date is extended, by the Thirtieth day of September next following spectivethe Zone income year.
Consequences of Non-Submission of Return scount on the real value of Bangladesh Bank Bills
ction 50A imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. 1,000/duction at normal rate or maximum rate whichever is greater.
In case of a continuing default a further penalty of Tk. 50/- for every day of delay.
erest on securities
%on interest or discount
pply of goods and execution of contracts and sub-contracts
ction 52(Rule 16)
up to 1 lac, 1-5 lacs (1%), 5-15 lacs (2.5%), 15-25 lacs 3.5% and 25 lacs and above (4%)
ne-2 (Partly) & LTU
ction 52 (Rule 17)
5% of the total receipt of indenting commission & 5% of total Shipping agency commission receipt
oyalty, Fees for professional or technical services
ction 52 A
% of theAssessment fees Procedures:
ne-8 For a return submitted under normal scheme, assessment is made after hearing.
evedoring agency & submitted Security service For returns under Universal Self Assessment Scheme, the acknowledgement slip is determined to ction 52beAA an assessment order. Universal Self Assessment is of course subject to audit.
5% of the fees Appeal against the order of DCT: A taxpayer can file an appeal against DCT's order to the Commissioner g. Zone-2 (Appeals)/Additional or Joint Commissioner of Taxes (Appeals) and to the Taxes Appellate Tribunal against an Appeal order. & F agency commission Tax withholding functions: ction 52 AAA In Bangladesh withholding taxes are usually termed as Tax deduction and collected at source. Under this 5% of the fees system both private and public limited companies or any other organization specified by law are legally ne-2 authorized and bound to withhold taxes at some point of making payment and deposit the same to the Government Exchequer. The taxpayer receives a certificate from the withholding authority and gets credits of tax against assessed tax on the basis of such certificate. e of bandrolls ( for biri) Heads of Income Subject to deduction or collection of income tax at source with specified rates of deduction. ction 52B
% of the value of bandrolls.
mpensation for acquisition of property
% of the compensation money
erest on saving instruments
% of the amount of interest (Current rate)
llection of tax from brick manufacturers
Sec. = Tk.10,000/ for each brick field. 1.5 Sec. = Tk.12,000/ for each brick field. 2 Sec. = Tk.18,000/ for each brick field.
mmission on Letter of Credits
% of the amount of commission.
uing & Renewal of trade licence
500/- For renewal of each Lincence
eght Forward agency Com.
Major areas for final settlement of tax liability: Tax deducted at source for the following cases is treated as final discharge of tax liabilities. No additional tax is charged or refund is allowed in the following cases:ntal power
ction 52N Supply or contract work % Band rolls of hand made cigarettes
Import of goods port of goods
of properties ction 53 Transfer (Rule17A)
% of the value of imports. Export of manpower ne-2 Real Estate Business
ome from house property (house rent) Export value of garments ction 53A (Rule17B) Local shippingrent business deduction if monthly is below 20,000/- 3% (if monthly rent is 20,000-40,000 Tk.) and 5% (if monthly rent is above 40,
ne-2 DhaRoyalty, & Othertechnical outside Zone know-how fee
Insurance agent commission. pping business of resident
ction 53AA Auction purchase % of freight Payment on account of survey by surveyor of a general insurance company ne-2,ctg Clearing & forwarding agency commission. Transaction by a member of a Stock Exchange. Courier business Export cash subsidy Tax Recovery System: In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:Imposition of penalty Attachment of bank accounts, salary or any other payment. Filing of Certificate case to the Special Magistrate.
Advance Payment of Tax: Every taxpayer is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds Taka three lakh. Penalty is imposed for default in payment of any installment of advance tax. Fiscal incentives : Following are fiscal incentives available to a taxpayer: a) Tax holiday: Tax holiday is allowed for industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions. Industrial Undertaking Eligible for Tax holiday: (i) An industry engaged in production of textile, textile machinery, jute goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers, compressors, basic raw materials of drugs, chemicals and pharmaceuticals. (ii) An industry engaged in agro-processing, ship building, diamond cutting. Physical Infrastructure Eligible for Tax holiday: Sea or river port, container terminals, internal container depot, container freight station, LNG terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, mono rail, underground rail, telecommunication other than mobile phone, large water treatment plant & supply through pipe line, waste treatment plant, solar energy plant, export processing zone. Tourism Industry Eligible for Tax holiday: Residential hotel having facility of three star or more. b) Accelerated depreciation: Accelerated depreciation on cost of machinery is admissible for new industrial undertaking in the first year of commercial production 50%, in the second year 30% and in the third year 20%. c) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods and having an annual turnover of not more than taka twenty four lakh is exempt from tax. d) Industry set up in EPZ is exempt from tax for a period of 10 years from the date of commencement of commercial production. e) Income from fishery, poultry, cattle breeding, dairy farming, horticulture, floriculture, mushroom cultivation and sericulture are exempt from tax up to 30th June, 2011, subject to investing at least 10% of the exempted income that exceeds one lakh Taka, in government bonds.
f) Income derived from export of handicrafts is exempted from tax up to 30th June, 2011. g) An amount equal to 50% of the income derived from export business is exempted from tax. h) Listed companies are entitled to 10% tax rebate if they declare dividend of 20% or more. i) Income from Information Technology Enabled Services (ITES) business is exempted up to 30th June, 2011.
Avoidance of Double Taxation Agreement: There are agreements on avoidance of double taxation between Bangladesh and 28 countries which are:(01) United Kingdom of Great Britain and Northern Ireland (02) Singapore (03) Sweden (04) Republic of Korea (05) Canada (06) Pakistan (07) Romania (08) Sri Lanka (09) France (10) Malaysia (11) Japan (12) India (13) Germany (14) The Netherlands (15) Italy (16) Denmark (17) China (18) Belgium (19) Thailand (20) Poland (21) Philippines (22) Vietnam (23) Turkey (24) Norway (25) USA (26) Indonesia (27) Switzerland (28) Oman.
Steps for collecting Income Tax in Bangladesh Submission of income tax returns is generally due by: ► 30th September in case of non-companies and ► 31st December in case of companies. Assessment is made in several procedures. They are: Self assessment Presumptive assessment Spot assessment Pre-audit based assessment. However, certain percent of self assessment cases are selected for audit. Assesses can prefer appeal if aggrieved by his assessment. There are three primary forums for appeal. They are to the Appellate Commissioner/Additional Commissioner/Joint Commissioner or to the Commission for reviews. The decisions of Appellate Commissioner/Additional Commissioner/Joint Commissioner can be challenged to the next Appellate Court named as Appellate Tribunal. Withholding tax is levy able on a number of items including contractors, imports, transfer of urban land/building, bank deposits etc.
Procedure of Assessment Generally the followings steps are followed in case of Assessment of the Company and the Corporation:
According to Sections 28, 29 and 30 of ITO, 1984 Income from business is to be calculated after considering admissible and inadmissible expenses to this end. Total Income of the Company is to be calculated by adding other income with income from business. Total Tax liabilities are to be determining by applying prescribed tax rate. Net Tax liability is to be ascertained by deducting the following tax rebate from Total Tax liabilities: ►10% Tax rebate on foreign income ►Tax rebate on increased production in case of industrial company, if applicable. ►Tax rebate on export income (at rate applicable) ►Tax rebate and average rate on tax free income.
Computation of Business Income Computation of Total Income Determination of Total Tax Liabilities Determination of Net Tax Liabilities Step-1 Step-2 Step-3 Step-4
Problems for collecting Income Tax Tax avoidance is one of the main problems for collecting Income Tax by the Income Tax Authority in Bangladesh. It is the legal utilization of the tax regime to one's own advantage, in order to reduce the amount of tax that is payable by means that are within the law. By contrast tax evasion is the general term for efforts to not pay taxes by illegal means. The term tax mitigation is a synonym for tax avoidance. Its original use was by tax advisors as an alternative to the pejorative term of tax ffd8ffe000104a4649460001020100c800c80000f avoidance. Latterly the term has also beenfe20c584943435f50524f46494c4500010100000c used in the tax regulations of some jurisdictions to484c696e6f021000006d6e74725247422058595a distinguish tax avoidance foreseen by the2007ce00020009000600310000616373704d534 lawmakers from tax avoidance which exploits 654000000004945432073524742000000000000 loopholes in the law.
0000000000000000f6d6000100000000d32d4850 202000000000000000000000000000000000000 000000000000000000000000000000000000000 pillars Based on these concepts arises the of Tax Protesters as well as Tax 000000000000000000001163707274000001500 Resistance: 000003364657363000001840000006c77747074 Some of those attempting not to pay tax000001f000000014626b70740000020400000014 believe that they have uncovered interpretations of the 7258595a00000218000000146758595a0000022 being law that show that they are not subject to taxed: these individuals and groups arec000000146258595a0000024000000014646d6e sometimes called tax protesters. An640000025400000070646d6464000002c400000 unsuccessful tax protestor has been088767565640000034c00000086766965770000 attempting openly to evade tax, while a03d4000000246c756d69000003f8000000146d65 successful one avoids tax. Tax resistance61730000040c000000247465636800000430000 is the declared refusal to pay a tax for 0000c725452430000043c0000080c67545243000 conscientious reasons (because the resister does not want to support the government0043c0000080c625452430000043c0000080c746 or some of its activities). Tax resistors typically do5787400000000436f70797269676874202863292 not take the position that the tax laws are031393938204865776c6574742d5061636b6172 themselves illegal or do not apply to them6420436f6d70616e790000646573630000000000 (as tax protesters do) and they are more000012735247422049454336313936362d322e3 concerned with not paying for particular100000000000000000000001273524742204945 government policies that they oppose. 4336313936362d322e310000000000000000000 00000000000000000000000000000000000
Responses to tax avoidance: Avoidance also reduces government revenue and brings the tax system into disrepute, so governments need to prevent tax avoidance or keep it within limits. The obvious way to do this is to frame tax rules so that there is no scope for avoidance. In practice, this has not proved achievable and has led to an ongoing battle between governments amending legislation and tax advisors' finding new scope for tax avoidance in the amended rules. Tax evasion: By contrast, tax evasion is the general term for efforts by individuals, firms, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability, and includes, in particular, dishonest tax reporting (such as declaring less income, profits or gains than actually earned; or overstating deductions). Illegal income and tax evasion: Who earn income by illegal means (gambling, theft, drug trafficking etc.) is required to report unlawful gains as income when filing annual tax returns. Suspected lawbreakers have therefore been charged with tax evasion when there is insufficient evidence to try them for their non-tax related crimes. Other times, tax evasion can be used as a "one more nail in the coffin" by prosecutors by stating that if a person earns illegal income, s/he may also be guilty of tax evasion. Those who attempt to report illegal income as coming from a legitimate source could be charged with money laundering.
Evasion of Value Added Tax (VAT): During the latter half of the twentieth century, Value Added Tax (VAT) has emerged as a modern form of consumption tax through the world. Producers who collect VAT from the consumers may evade tax by underreporting the amount of sales. Control of evasion: Level of evasion depends on a number of factors one of them being fiscal equation. People's tendency to evade income tax declines when the return for due payment of taxes is not obvious. Evasion also depends on the efficiency of the tax administration. Corruption by the tax officials often render control of evasion difficult. Tax administrations resort to various means for plugging in scope of evasion and increasing the level of enforcement. Public opinion on tax avoidance: Tax avoidance may be considered to be the dodging of one's duties to society, or alternatively the right of every citizen to structure one's affairs in a manner allowed by law, to pay no more tax than what is required. Attitudes vary from approval through neutrality to outright hostility. Attitudes may vary depending on the steps taken in the avoidance scheme, or the perceived unfairness of the tax being avoided. Corruption by tax officials: Corrupt tax officials cooperate with the tax payers who intend to evade taxes. When they detect an instance of evasion, they refrain from reporting in return for illegal gratification or bribe. Corruption by tax officials is a serious problem for the tax administration in a huge number of underdeveloped countries.
The distinction in various jurisdictions of Tax Evasion and Tax Avoidance: The use of the terms tax avoidance and tax evasion can vary depending on the jurisdiction. In general, the term "evasion" applies to illegal actions and "avoidance" to actions within the law. The term "mitigation" is also used in some jurisdictions to further distinguish actions within the original purpose of the relevant provision from those actions that are within the letter of the law, but do not achieve its purpose.
Conclusion Though the rate of tax revenue is to GDP is very negligible, despite the government is trying to maximize its tax revenue through different method. But the government should also remind the cannon of convenience while collecting tax from assesses. As we are living in a civilized society - should come forward to pay taxes to government in order to conduct the administrative, defense and development activities of the country. Otherwise we would not be able to prove ourselves as civilized people. Tax is the most important in the hand of the government to control the economy as well as the inflection. It also helps in push money to the economy, develop certain source of the economy and control some other activities of the economy. No Government can run it’s and perform administration works without collecting tax as a source of revenue. So, the Government imposes tax over the company and the corporations. On the other hand Government can also intensive to the infant and certain basic industry for protection through its tax policy.