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Handbook of Income Tax

Handbook of Income Tax regarding Admissible and Inadmissible


Income/Expenses (Assessable and Non-assessable Income/Expenses) as
per seven heads of Income

Prepared By

Farid Mohammad Nasir


CA student
ICAB
Based on the latest Finance Act

2015

Edition 1.0.2
(Boishakhi Edition)

Email: farid.pq@gmail.com
Facebook: http://facebook.com/farid.pq
LinkedIn: http://bd.linkedin.com/in/faridpq

Table of Contents
0. Prelude .................................................................................................................................................03
1. Income from Salary ............................................................................................................................... 04
2. Income from Interest on Securities ....................................................................................................... 08
3. Income from House Property ................................................................................................................ 10
4. Income from Agriculture ....................................................................................................................... 13
5. Income from Business or Profession ...................................................................................................... 17
6. Capital Gain ..........................................................................................................................................27
7. Income from Other Sources .................................................................................................................. 30
8. Sixth Schedule Part-A (Exclusions from Total Income) ........................................................................... 34
9. Sixth Schedule Part-B (Allowances for Investment Credit) ..................................................................... 38
10. Annexure I ............................................................................................................................................40
11. Annexure II ...........................................................................................................................................41
12. Annexure III ..........................................................................................................................................42
13. Bibliography..........................................................................................................................................43

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Prelude
The sole objective of this handbook is to help determine the assessable incomes of the seven heads which will help
us in our professional examination as well as in our professional life to determine the assessable income of both the
individuals and companies.
This handbook is mainly prepared to combat the exam and solve the mathematical problems we face while we
encounter to find the assessable income of both individuals and companies.
This handbook is a secondary level guideline, not a primary level guideline. Before studying this handbook you
should have a minimum level of knowledge of Taxation & the respective acts and its sections (ITO 1984 & its
Rules) and you should also read the respective Sections of the ITO 1984 and/or Rules of this act & SROs regarding
taxation issued by the Government time to time.
In this handbook, it is tried hard at the maximum effort to discuss all the issues in respect of the seven heads to
determine the assessable income of the respective income head but this handbook is not an inclusive one. Some
issues can be missed. If anyone finds anything missing or contradictory while and after reading this handbook that
an issue or some issues are left that are not included in this handbook, please be it known to me so that I can include
those issues in further editions. I seek your kind and sincere cooperation in this regard.

First Edition (Independence Edition)


First Edition-Revised (Boishakhi Edition)

: March 2015
: April 2015

The areas which have been discussed have been tried to present very sincerely and carefully. The author of the
handbook was very sincere and careful when preparing this handbook. Despite that If any errors, mistakes or any
mispresentations are found in this handbook, it is totally unintentional and due to mistake. So I urge all the readers
to let me know the facts so that I can amend those errors or mistakes in future.

Best regards

Farid Mohammad Nasir


Date: 17 April 2015

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1. Income from Salaries:


Related References:
Sections - 21 & 172
2(45) & 2(58)
Schedule 6th Part A - Para 4, 5, 8 20, 21, 25, 26 (for Bangladeshi) & 7, 15, 16 (for foreigners)
Rule - 33, 33(a, b, c, d, e, f, g, h, i, j)
SROs - 226-Law/IT/2011 dated 4th July 2011
227-Law/IT/2011 dated 4th July 2011
228-Law/IT/2011 dated 4th July 2011

As per Section 2(58) of the Income Tax Ordinance 1984, Salaries include:
1. Any pay or wages
2. Any annuity, pension or gratuity
3. Any fees, commission, allowances, perquisites or profits in lieu of (See Section2(50)), or in
addition to salary or wages
4. Any advance of salary
5. Any leave encashment.

Section 21(1) provides that the following income of an assessee shall be classified and computed under
the head "Salaries", namely:(a) any salary due from an employer to the assessee in the income year, whether paid or not;
(b) any salary paid or allowed to him in the income year, by or on behalf of an employer though
not due or before it became due to him; and
(c) any arrears of salary paid or allowed to him in the income year by or on behalf of an employer,
if not charged to income-tax for any earlier income year.
When we work with the head - Salaries, we should be familiar with the concept of Perquisite
As per Section 2(45) Perquisite means
(i)
any payment made to an employee by an employer in the form of cash or in any other
form excluding
1. basic salary,
2. festival bonus,

(ii)

3. incentive bonus not exceeding ten percent of disclosed profit


4. arrear salary,
5. advance salary,
6. leave encashment or
7. leave fare assistance and
8. overtime.
any benefit, whether convertible into money or not, provided to an employee by an
employer, called by whatever name, other than contribution (by employer) to a
1.
2.
3.
4.

recognized provident fund (RPF)


approved pension fund (APF)
approved gratuity fund (AGF)
approved superannuation fund (ASF)

N.B: when you read the section 2(45), always read the Section 30(e) along with.

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#
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16

The following table shows the items whether the income or part of the income to be included in the total income
under the head Income from Salaries or not
Description
Ref
To be included in
To be exempted
Total Income
from Total Income
Full

Basic Salary
Full

Dearness Allowance
Full

Bonus
Full

Festival bonus/performance bonus


Full

Overtime
Full

Commission and fees


Sec. 172(a)
Full

Advance salary
Sec.
172(a)
Full

Accrued / outstanding salary


Sec.
172c
Full

Profit in lieu of salary


Full

Leave encashment /Compensation


Full

Annuity
Full

Education allowance for children


Full

Servant allowance
Full

Allowance received as Head of a department / Charge


allowance
Full

Residence telephone bills / utility bills / club bills


reimbursed
Rule 33a
50% of Basic or
House rent allowance in Cash

17 Rent free accommodation

Rule 33b(1)

18 Accommodation at a concessional rate

Rule 33b(2)

19 Conveyance allowance received in Cash


20 Conveyance provided for personal use

Rule 33c

21 Additional conveyance allowance along with


conveyance facility

Rule 33d

Rule 33e

22 Free or concessional passage for travel abroad or


within Bangladesh

Rule 33g (1.i)

23 Free or concessional passage for travel abroad or


within Bangladesh

Rule 33g (1.ii)

24 Free or concessional passage for travel abroad or


within Bangladesh

Annually Tk 240000,
whichever is lower
The rental value or
25%
OF
Basic,
whichever is lower
The difference between
Rule-33b(1) and actually
cash paid by the assessee
Excess over Tk. 30000
5% of Basic Salary will be
added
5% of Basic Salary will be
added plus the amount of
the conveyance allowance
paid in cash
If as per the terms of
employment-the sum by
which cash payments
made by the employer
exceeds
the
actual
expenditure
If not as per the terms of
employment - the whole
amount paid in cash, if no
cash is paid then the
amount would have been
expended

Rule 33g (2)

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Up to Tk 30000

If no cash is paid
during travel, then
nothing will be added
to the total income.
(see the rule*)

Fully exempted If any benefit as per


Rule 33g (1) provided
by the undertakings
engaged
in
the
transport of passengers
or the carriage of
goods.
Page 5 of 43

Full

Rule 33h

28 Any other benefit or annuity

Rule 33j

29 The value of any benefit provided free of cost or at a


concessional rate
30 Any sum paid by an employer in respect of obligation
on employee
31
Employers contribution to Recognized
Provident Fund (RPF)
32
Interest on RPF

Rule 33j

if not exempted; (see the


rule)
Full

Rule 33j

Full

Full

Actual interest less


exempted to the extent
of the interest @
14.50% or, 1/3rd of
basic salary
Fully exempted

Full

Full

Fully exempted

Fully exempted

Full

Fully exempted

Fully exempted

Para 21, 6th SchPart A

Fully exempted

Para 8, 6th SchPart A


Para 20, 6th SchPart A
Para 21, 6th SchPart A

Fully exempted

Fully exempted

Fully exempted

Full

Fully exempted

RPF

25 Entertainment allowance
26 Free Tea, coffee, beverage or the like thereof
provided at the office premises (i.e. launch or tiffin)
27 Medical allowance

34

UPF

33

36

ASF

35

37

39

AGF

38

Both employees and employers contribution to


Unrecognized Provident Fund (UPF) plus its
interest(if any)
Any payment received by an assessee from UPF
at retirement
Employers contribution to an Approved
Superannuation Fund (ASF)
Interest on accumulated balance of ASF
Any payment received by an assessee from ASF
at retirement
Employers contribution to an Approved Gratuity
Fund (AGF)
Interest on accumulated balance of AGF

Any payment received by an assessee from AGF


at retirement
41 Any payment (Accumulated balance while leaving
job*) received from (a) a government provident fund*
(b) a recognized provident fund (RPF)*
(c) an approved superannuation fund (ASF)*
(d) a workers participation fund
42 Any Pension received by an assessee

Rule 33i

Para 25, 6th SchPart A


&
SRO_No._310/L
aw/IT/1984 (for
the Rate 14.5%)

Para5(1), Part-A,
1st Schedule

Para 5, Part-C,
1st Schedule

40

43 Gratuity
44 Any amount received by an employee of a Govt.
organization at the time of voluntary retirement in
accordance with any scheme approved by the Govt.
45 Employers contribution to Life Insurance Policy
46 (1)Any income derived from a provident fund
established under the Provident Fund Act 1925 (for

Fully exempted
10% of Basic or
Maximum Tk 60,000
whichever is lower
(see the rule)

Para 4, 6th SchPart A

govt. employees)

(2)Any income derived from workers participation


fund established under the Bangladesh Labor Act,
2006

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47 Any Special allowance, benefits or perquisite


specially granted to meet some official expenses
48 Remuneration of Ambassador/high
Commissioner/Charge daffairs/ commissioner/
counselor/ counsel de carrier/ secretary/ advisor of
any Embassies of foreign states and the their nonBangladeshi employees

Para 5, 6th SchPart A

Fully exempted

Para 7, 6th SchPart A

Fully exempted

Salaries are exempted from payment of tax (as per SRO & Notification):
01. 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/her arrival
in Bangladesh. (SRO-114-Law/IT/1999)
02. Any salary drawn by any foreigner from thru 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 exempted from tax. (SRO-207-Law/It/1997)
03. Salaries of categorized personnel of United States and its agencies are tax free as per provision of
schedule-1 (Article-V) Section-17 and schedule-2 (Article-VI) Section-18 of United States and
Specialized Agencies (Privileges and Immunities) Act, 1975. (NBR Circular No: NBR/Tax/Tax-7/Tax
Policy/02/2006, dated 29/04/2007)
04. When in any year an assessee has ceased to be an employee participating in a recognized Provident
Fund and has been declared by the employer maintaining the Fund not to be eligible to receive the
whole for the accumulated balance due to him, so much of his income as is assessable for that year
shall be exempted from income tax and shall be excluded from the computation of total income and if
such amount exceeds the amount of his income in that year, so much of his income in the following
year as is equal to the amount of such excess shall be so exempted and excluded is such year or years.
(SRO-454-Law/IT/1980 dated 31.12.1980 (Serial No 19))
05. Chargeability of tax on only Basic Salary of certain persons e.g. ministers, MPs, Judges, Govt.
employees etc.:
Name of person

Chargeability of tax on

Prime Minister, Speaker, Ministers, and Only Basic salary is taxable; other allowances/elements of salary are
Advisors with minister rank, Deputy fully exempted from tax (SRO-226-Law/IT/2011 dated 04/07/2011
Speaker
Honorable Judges of High Court and Only Basic salary is taxable; other allowances/elements of salary are
Appellate Division of the Supreme Court
fully exempted from tax (SRO-227-Law/IT/2011 dated 04/07/2011
Government employees

Only Basic salary is taxable; other allowances/elements of salary are


fully exempted from tax (SRO-228-Law/IT/2011 dated 04/07/2011

Note: Salary received by a person as an MP is taxable as Income from Other Sources but if a person receives as a
Minister of Govt., income is taxable under the head Salaries

The items to be considered under the head Salaries and regarding Salaries for investment credit purpose
have been discussed in the section of Investment Credit / Allowance at the end part of this handbook.

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2. Income from Interest on Securities:


Related References:
Sections - 22 & 23
51, 106 & 172(d)
Schedule 6th Part A - Para 24 & 40
Rule - there is no relevant rule to this head
SROs - no is issued in relation to this head
As per Section 22, the following conditions should be met in order to be termed as an income under the head
Income from Interest on Securities
(a) Income must be received as interest (the interest on securities will taxed in the year of actual
receipt)
(b) The income must be from securities issued by the government and/or debentures or securities
issued by local authorities and/or companies.
As interest on securities is a separate head of income, therefore, even if the securities are held as trading assets
within the course of any business undertaken by a bank, an insurance company, a leasing company or a stock
broker; the interest must be charged under the head Income from Interest on Securities not under the head
Income from Business or Profession as per section 28. When these securities are sold, any gain or losses from
such disposal will be considered as capital gain or losses; hence will not be recorded under the head Income from
Interest on Securities. Rather any gain from such event will be recorded under the head Capital Gain
CLASSIFICATION OF SECURITIES
Type of Securities
Nature
Tax free:
Treasury Bond
Treasury Bill
Government Securities
Less tax:
National Bond
Less tax govt. securities

Commercial Securities

Debentures/Bonds:
Approved Securities or
Unapproved Securities
Zero Coupon Bond

TDS as per Section 51

Taxable Status

No TDS

Tax free

5%

Fully taxable

5%

Fully taxable

No TDS

Tax free

The following interests from different sources will not be considered under the head Income from Interest on
Securities but under the head Income from Other Sources
i)
Income or profit received from all kinds of bank deposits like Savings Deposits or Fixed Deposits
ii)
Income from investments other than securities other than securities in any government or commercial
projects
iii)
Interest on capital and loan from a person or partnership firm
iv)
Interest on securities issued by any individuals, partnership firm, association of persons (AOP), club
etc.
v)
Interest on Savings Certificates
vi)
Interest on Post Office Savings Bank and Postal Savings Certificate
vii)
Interest on securities issued by any foreign government
viii)
Interest received from a company on Book-Debt / Accounts Receivable balance

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Description

Ref

To be included in Total
Income

To be exempted from
Total Income

Para 24, 6th SchPart A


Sec. 28 (a)

Fully exempted

Full
Full
Full

Fully exempted

01

Tax free govt. securities

02
03
04
05

Less tax govt. securities


Approved commercial securities
Unapproved commercial securities
Zero Coupon Bond (ZCB)

Payment/Account head /At the account head

01

Any sum for this purpose


Bank commission/charges for collecting Sec. 23 (1) (a)
interest
Sec. 23 (1) (b)
Any interest payable for this purpose
Interest on borrowed capital for
investment in securities
No allowance or deduction will be allowed for tax-free govt. securities
[Ref: Proviso of Section 22]
No deduction will be allowed in respect of any interest payable outside Bangladesh on which tax has not been paid or
deducted as per Chapter VII
[Ref: Section 23]

Sec. 28 (b)
Sec. 28 (b)
Para 40, 6th SchPart A

Admissible Expenses

02
03
04

Reference

Purposes of expenses / Limit for Admissible Expenses

Grossing up of interest while calculating the taxable income:


Interest on securities, which is subject to tax and tax is deducted at source, must be the gross amount, not the net
amount. As per Finance Act 2014, TDS rate of any type of securities such as less tax govt. securities and
Commercial securities is 5%.
The formula for grossing up of interest is:
Gross Interest = Net Interest [100 (100 Rate of Tax Deducted at Source i.e. 5% now)]
The items to be considered under the head Interest on Securities and regarding Securities for investment
credit purpose have been discussed in the section of Investment Credit / Allowance at the end part of this
handbook.

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3. Income from House Property:


Related References:
Sections - 24 & 25
2(3)-Annual Value; 19(22), 33(c) & 53(a)
Schedule - 6th Schedule Part A - Para 1, 14 & 38
Rule - there is no relevant rule to this head
SROs - 454(Serial No. 18)-Law/80 dt.21.12.1980; 210-L/IT/13 dt. 01.07.2013

Annual Value under Section 2(3) shall be deemed to be in relation to any property let out(i)
(ii)

the sum for which property might reasonably be expected to let from year to year 1[and any
amount received by letting out furniture, fixture, fittings etc; or
where the annual rent in respect thereof is in excess of the sum referred to in paragraph (i),
the amount of the annual rent

Income from house property under Section 24:


(1) Tax shall be payable by an Assessee under the head "Income from house property" in respect of the annual
value of any property, whether used for commercial or residential purposes, consisting of any building,
furniture, fixture, fittings etc. and lands appurtenant thereto of which he is the owner, other than such
portions of the property as he may occupy for the purposes of any business or profession carried on by him,
the income from which is assessable to tax under this Ordinance.
(2) Where any such property as is referred to in sub-section (1) is owned by two or more persons and their
respective shares are definite and ascertainable, such persons shall not constitute and shall not be deemed to
be, an association of persons; and for the purpose of computation of the income of an Assessee in respect of
that property, only such part of such income as is proportionate to the share of the Assessee shall be
reckoned as his income from that property.

Conditions of income to be charged under this head:


1. Assessee must be the legal owner or deemed to be the owner (beneficiary of the property)
2. House property must be rented for commercial or residential purposes
3. Property must consist of any buildings or land / lands appurtenant thereto

RENTAL STATUS OF THE HOUSE PROPERTY:


1. Fully let out house property:
All reasonable income (municipal value) or actual annual rental income (whichever is
higher) is chargeable to tax and all admissible expenses are fully considered in this regard
2. Partly let out house property:
All reasonable income (municipal value) or actual annual rental income generated from the
let out part of the property (whichever is higher) is chargeable to tax and all admissible
expenses are proportionately considered for the let out part in this regard
3. Fully occupied house property by the owner:
Annual value in such a case is not needed and considered as non-assessable income as per
the ITO 1984

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Non-assessable Income
#

01

02
03

04

05

Reasons / areas

Annual value of the house used by the


owner for his own residence purpose and
for the purpose of business or profession
Vacancy allowance (also discussed below)
Any income derived from the house
property held by the trust or other legal
obligation wholly used for religious or
charitable purpose
Any income derived from any building
for ten years from the date of completion
of construction
House property income of any chamber of
commerce and industry

Reference
Sec. 24 (1) (a)

Limit for Admissible Expenses


Any sum for this purpose

Sec. 25 (1)
(j&k)
Para 1(1), 6th
Sch-Part A

The amount equal to such portion of the annual value

Para 38, 6th


Sch-Part A

(see the reference for details)

SRO-210
Dated: 01/07/13

Any amount of rent income

Any amount

Admissible Expenses
#

Payment/Account head /At the account head

01
02
03
04

Land development tax or rent


Insurance premium
Interest on mortgage loan
Annual tax/charge

Sec. 25 (1) (a)

Reference

05
06

Ground rent
Interest on borrowed capital

Sec. 25 (1) (f)

07

Interest on borrowing during construction

Sec. 25 (1) (gg)

08

Sec. 25 (1) (h)

09

Repair and maintenance includes:


Expenditure for repairs
Collection of rent
Water and sewerage
Electricity
Salary of darwan, security guard,
pump-man, lift-man & caretaker
All other expenditure related to
maintenance
Vacancy allowance

10

Vacancy allowance

Sec. 25 (1) (k)

11

Uncollectible/irrecoverable rent

SRO-454-L/80
Dated:
31/12/1980

Provision for Inadmissible Expenses:

Sec. 25 (1) (b)


Sec. 25 (1) (d)
Sec. 25 (1) (e)

Sec. 25 (1) (g)

Purposes of expenses / Limit for Admissible Expenses


Any sum payable for this purpose
The amount of any premium for this purpose
The amount of interest payable on such mortgage or charge
Any tax leviable, in respect of property or income from property,
by local authority or Govt but does not include any tax leviable
under the ITO 1984
The amount of such rent
The amount of any interest payable on such capital borrowed
from bank or financial institution
Where no income is earned during the period of construction, the
interest payable during such period will proportionately be
distributed in subsequent first three years for which income is
assessable (see the section if not clear)
Admissible limit for Repair and maintenance is as follows:
(i) An amount equal to one-forth (25%) of the annual value
where the property is used for residential purpose;

(ii) An amount equal to thirty percent (30%) of the annual value


where the property is used for commercial purpose.

Sec. 25 (1) (j)

Where the whole the property was let out and vacant during a part
of the year, a sum equal to such portion of the annual value is
admissible.
Where the property was let out in parts and vacant during a part of
the year, a sum equal to such portion of the annual value is
admissible.
Part of rent which cant be recovered anymore and which has
been assessed in the preceding year will be deducted from total
income in the subsequent year

No deduction shall be allowed in respect of any interest or annual charge payable outside Bangladesh on which tax has not been
paid or deducted as per the provisions of Chapter VII
[Ref: section 25(2)]

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Treatment of advance rent when it is not adjustable against house rent: Section 19(22)
Where the advance received by the owner is not adjustable against house rent, then such advance will be
treated as house property income as per Section 19(22). However such advance will be allocated into 5 years
including 1st year in equal proportion if the assessee opts so. Where such advance or part thereof is refunded by the
owner, then the amount so refunded shall be deducted from income in which year it is refunded.

Grossing-up Rental Value when the tenant bears any owners expenses:
If the tenant bears any expenses like repair and maintenance which is supposed to be borne by the owner,
actual rent will be increased by the same amount.

Deducting from Rental Value when the owner bears any tenants expenses:
If the owner bears any expenses like water bill, gas bill, electricity bill which is supposed to be borne by
the tenant, actual rent will be decreased by the same amount.
Income from letting out SUBLET by a tenant is considered as Income from Other Sources not as Income from
House Property
No items under the head Income from House Property and regarding House Property are considered for
investment credit purpose.

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Page 12 of 43

4. Income from Agriculture:


Related References:
Sections - 26 & 27
2(1), 19(17), 19(19) & 35(1)
Schedule 6th, Part A - Para 27, 29& 46
Rule - 30, 31, 32
SROs - 208-Law-IT/2013 dt. 01 July 2013
Definition/Scope of Agricultural Income:
See the Section 2(1) of the ITO 1984 for details to have a clear idea
Characteristics of Agricultural Income:
(i)
It must derive from any agricultural land situated in Bangladesh. The land may be situated in an
urban area or in a rural area.
(ii)
It must come from fundamental agricultural work like field cultivation or cultivation of ground, in
the sense of tilling of land, sowing of seeds, planting and similar basic and subsequent operations
on the land
Basic Operations: Agriculture in its primary sense denotes the cultivation of the field and is
restricted to cultivation of the land in the strict sense of the term, meaning tilling of the land,
sowing of the seeds, planting and similar operation on the land.
Subsequent Operations: Such operations are absolutely necessary for the purpose of effectively
raising the agricultural produce and are to be performed after the produce spouts from the land e.g.
weeding, digging the soil around the growth, removal of undesirable undergrowth, and all
operations which foster the growth and preservation of the produce not only from insects and pets
but also from the depredation from outside, tending, pruning, cutting, harvesting and rendering the
produce fit for the market, would all be agricultural operations when taken in conjunction with the
basic operations
(iii)
Income from any other assets solely used for agricultural purposes is considered as Agricultural
Income
(iv)
It may become necessary to perform a process to make the agricultural products marketable or
saleable, then the gain in the value of the produce by such process is classified as Agricultural
Income
(v)
Income (rent) may come from any building situated in the agricultural land or adjacent vacant
agricultural land (Remember: this rent is not regarded as Income from House Property)
(vi)
Income may come from gain on sale or discarded value of machineries or plant used for
agricultural purpose
(vii)
Some income may partially be considered as agricultural income e.g. Sale of tea, Sale of rubber,
Sale of tobacco and Sale of Sugar
From the above discussion, it is clear that agriculture would include horticulture, floriculture, arboriculture,
sericulture etc. It would include the raising of grooves, plantations, raising of grass or pastures. It would extend to
cultivation of all commodities of food value like sugarcane, coffee, mangoes and other fruits etc; artistic and
decorative value like flowers and creepers; housing value like bamboo, timber; fuel value; medicinal value and
health value. It would also include growing of animals, poultry when it is not done for business purpose.
Agriculture income, however, cover only those incomes which are derived from human effort not naturally.
i.e. Crops or trees of spontaneous growth in forests or in any other areas where there is no human effort is not
considered as agricultural income (This income is regarded as Income from Other Sources

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Page 13 of 43

SUMMERY OF PARTLY AGRICULTURAL INCOME


BoP
Particulars
AI
Income from tea garden
40%
60%
Income from rubber garden
40%
60%

Reference
Sec 26(2), Rule 31
Sec 26(3), Rule 32

Income from tobacco/sugar/other similar products industry:

Where further processing is done by the assessee


Where products are sold without further processing

60%
100%

40%
0%

Sec 26(3), Rule 32


Sec 26(3), Rule 32

OTHER FORMS OF AGRICULTURAL INCOME:


1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Income from cattle rearing


Income from sale of palm juice and date juice
Income from sale of seeds and grass, if grown by human effort
Income from agricultural cooperative society which was organized for farming and cattle rearing
Income from land or assets used for processing the agricultural commodities to make them marketable
Income from land leased for agricultural purposes
Income from any system of sharing of crop generally known as adhi, barga or bhag
Income from sale of herbal or medical plants
Income from cultivation of flower and fruits
Income from sale of honey if produced in agricultural land using special technologies like special box for
honey-comb
11. Income from dairy farm provided that
a) Assessee is the owner of the cattle
b) Cattle are reared in cattle rearing field
c) Milk is processed by the assessee
12. Income from poultry farm if they are reared in agricultural land
Agricultural Income under Section 19(17) & 19(19):
Under section 19(17):
Where any machinery or plant exclusively used by an assessee for agricultural purpose has been
disposed and the sale proceeds thereof exceed the WDV, so much of the excess as does not exceed
the difference between the Original Cost and the WDV shall be deemed to be the income
classifiable under the head Agricultural Income
Under section 19(19):
Where any insurance, salvage or compensation moneys are received in any income year in respect
of any machinery or plant which has been used by the assessee exclusively for agricultural purpose
is discarded, demolished or destroyed and the amount of such moneys exceed the WDV of such
machinery or plant, so much of the excess as does not exceed the difference between the Original
Cost and the WDV less the Scrap Value shall be deemed to be the income classifiable under the
head Agricultural Income

DONT GET CONFUSED WITH SOME TYPICAL NON-AGRICULTURAL INCOME:


1. Income from ferry ghat, mooring terminal
2. Income from sale of products that grow up in the agricultural land without agricultural works e.g. forest
trees, wild grass, fruit and flowers grown spontaneously and without human effort
3. Income from sale of forest trees, flowers, bamboo, wild grass, reeds of fruits produced naturally without
any agricultural work
4. Income from salt production by flooding the land with sea water and then extracting salt therefrom
5. Income from cutting and selling of timber on contract
6. Income from interest on arrear of rent for agricultural land
7. Income from letting out vacant land not used for agricultural purpose
8. Income from royalty/ground rent against lease of land for mining, potteries, quarries etc
9. Income from sale of stones from quarries
10. Income from sale of sail for brick field

Farid Mohammad Nasir


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Page 14 of 43

11.
12.
13.
14.
15.

16.
17.
18.
19.
20.
21.
22.

Income from sale of water for irrigation


Income from salary for working as an agricultural supervisor/manager
Income from sale of crops which have been purchased from other for resale
Income from dairy farm solely established for business purpose (Dont mix up with the Serial No. 11 above)
Income from poultry farm established separately for business purpose (Dont mix up with the Serial No. 12 above)
Income from fisheries/fishing
Income from fish hunting, ship anchoring etc
Income derived from butter and cheese making
Income received as commission foe working as middleman in agro products
Remuneration received by managing agent at a fixed percentage of net profit from a company having
agricultural income
Interest received by an assessee against loan in the form of agricultural produce
Income from dividend paid by a company out of its agricultural income.

Admissible Expenses
#

Payment/Account head /At the account head

Reference

01
02
03

Land development tax


Local tax
Production costs:

Sec. 27 (1) (a)

04

Production costs

Sec. 27 (1) (c)


(ii)

05

Production costs in respect of adhi,


barga or bhag (Inadmissible expenses)

Sec. 27 (1) (c)


(iii)

06
07

Insurance premium
Maintenance cost of Irrigation Plant

Sec. 27 (1) (d)

08
09

Depreciation
Interest on mortgage

Sec. 27 (1) (f)

10

Interest on borrowed capital

Sec. 27 (1) (h)

11

Loss incurred from sale of demolished


machineries (see this Section if not clear)

Sec. 27 (1) (i)

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Sec. 27 (1) (b)


Sec. 27 (1) (c)
(i)

Sec. 27 (1) (e)

Sec. 27 (1) (g)

Purposes of expenses / Limit for Admissible Expenses


Any sum payable for the land used for agricultural purposes
Any tax, local tax or cess (see the Section for details)
Conditions to be met to be admissible:
a) For cultivating the land or raising livestock thereon;
b) For performing any process ordinarily employed by a
cultivator to render marketable the produce of the land;
c) For transporting the produce of the land or the livestock raised
to the market; and
d) For maintaining the agricultural implements and machinery in
good repair and for proving upkeep of cattle for the purpose of
cultivation, process or transportation as aforesaid.
60% of market value of the produce of the land where no books of
accounts in respects of agricultural income are maintained
(NOTE: where books of accounts are maintained, 100% of actual
production costs are admissible expenses)
No deduction is allowed if agricultural income is derived by the
owner of the land from share of the produce raised through any
system of sharing of crop generally known as adhi, barga or bhag
Any sum paid as premium relating to any agricultural activities
Any sum paid in respect of the maintenance of any irrigation or
protective work or other capital assets
A sum calculated at the rate as provided in the Third Schedule-Para 1
The amount of interest paid in respect of mortgage or charge
where land is subject to a mortgage or other capital charge
Where the land has been acquired or improved by the use of
borrowed capital, the amount of any interest is paid in respect of
such capital
The amount actually written-off / the amount of losses from any
demolishment is allowable expense but maximum allowable limit:
i) where no insurance or compensation money is received Maximum limit = (written down value scrap value[SV])
ii) where no insurance or compensation money is received Maximum limit = (WDV SV) the amount of
insurance or compensation money received

Page 15 of 43

12

Loss incurred from sale or exchange of


machineries (see this Section if not clear)

Sec. 27 (1) (j)

13

Other expenses

Sec. 27 (1) (k)

Provision for Inadmissible Expenses:

The amount actually written-off by way of sale or exchange of


machinery or plant which has been used exclusively for
agricultural purpose but the maximum of the amount by which the
WDV of the machinery or plant exceeds the amount for which the
asset has been actually sold or transferred
Maximum limit = (WDV the amount of actual sale/transfer)
Not being capital or personal nature, any other expenditure laid
out wholly and exclusively for the purpose of deriving agricultural
income from the land

No deduction shall be allowed in respect of any interest on which tax has not been paid or deducted as per the provisions of
Chapter VII
[Ref: Section 27(2)]

Non-assessable Agriculture Income


01
02
03

Any income including agricultural income of an indigenous Hillman of any of the hill districts of Rangamati, Bandarban &
Khagrachhari, which has been solely derived from economic activities undertaken within the said the said hill districts.
[Ref: Para 27, Part-A,6th Schedule]
Any income, not exceeding Tk 200,000 chargeable under the head Agricultural Income of as assessee being an individual, whose
only source of income is agriculture.
[Ref: Para 29, Part-A,6th Schedule]
An amount equal to fifty percent (50%) of the income derived from corm, maize or sugar beet [Ref: Para 45, Part-A,6th Schedule]

No items under the head Income from Agriculture and regarding Agriculture are considered for investment
credit purpose.

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Page 16 of 43

5. Income from Business or Profession:


Related References:
Main Section:
Definition:

28, 29 & 30
2(14) - Business
2(34) - Income
2(49) - Profession
2(61) - Speculative Business
Deemed Income: 19(15) - a, aa, b, c
19(16) with 3rd Schedule Para 10
19(18) with section 29(1) (xii)
19(20) & 19(23) with Rule-30A
Rule:
30, 30A, 31, 32, 65, 65A, 65C
th,
Schedule: 6 Part A - Para 1A, 33, 35, 37, 39, 42, 44, 45 & 3rd Schedule - all Para except Para 1
SROs:
Brief description of the SROs
Date
SRO

Have a sharp eye on these SROs


bcoz the validity of these will
end on June 30, 2015. (These
can be further amended)

01

15% Tax on textile industries

02

15% Tax on jute Industries

03

Tax exemption for 5 years & 7 years on different years


on income of industries set up at EPZ
50% Tax exemption on income from export sales of any
industry set up in any EPZ declared u/s Section 10 of the
BEPZA Act, 1980 (Act No. XXXVI of 1980)
10% Tax on Export-oriented Garment Industries

04

05

(Read the SRO No. 205-Law/IT/2013 dt. 06/07/2005 along with this SRO)

06

25% Tax on local authority / Autonomous Institutions

07

3 % reduced tax on various sources of income like


fisheries, poultry feed, cattle farming, dairy farming etc.
Validity upto June 30, 2015 (See the SRO)
Exemption on income of private power generation
company

08

(See all the three SROs to be clear about these)

09

15% Tax on private university

10
11

Tax exemption of new private hospitals established


between 1st July 2005 to 30th June 2008 for 5 years
15% Tax on National level research institute

12

SRO on CSR

13
14
15
16

Travel Tax on different rates


(Passenger) Vehicle Tax
(Personal) vehicle Tax
Tax on Water-way transport

17

SRO No. 207-Law/IT/2013


SRO No. 206-Law/IT/2013

These
are
Amendment
SROs

July 01, 2013


July 01, 2013

SRO No. 219-Law/Income Tax/2012

June 27, 2012

SRO No. 267-Law/IT/1986

July 01, 1986

(See para 34 of 6th schedule part A)


SRO No. 265-Law/IT/2010
SRO No. 206-Law/IT/2013
SRO No. 158-Law/IT/2014

July 01, 2013


June 26, 2014

SRO No. 208-Law/IT/2013

July 01, 2013

SRO No. 211-Law/IT/2013


SRO No. 213-Law/IT/2013
SRO No. 212-Law/IT/2013
SRO No. 268-Law/IT/2010

For 15 years

July 01, 2013

For 10years

July 01, 2010

SRO No. 204-Law/IT/2005

July 06, 2005

SRO No. 157-Law/IT/2007

June 28, 2007

i. SRO No. 229-Law/Income Tax/2011


ii. SRO No. 223-Law/Income Tax/2012
iii. SRO No. 186-Law/Income Tax/2014
SRO No. 159-Law/IT/2014
SRO No. 159-Law/IT/2014
SRO No. 160-Law/IT/2014
SRO No. 224-Law/IT/2012
SRO No. 162-Law/IT/2014
SRO No. 157-Law/IT/2014

July 04, 2011


June 27, 2012
July 01, 2014
26 June, 2014
26 June, 2014
26 June, 2014
27 June, 2012
26 June, 2014
26 June, 2014

Exemption on Income of DSE & CSE for 5 years on


various rates in each of 5 years
SRO No. 185-Law/IT/2014
July 01, 2014
18 Tax rebate for 10 years or upto 2019 for Productionoriented industries which are not situated in the city
corporation area and subject to other conditions
The list of SROs is not an inclusive one. There are a number of SROs regarding income tax to be paid on the
income head Income from Business or Profession but the mostly important SROs are mentioned here.

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Page 17 of 43

Definition/Scope of Income from Business or Profession:


See the Section 2(14), 2(34), 2(49) 2(61) & 28 of the ITO 1984 for details to have a clear idea
Business includes trade, commerce, manufacture and adventure or concern in the nature of trade,
commerce and/or manufacture.
Profession involves the idea of an occupation requiring purely intellectual skill or manual skill on
the basis of some special learning.

Allowable deductions/Admissible Expenses


#

Payment/Account head /At the account head

Reference

01

Rent of premises

Sec. 29(1)(i)

02

Repair of the hired premises

Sec. 29(1)(ii)

03

Interest on borrowed capital

Sec. 29(1)(iii)

04

Distribution of profits

Sec. 29(1)(iv)

05

Transfer to Special Reserve Account

Sec. 29(1)(v)

06

Current repair & maintenance

Sec. 29(1)(vi)

07

Insurance premium

Sec. 29(1)(vii)

08

Depreciation

Sec. 29(1)(viii)

(Fiscal depreciation, not accounting depreciation)

09

Amortization of license fee

Sec. 29(1)(viiia)

10

Investment allowance for Ship

Sec. 29(1)(ix)

11

Obsolescence allowance

Sec. 29(1)(xi)

12

Allowance for disabled or dead animals

Sec. 29(1)(xii)

13

Land development tax or Local Taxes

Sec. 29(1)(xiii)

14

Bonus or Commission (paid to employees)

Sec. 29(1)(xiv)

15

Bad debt

Sec. 29(1)(xv)

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Purposes of expenses / Limit for Admissible Expenses


The amount of rent paid for the premises
Provided that:
*Proportional rent is allowed for deduction if the premises are
partially used for dwelling
*No deduction is allowed if the premise is owned by the assessee
The amount paid for the repair of hired premises
Provided that:
Proportional amount of sum paid for such repair is allowed for
deduction if the premises are partially used for dwelling
The amount of any interest paid or any profit shared with a bank
run on Islamic principles. (see the proviso of this section)
Any sum paid by way of profit a bank run on Islamic principles
on deposits
An amount not exceeding 5% of total income transferred to any
special reserve by financial institutions as approved by the Govt.
provided that such reserve doesnt exceed the paid up capital
The amount paid on account of current repairs to buildings,
machinery, plant or furniture used by the business or profession
The whole or proportionate part of the amount on account of any
premium paid against risk of.. (see the rest of the section)
Depreciation allowances of the business assets, or bridge or road
or flyover owned by a physical infrastructure undertaking, as
admissible under the Third Schedule
Amortization of license fee as admissible under the 3rd Schedule
An amount of 20% of the original cost of a ship, being a
passenger vessel plying ordinarily on inland waters or a fishing
trawler for the year in which the ship or the trawler is first put to
use for public utility
An obsolescence allowance to the extent and computed in
paragraph 10 of the Third Schedule
An amount equivalent to the difference of the original cost of the
animal and the, if any, realized by sale or other disposition of the
carcass of the animal (see the section for details)
Any sum paid on account of land development tax or rent, local
rates or municipal taxes in respect of premises or part thereof as is
used for the purpose of the business or profession
Any sum paid to the employees as bonus or commission for
services rendered (not payable as profits or dividends) with
reference to:
o the general practice in similar business or profession,
o the profits of the business or profession, and
o the pay and other conditions of service of the employees.
The amount of any debt or part thereof which is established to
have become irrecoverable and has actually written off from the
books of accounts (see the section for details)
Page 18 of 43

Sec. 29(1)(xvi)

16

Previous years bad debt

17

Additional bad debt

Sec. 29(1)(xvii)

18

Provision for bad and doubtful debt

19

Payment for scientific research

Sec. 29(1)(xviiia)
&
Sec. 29(1)(xviiiaa)
Sec. 29(1)(xx)

20

Donation to research institute/body

Sec. 29(1)(xxi)

21

Payment to educational institution or


hospital

Sec. 29(1)(xxii)

22

Donation to educational institution or


hospital (for construction & maintenance

Sec. 29(1)(xxiii)

(IY-income year)

purpose)

23

Expenditure on training

Sec. 29(1)(xxiv)

24

Expenditure on traveling abroad as a


member of Trade Delegation

Sec. 29(1)(xxv)

25

Subscription to a registered Trade


Organization

Sec. 29(1)(xxvi)

26

Other revenue expenditure

Sec. 29(1)(xxvii)

(for the sole purpose of the business /profession)


[This clause is very important to claim
any expenses as admissible]

Any debt actually written off as irrecoverable but has not been
allowed earlier as irrecoverable; so much of such debt or part
thereof as has been established to have become irrecoverable in
any subsequent year shall be allowed as a deduction in that IY
Any debt actually written as irrecoverable for an income year and
the DCT is satisfied that the debt or part thereof became
irrecoverable in an earlier income year not falling beyond fours
immediately preceding the income year when it was written off
Provision for bad and doubtful debts made by banks is applicable for
some assessment years (see the two sections for details)

Any capital expenditure laid out or expended on scientific


research in BD related to the business carried on by the assessee:
Provided that where a deduction allowed for any income year
under this clause, no depreciation/obsolescence allowance shall
be allowed under clause (viii) or (xi) for the same income year.
Any sum paid (i) to a scientific institute, association or other body
engaged in such scientific research or, (ii) to a university, college,
technical school or other institution [subject to the approval of the
Board] for the purpose of scientific research or training related to
the class of business carried on by the assessee
Any revenue expenditure laid out or expended on any educational
institutional or hospital for the benefit of the employees, their
families and dependents or on the training of industrial workers, if
o no charge is made for services rendered by such institution or
hospital or for the training of the workers; and
o no deduction or allowance is claimed for such expenditure
under any other clause of the section.
Any capital expenditure laid out or expended on the construction
& maintenance of educational institutional or hospital established
for the benefit of the employees, their families and dependents or on
the training of industrial workers, if
o no charge is made for services rendered by such institution or
hospital or for the training of the workers; and
o no deduction or allowance is claimed under any other clause of
the section for the same income year in respect of expenditure
represented either wholly or partly by any asset.
Any expenditure laid out or expended on the training of citizens
of BD in connection with a scheme approved by the Board
Any revenue expenditure or personal expenses incurred by an
assessee in connection with visits abroad as a member of a trade
delegation sponsored b the Govt.
Any sum paid on account of annual membership subscription to a
registered trade organization within the meaning of the Trade
Ordinance, 1961 or to a professional institution recognized by the
Board in this behalf.
Any revenue, not personal, expenditure laid out or expended
wholly or exclusively for the purpose of the business or
profession of the assessee. Examples of some of such expenses
are enumerated below:

Accounting and audit fees;


Annual listing fees paid to stock exchanges;
Brokerage paid for raising loan to finance;
Commission for securing orders, getting tenders, retaining customers;
Commission paid to selling agents;
Compensation to an employee for injury or accident occurred while on duty;
Compensation to employees due to dismissal, suspense;
Contribution to a trade syndicate to preventing uneconomic competition;
Employers contribution to a provident fund, approved gratuity and superannuation fund;
Expenditures incurred to alter articles or memorandum of association;

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Page 19 of 43

Expenses incurred in defending a case for damages for breach of contract;


Expenses incurred in defending the assessees title over his assets;
Expenses incurred to secure the termination of a disadvantageous trade liability;
Gift to employees;
Incentives (10% of the net profit disclosed in the statements of accounts) given to employees to motivate
Legal fees incurred for the sake of business or profession;
Litigation expenses or legal fees incurred in partnership in validating the contract or for protecting the interest of the business;
Periodical payment for the use of goodwill;
Perquisites (up to Tk. 350000 per employee) or leave allowance given to employees;
Production, transportation and marketing of inventories;
Renewal fees of license;
Revenue expenditure on publicity, campaign and advertisement;
Royalty paid against patent or copyright;
Sales tax, VAT, water, road tax, municipal tax, excise duty, customs duty etc;
Stamp and registration charges for the purposes of entering into agreement for obtaining overdraft facilities;
Telephone and telegraph expenses;
Traveling expenses of the directors for the business purpose;
Welfare expenditure incurred for employees;
(Ref: from the book of Shil, Masud & Alam)

27

Fair proportional allowance or deduction

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Sec. 29(2)

Where any premises, building, machinery, plant or furniture are


not wholly used for the purposes of the business or profession,
any allowance or deduction under section 29(1) shall be restricted
to the fair proportional part of the amount.

Page 20 of 43

Non-allowable deductions/Inadmissible Expenses


#

Payment/Account head /At the account head

01

At the head of Salaries

Sec. 30(a)

Reference

02

Any head of expenses

Sec. 30(aa)

(This clause is very important bcoz any expenses can


be inadmissible expenses if TDS & VDS is not made)

03

Any payment to a Partner or member of


any AOP (Association of Persons)

Sec. 30(b)

04

Brokerage or commission paid to a Nonresident

Sec. 30(c)

05

Any payment to provident fund or other


fund

Sec. 30(d)

06

Perquisites

Sec. 30(e)

07

Expenses incurred in the head of


Entertainment, Foreign travels of
employees for holidaying and recreation
and Distribution of free samples

Sec. 30(f)

Entertainment

Rule 65

(*income, profits and gains mean the


income, profits and gains after deducting all
admissible expenses, other than only
Entertainment, as per the ITO 1984)
Foreign travels

Rule 65 A

Distribution of free samples

Rule 65 C

( % on Turnover)

08

Head Office expenses

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Sec. 30(g)

Reasons to be Inadmissible / Limit for Admissible Expenses


If salaries are paid to the employees without deducting taxes at
sources (TDS) as per Section 50
If any payment is made to any person without deducting tax
(TDS) as per Chapter VII of ITO, 1984 and without deducting
value-added tax (VDS) as per VAT Act 1991.
Any payment by way of interest, salary, commission or
remuneration made by a firm or an AOP to any partner or any
member of the AOP, as the case may be
Any payment by way of brokerage or commission made to person
who is not a resident in BD is inadmissible unless tax (TDS) has
been deducted therefrom under section 56
Any payment to a provident fund or other fund established for the
benefit of the employees unless the employer has made effective
arrangements to secure that tax shall be deducted at source from
any payments, made from the fund, which are taxable being
income falling under the head Salaries
So much of the expenditure as per the provisions (see Section 2(45)
for the definition and scope of Perquisites) of perquisites to any
employee (per employee) exceeds Tk 350000 (see also its Proviso)
Any expenditure in respect of the following as in excess of the
amount or rate specified in this behalf and as in not, in the cases
of sales and services liable to excise duty, supported by excise
stamp or seal, namely:- (as follows)
The amounts or rates in excess of which no deduction shall be
admissible for the expenditure in respect of entertainment are
specified below:
(a) On the first 10 lakh of *income, profits and gains of the
business or profession (computed before making any allowance in
respect of expenditure on Entertainment)...4%
(b) On the balance of income, profits and gains of the business
or profession (computed in the manner as aforesaid).2%
(1) The allowance in respect of expenditure on foreign travels for
holidaying and recreation of the employee and his dependents in
excess of the amount equivalent to three months basic salary of the
employee or three-fourths of the actual expenditure, which is less
(not oftener than once in every two years) shall be admissible
(2) Provided that any payment of sum exceeding Tk 10,000 shall
not be allowed as a deduction unless such payment is made by a
crossed cheque drawn on a bank or by a crossed bank draft
The rates in excess of which no deduction shall be admissible for
expenditure in respect of distribution of free samples are as follows:
(a) for a Turnover (Sales) upto Tk 5 crore..@ 1.5%
(b) for a turnover in excess of 5 crore but upto 10 crore...@ 0.75%
(c) for any amount or a turnover in excess of Tk 10 crore...@ 0.375%
Provided that in the case of a pharmaceutical industry, the rates
in respect of distribution of free samples are specified below:
(a) for a Turnover (Sales) upto Tk 5 crore.....@ 2%
(b) for a turnover in excess of 5 crore but upto 10 crore....@ 1%
(c) for any amount or a turnover in excess of Tk 10 crore.....@ 0.50%
Any expenditure exceeding 10% of the Net Profit disclosed in the
statements of accounts under the Head Office expenses by a
company not incorporated in Bangladesh
Page 21 of 43

09

Royalty, technical service fee, technical


know-how fee or technical assistance fee

Sec. 30(h)

10

Sec. 30(i)

Any payment by way of salary or remuneration made other than


by a crossed cheque or bank transfer to an employee having gross
monthly salary of Tk 15,000 or more

11

Any cash payment by way of Salary to


an employee having gross monthly
salary of Tk 15,000 or more
Incentive bonus

Sec. 30(j)

Any expenditure by way of incentive bonus exceeding 10% of the

12

Overseas traveling

Sec. 30(k)

13

Any commission paid or discount made


to a shareholder director
Cash payment over Tk 50,000

Sec. 30(l)

15

Office rent paid without a crossed


cheque or bank transfer

Sec. 30(n)

Provision for Disallowance:


Notwithstanding anything contained in sections 28, 29 & 30, the DCT shall not make any disallowance or deduction for any year
from any claim made by the assessee in the trading account or, profit or loss account without specifying reason for such allowance
or deduction
[Ref: Sec. 30A]

Other Inadmissible Expenses

Any payment by way of royalty, technical service fee, technical


know-how fee or technical assistance fee exceeding 8% of the
Net Profit disclosed in the statements of accounts

Net Profit disclosed in the statements of accounts

14

Sec. 30(m)

Any expenditure by way of overseas traveling exceeding 1% of


the disclosed turnover
Any payment by way of commission paid or discount made to its
shareholder by a company
Any payment exceeding Tk 50,000 or more, other than by a
crossed cheque or bank transfer excluding
(i) payment for the purchase of raw materials;
(ii) salary or remuneration made to any employee, without
prejudice to an obligation referred to in Section 30 (i);
(iii) any payment for government obligation
Any payment by way of any rent of any property whether used
for commercial or residential purposes, other than a crossed
cheque or bank transfer

Some other expenses which are not admissible expenses in general


tax practice are enumerated below:

Any payment to partner in any form (in case of a partnership business);


Capitalized expenditure in any form;
Contingent liability;
Contribution to political parties;

Contribution to unrecognized provident fund;

Cost of copy rights, patent etc (as this is not of revenue nature);
Excess remuneration paid to the employees who have relation with the partner;
Expenditure incurred for issuing of shares.
Expenses for protecting against competition;
Fees paid to obtain license to investigate and search minerals;
Fund embezzlement after office hour;
Fund embezzlement by stranger during office hour;
Gratuity paid to a single employee where it was not the practice of the company to pay gratuity;
Income tax and Provision for income tax;
Legal expenses for income tax, alternation of capital, company dissolution;
Loss of speculative business;
Loss on sale of capital assets;
New years presentation to employees;
Past losses, in case of change of business;
Payment of fine for violation of law;
Payments made for acquisition of goodwill;
Penalty, fine and damages paid in connection with the infringement/violation of law;
Personal expenses for assessee;
Preliminary expenses, underwriting commission, writing off share discount;
Reserve for bad debt and reserve for discount;

[Read the Section 29 (xxvi) for the reason to consider the above mentioned expenses by the taxmen]

(Ref: taken from the book of Shil, Masud & Alam)

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Page 22 of 43

Admissible Business Losses


as per the general tax practice
A trading loss of business is deductible in computing the profit earned by the business even though there is no specific provision
in the ITO foe allowance thereof. Business losses can be allowed as deduction only if the following conditions are satisfied:
o Losses must be in revenue nature
o Losses must be incurred in the respective income year
o Losses must be incidental to the business or profession carried on by the assessee
o It must not be notional or fictitious
o It must have to be incurred and not merely anticipated to incur in the future
o There should not be any, direct or indirect, restrictions under the Act against the deductibility of such loss
Some of such losses are follows:
Depreciation of funds kept in foreign currency for purchase of stock-in-trade;
Loss arising from negligence or dishonesty of employees;
Loss arising from sale of securities held in the regular course of the business;
Loss arising on account of failure on the part of the assessee to accept delivery of goods;
Loss caused due to breach of contract for delivery of goods by either party;
Loss caused due to forfeiture of a deposit made by the assessee for property carrying out of contract for supply of commodities;
Loss caused due to theft or burglary in the factory premises during working hours;
Loss due to exchange rate fluctuations of foreign currency held on revenue account;
Loss incurred by a holding company which has guaranteed to a loan taken by its subsidiary company.
Loss incurred by a sugar manufacturing company by foregoing advances made to sugarcane growers who used to sell sugarcane crop
exclusively to the company;
Loss incurred due to freezing stock-in-trade by enemy action;
Loss incurred on account of insolvency of banker with which current account is account is maintained by the assessee;
Loss incurred on realization of amount advanced in connection with business;
Loss of cash and securities in a banking company on account of burglary (may be after banking hours);
Loss of security deposited for the purposes of acquisition of stock-in-trade;
Loss of stock-in-trade as a result of enemy action, or arising under similar circumstances;
Loss of stock-in-trade due to destruction by fire and other natural calamities or due to an Act of God;
Loss on account of embezzlement by an employee;
Loss on account of non-recovery of advances given by the assessee-company (engaged in the business of financing its subsidiaries) to
its 100% subsidiary company;
(Ref: taken from the book of Shil, Masud & Alam)

Inadmissible Business Losses


as per the general tax practice
Losses which are not deductible from business income are as follows:
Anticipated future loss;
Depreciation of funds kept in foreign currency for capital purposes;
Loss arising from as a result of seizure and confiscation of illegal stock-in-trade;
Loss arising from non-recovery of tax paid by an agent on behalf of a non-resident;
Loss caused by forfeiture of advance given fir purchase of capital assets;
Loss due to sale of shares held as investment;
Loss incurred due to damage, destruction of capital assets;
Loss incurred in the closing of business;
Loss of advances made for setting up a new business which ultimately could not be started;
Loss of speculative business
Loss relating to any business or profession discontinued before the commencement of income year;
Loss which is not incidental to trade or profession carried on by the assessee;
Violation of law is not a normal incident of trade and an expense incurred by way of penalty for infraction of laws is not deductible as
business loss.
(Ref: taken from the book of Shil, Masud & Alam)

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Page 23 of 43

SUMMERY OF PARTLY INCOME FROM BUSINESS


AI
Particulars
BoP
Income from tea garden
60%
40%
Income from rubber garden
60%
40%

Reference
Sec 26(2), Rule 31
Sec 26(3), Rule 32

Income from tobacco/sugar/other similar products industry:

Where further processing is done by the assessee


Where products are sold without further processing

Ref

60%
100%

40%
0%

Sec 26(3), Rule 32


Sec 26(3), Rule 32

DEEMED INCOME CONSIDERED AS INCOME FROM BUSINESS OR PROFESSION


Particulars

Sec. 19(15)

Where, for the purpose of computation of income of an Assessee under section 28, any deduction has been made for any
year in respect of any loss, bad debt, expenditure or trading liability incurred by the Assessee, and-(a) subsequently, during any income year, the Assessee has received, except as provided in clause (aa) whether in cash or in
any other manner whatsoever, any amount in respect of such loss, bad debt, or expenditure, the amount so received shall be
deemed to be his income from business or profession during that income year;
(aa) such amount on account of any interest which was to have been paid to any commercial bank or the Bangladesh
Development Bank Ltd. or on account of any share of profit which was to have been paid to any bank run on Islamic
principles and which was allowed as a deduction in respect of such expenditure though such interest or share of profit was
not paid by reason of the Assessee having maintained his accounts on mercantile basis, within three years after expiry of the
income year in which it was allowed, shall, to such extent as it remains unpaid, be deemed to be income of the Assessee
from business or profession during the income year immediately following the expiry of the said three years;
(b) the Assessee has derived, during any income year, some benefit in respect of such trading liability, the value of such
benefit, if it has not already been treated as income under clause (c), shall be deemed to be his income from business or
profession during that income year;
(c) such trading liability or portion thereof as has not been paid within three years of the expiration of the income year in
which deduction was made in respect of the liability, such liability or portion, as the case may be, shall be deemed to be the
income of the Assessee from business or profession during the income year immediately following the expiry of the said
three years; and the business or profession in respect of which such allowance or deduction was made shall, for the purposes
of section 28, be deemed to be carried on by the Assessee in that year:
Provided that where any interest or share of profit referred to in clause (aa) or a trading liability referred to in clause (c) is
paid in a subsequent year, the amount so paid shall be deducted in computing the income in respect of that year.
Example -

Sec. 19(16)
&
along with
3rd Schedule
Para 10

Where any building, machinery or plant having been used by an Assessee for purpose of any business or profession carried
on by him is disposed of during any income year and the sale proceeds thereof exceeds the written down value, so much of
the excess as does not exceed the difference between the original cost and the written down value shall be deemed to be the
income of the Assessee for that income year classifiable under the head "Income from Business or Profession
Example -

Sec. 19(18)
&
along with
Sec. 29 (xi)

Where any insurance, salvage or compensation moneys are received in any income year in respect of any building,
machinery or plant which having been used by the Assessee for the purpose of business or profession is discarded,
demolished or destroyed and the amount of such moneys exceed the written down value of such building, machinery or
plant, so much of the excess as does not exceed the difference between the original cost and the written down value less the
scrap value shall be deemed to be the income of the Assessee for that income year classifiable under the head "Income from
Business or Profession".
Example -

Sec. 19(20)

Where an asset representing expenditure of a capital nature on scientific research within the meaning of section 29 (1) (xx) is
disposed of during any income year, so much of the sale proceeds as does not exceed the amount of the expenditure allowed
under the said clause shall be deemed to be the income of the Assessee for that income year classifiable under the head
"Income from Business or Profession". (See the two explanations attached to the Section 19(20) in ITO, 1984)
Example -

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Page 24 of 43

Sec. 19(23)

Where during any income year an Assessee, being an exporter of garments, transfers to any person, the export quota or any
art thereof allotted to him by the Government, such portion of the export value of the garments exportable against the quota
o transferred as may be prescribed for this purpose shall be deemed to be the income of the Assessee for that income year,
classifiable under the head "Income from Business or Profession"
Example -

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Page 25 of 43

CORPORATE TAX RATE


Types of
Companies
Publicly traded
company

Heads/sources of Income

Business income/other income


(a) If Dividend is declared by less than 10% or failure t pay
dividend within 6 months
(b) If Dividend is declared by more than 30% (as per Finance
Act - 2014,) the assessee-company will get 10% rebate on tax
liability
(c) Newly listed companies in case of transferring 20% of
paid-up capital to share market through IPO

Tax Rate for Assessment Year


2013-14

2014-15

27.5%
37.5%

27.5%
35%

24.75%

24.75%

24.75%

24.75%

37.5%

35%

Non-publicly
traded
company*

Business income/other income

Bank,
Insurance,
Financial
institutions
Merchant Bank

Business income/other income

42.5%

42.5%

Business income/other income

37.5%

37.5%

Cigarette
manufacturing
company

Business income
/other income

For publicly traded company

40%

40%

Other than publicly traded company

45%

45%

Mobile phone
company

Business income
/other income

For publicly traded company


Other than publicly traded company

40%
45%

40%
45%

For any type of


company

(1) Capital Gain (as per 2nd schedule)


(2) Capital Gain from sale of shares of listed companies

15%

15%
10%

*(including non-resident company)

Ref: 53O and 82C(sss) [as per Finance Act-2014]

(3) Dividend income

10%
Ref: SRO-269-Law/IT/10

20%

20%

Additional tax
(u/s 16B)

If a listed company, other than a bank and insurance company, has not issued, declared or
distributed dividend or bonus share equivalent to at least 15% of its paid-up capital within 6
months immediately following any income year, the company shall be charged additional tax @
5% on the undistributed profit (accumulated profit + free reserve)

Excess profit
tax (u/s 16C)

If any bank show profit exceeding 50% of the aggregate sum of capital and reserve, the
company (the banking company), in addition to tax payable under the ITO, 1984, shall have to pay
an excess profit tax for that year @ 15% on such excess profit

Minimum tax
(u/s 16CCC)

Minimum tax @ 0.30% on gross receipt is to be paid irrespective of profit or loss.

Farid Mohammad Nasir


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Page 26 of 43

6. Capital Gains:
Related References:
Sections - 31 & 32
2(15) - Capital Asset
2(30) - Fair Market Value
2(66) - Transfer
16(3)ii - Charge of tax on Capital Gains
53M, 53N & 53O
Schedule: 2nd Schedule - Para 2
6th Schedule-Para 18 & 43
Rule - 42
SROs - SRO No. 217-Law/IT/2014
Capital Gains arise from the transfer of capital assets
Definition of Capital Assets:
Capital asset means property of any kind held by an Assessee, whether or not connected with his business
or profession, but does not include(a) any stock-in-trade (not being stocks and shares), consumable stores or raw materials held for the
purposes of his business or profession; and
Example: Any gain arising from selling consumable stores will be included in the head Income
from Other Sources
(b) personal effects, that is to say, movable property (including wearing apparel, jewellery, furniture,
fixture, equipment and vehicles), which are held exclusively for personal use by, and are not used
for purposes of the business or profession of the Assessee or any member of his family dependent
on him;
Example: (i) Any gain arising from selling the assessees personal car will not be included in the
head Capital Gains as well as Total Income.
(ii) Any gain arising from the sale of assessees house or land will be included in the
head Capital Gains"
Characteristics of Capital Gains:
(i)
The Capital Asset has to be transferred.
(ii)
Income under this head has to be recognized in the income year in which the transfer took place.
SECTION-31 says:
Tax shall be payable by an assessee under the head "Capital Gains" in respect of any profits and gains
arising from the transfer of a capital asset and such profits and gains shall be deemed to be the income of
the income year in which the transfer took place
CONPUTATION OF CAPITAL GAINS as per Section-32:
(1) The income under the head "Capital gains" shall be computed after making the following deduction from the
full value of the consideration received or accruing from the transfer of the capital asset or the fair market value
thereof, whichever is higher, namely:-

Allowable deductions/Admissible Expenses


#

Payment/Account head /At the account head

01

Any expenditure

Sec. 32(1)a

02

Cost of acquisition of the capital asset

Sec. 32(1)b

03

Cost of acquisition of the capital asset:


where it was acquired by the assessee
by purchase

Sec. 32(2)i

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Reference

Purposes of expenses / Limit for Admissible Expenses


Any expenditure incurred solely in connection with the transfer of
the capital asset
Any capital expenditure incurred for any improvements thereto
but excluding any expenditure in respect of which any allowance
is admissible under any provisions of Sections 23, 29 and 34
The actual cost of acquisition

Page 27 of 43

04

Cost of acquisition of the capital asset:


where it became the property of the
assessee:
(cc) under a deed of gift, bequest or will;
or
(ccc) under a transfer on a recoverable
or irrecoverable trust; or
(d) on any distribution of capital assets
on the liquidation of a company; or
(e) on any distribution of capital assets
on the dissolution of a firm or other
association of persons or the partition of a
Hindu undivided family;

Sec. 32(2)ii

The actual cost of acquisition to the previous owner of the capital


asset as reduced by the amount of depreciation, if any, allowed to
the previous owner;
and where the actual acquisition to the previous owner cannot be
ascertained, the fair market value at that date on which the capital
asset became the property of the previous owner
Provided that where the capital asset is an asset in respect
of which the assessee has obtained depreciation allowance in any
year, the cost of acquisition of the capital asset to the assessee shall
be its written down value increased or diminished, as the case may
be, by any adjustment made under section 19(16) or (17) or section
27 (1) (j) or Section 29(1) (xi)
Provided further that where the capital asset became the
property of the assessee by succession, inheritance or devolution, the
actual cost of acquisition of the capital asset to the assessee shall be
the fair market value of the property prevailing at the time the
assessee became the owner of such property.

(See the Clauses 3, 4 of Section 32)

Non-assessable Capital Gain


#

01

Source of Capital Gain

Capital gain arising from the transfer of

Reference
Sec. 32(5)

Capital asset used for the purpose of the


business

02

Capital gain arising from the transfer of

Sec. 32(7)

Government securities

03

Capital gain arising from the transfer of


Buildings and Land to a new company

Sec. 32(10)

04

Capital gain of a firm arising from the


transfer of its capital asset to a new

Sec. 32(11)

company

05

06

Capital gain arising from the trading of


securities list with any stock exchanges
by general shareholders
Capital gain arising from the transfer of a
Power Generation Company

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SRO No. 217Law/IT/2014 dt.


18 Aug 2014
SRO No. 188Law/IT/2009 dt.
01 July 2009
&
SRO No. 235Law/IT/2011 dt.
06 July 2011

Particulars
If the capital gains, arising out of transfer of capital assets used for
in the business or profession, are used fully or in part to purchase
a new capital asset within a period of one year before or after the
date of transfer and id the assessment for rolling over the gain on
(See this Clause if not clear)
new asset.
Notwithstanding anything contained in this section or section 31,
where a capital gain arises from the transfer of a capital asset
being Government securities, then no tax shall be charged under
this section.
Notwithstanding anything contained in this section or section 31,
where a capital gain arises from the transfer of capital asset
being buildings or lands to a new company registered under
7[the Companies Act, 1913 (VII of 1913) or Kvvbx AvBb, 1994
(1994 mbi 18 bs AvBb)], for setting up of an industry, and if the
whole amount of capital gain is invested in the equity of the said
company, then the capital gain shall not be charged to tax as
income of the year in which the transfer took place.
Notwithstanding anything contained in this section or section 31,
where a capital gain arises from the transfer of capital asset of a
firm to a new company registered under the Companies Act, 1913
(VII of 1913) or Kvvbx AvBb, 1994 (1994 mbi 18 bs AvBb), and if
the whole amount of the capital gain is invested in the equity of
the said company by the partners of the said firm, then the capital
gain shall not be charged to tax as income of the year in which
the transfer took place.
The income earned from trading of securities, listed with any
stock exchanges and approved by the BSEC, by all individual
(general) shareholder-assessees is exempted from tax.
Capital gain arising from the transfer of a Power Generation
Company provided that the company began its commercial
production within 30 June 2013

Page 28 of 43

Capital Gain to different


assessees
Tax on capital gain

TAX RATE of CAPITAL GAINS


Particulars

Tax Rate
(Para-2, 2nd Schedule)

In case of a company

Capital Gain disposed in any year (Irrespective of 5 years provision)

In case of a person other


than a company

(i) Capital Asset disposed before 5 years:

The amount of capital gain will be included in total income and taxed
accordingly at regular rate. If average tax exceeds 15%, then Capital
Gain separately will be taxed @
If average doesnt exceed 15%, then Capital Gain will be taxed @

15%

15%
Average Rate

(ii) Capital Asset disposed after 5 years

15%

Special Tax Rates on income earned from selling of Stocks & Shares: (SRO No. 217-Law/IT/2014 dt. 18 Aug 2014)
(a.1) Sponsor Shareholders Any gain earned from the transaction of securities of Bank, Financial
5%
Institution, Merchant Bank, Insurance, Leasing Company, Portfolio
or Shareholder Directors
(Individual Assessee)

( a.2) Any shareholder who


holds more than 10% shares
of paid-up capital of a listed
company (Individual Assessee)
(b) Other Shareholders

Management Company, Stock Dealer Company or Stock Broker Company


Any income earned from trading of shares/securities by a any Shareholder
[excluding the Sponsor Shareholders / Director Shareholders mentioned in
a.1 ] having 10% or more shares of the total paid-up capital of a company
listed with any exchange at any time during the income year

5%

The income from trading of securities of all other individual shareholderTax


assessees excluding those mentioned in (a.1) & ( a.2) is exempted from tax
(Individual Assessee)
exempted
Explanation: here the term Securities includes Stocks, Shares, Mutual Fund Unit, Bond, Debenture or other securities of
all companies or institutions, being approved by the BSEC which are transactable and listed with any stock exchanges,
excluding government securities.

Tax on income earned from Transfer of securities or mutual fund units by Sponsor Shareholders:
(as per ITO provisions)

Sponsor Shareholder of
Securities or Mutual Fund
Units of a company
.

(53M & 82C)

On the difference between Transfer Value and Cost of Acquisition of the


Securities or Mutual Fund Units at the time of transfer or declaration of
transfer or according consent to transfer of Securities or Mutual Fund Units
of a Sponsor-Shareholder or Director or Placement-holder of a company or
Sponsor or Placement-holder of a Mutual Fund Units listed with a stock
exchange.

5%

Tax on income earned from Transfer of share of Shareholder of Stock Exchanges:


.
(as per ITO provisions)
Any profits or gain arising from the transfer of share of a shareholder of
Shareholder of Stock
15%
stock exchange at the time of transfer or declaration of transfer or according
Exchanges
consent to transfer of share of Stock Exchange, whichever is earlier.
.
(53N & 82C)
Tax on income earned from Securities traded in any Stock Exchanges by Company-assessee:
.
(as per ITO provisions)
On the realized gains derived by a any company, as defined in Clause 20 of
Any Company or Firm
10%
Section 2 of this Ordinance, or firm before closing of a financial year.
.
(53O & 82C)

The items to be considered under the head Capital Gain for investment credit purpose have been discussed in
the section of Investment Credit / Allowance at the end part of this handbook.

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Page 29 of 43

7. Income from Other Sources:


Related References:
Sections - 33 & 34, 36
2(26)-Dividend; read with Rule-19(7); 2(38)-Interest;
2(31)-Fees for technical services;
2(56)-Royalty;
Section: 19(1)-19(5); 19(8)-19(13);
19(21), 19(21A), 19(21B*), 19(24) [*read with Section 82BB (5)]; 19(26)-19(28);
Schedule: 6th Schedule Part-A Para 11A & 22A
Rule - 19(7)

Scope of Income from Other Sources (Section 33):


The following income of an assessee shall be classified and computed under the head "Income from other sources",
namely:(a) dividend and interest;
(b) royalties and fees for technical services;
(c) income from letting of machinery, plants or furniture belonging to the assessee, and also of buildings
belonging to him if the letting of buildings is inseparable from the letting of the machinery, plant or
furniture;
(d) any income to which section 19 (1), (2), (3), (4), (5), (8), (9), (10), (11), (12), (13), (21), (21A), (21B),
(24), (26), (27) or (28) applies;
(e) any other income of any kind or from any source which is not classifiable under any of the other heads
specified in section 20.
As per Section 34

Allowable deductions/Admissible Expenses


#

Payment/Account head /At the account head

01

Interest expense

Reference
Sec. 34(1)

02

Any revenue expenditure

Sec. 34(2)

03

Obsolescence allowance
Repair & maintenance
Insurance premium

Sec. 34(3)

Purposes of expenses / Limit for Admissible Expenses


The amount of interest paid in respect of money borrowed for the
purpose of acquisition of shares of a company (against this interest
expense, the assessee wants to get dividend income from those shares)

Any revenue expenditure, but not personal expenditure of the


assessee, incurred solely for the purpose of making or earning
the relevant income.
Where the income is derived from letting on hire of machinery,
plant or furniture belonging to the assessee and also of building
belonging to him if the letting of the building is inseparable from
the letting of such machinery, plant or furniture, the same
allowances as are admissible under section 29(1) (vi), (vii) and
(xi) to an assessee in respect of income under the head "Income
from business or profession" subject to the same conditions and
limitations as if the income from such letting on hire were income
from business or profession:
Provided that the provisions of section 19(16) shall also be
applicable for the determination of any profits where the sale proceeds of
such machinery, plant, furniture or building exceeds the written down
value thereof.

Non-allowable deductions/Inadmissible Expenses


#

Payment/Account head /At the account head

Reference

01

Interest payable outside Bangladesh on


which tax has not been deducted

Sec. 34(4) a

02

Salaries if tax is not deducted

Sec. 34(4) b

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Reasons to be inadmissible / Limit for Admissible Expenses


Any interest chargeable under this Ordinance which is payable
outside Bangladesh on which tax has not been paid and from
which tax has not been deducted at source under section 56
Any payment which is chargeable under the head "Salaries" if tax
has not been paid thereon or deducted there from under section 50
Page 30 of 43

Deduction of tax from dividends:

Particulars

TDS
Rate

Exemption
Upto

Ref

Dividend income from public and private companys ordinary / preference shares is subject to the following
deductions in different categories
Non-resident foreigner (NRF):
th
If shareholder is a company
20% Tk. 20,000 Sec. 54(1)(a) (i) & 6 Sch. Part-A, Para-11A
01
th
If shareholder is a person other than a company
30% Tk. 20,000 Sec. 54(1)(a) (ii) & 6 Sch. Part-A, Para-11A
02
Resident and non-resident Bangladeshi (Both RB & NRB):
th
If shareholder is a company
20% Tk. 20,000 Sec. 54(1)(b) (i) & 6 Sch. Part-A, Para-11A
03
th
If shareholder is a person other than a company; If TIN
10% Tk. 20,000 Sec. 54(1)(b) (ii) & 6 Sch. Part-A, Para-11A
04
If shareholder is a person other than a company; If no TIN 15% Tk. 20,000
Dividend from Mutual Fund/Unit Fund:
01 Dividend income from mutual fund/unit fund is also subject to deductions in the same manner as above but
exemption limit for Dividend income from mutual fund/unit fund is Tk. 25,0000 [Ref:6th Sch. Part-A, Para-22A]

Deduction of tax from other interests (which are not included in the head of Income from Interest on
Securities):
National Saving Instruments (Sanchaypatra), Development Bonds and (Post Office) Saving Bank A/c are
administered by Directorate of National Savings (DNS) under Internal Resources Division (IRD), Ministry of
Finance, Bangladesh. Such Saving Products, Development Bonds and Saving Bank A/c are as follows:

Particulars

TDS Rate

Ref

No. of
Products

Sanchaypatra (Maintained by Bank, Bureau & Post Office)

01
02
03

1. 5 Years Sanchaypatra
2. 3 Monthly Sanchaypatra
3. Pensioner Sanchaypatra

5%
5%
5%

04

4. Paribar Sanchaypatra

5%

52D

5%

52D (If Cumulative investment doesnt

52D
52D
52D (If Cumulative investment doesnt
exceed five lakh taka, NO TDS) / 82C

Development Bond(Maintained by Bank):


05

1. Wage Earners Development Bond

06
07
08

2. Bangladesh Prize Bond (Maintained also by Bureau & Post Office)


3. US Dollar Premium Bond
4. US Dollar Investment Bond

exceed five lakh taka, NO TDS) / 82C

20%
Tax Free
Tax Free

55 / 82C

10%
10%
Tax Free

53I
53I

(I didnt still find the reference)


(I didnt still find the reference)

Saving Bank (Maintained by Post Office):


1. Post Office Saving Bank:
09
10
11

I.

Post Office Savings Bank A/c - Ordinary A/c

II.
Post Office Savings Bank A/c - Fixed Deposit
2. Postal Life Insurance

[See Annexure I to have a clear idea about the effective Saving Instruments prevailing in BD]

Farid Mohammad Nasir


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(I didnt still find the reference)


Ref: Directorate of National Savings (DNS)

Page 31 of 43

Other Interest income generated from.:

Sources of Interest Income


01

02
03
04

TDS Rate

Interest income (or Profit from any bank run on Islamic


principles) on Savings Deposits / FDR from any
scheduled bank, co-operative bank, or bank run on Islamic
principles, or NBFI or any leasing company, or housing
finance company

10% if TIN,
but in case
of no TIN
15%

Interest on Non-Resident Foreign Currency Deposit A/c


Interest on DPS / Contributory Savings scheme run by a
scheduled bank and approved by the government
Interest on Bangladesh Industrial 10% Development Bond

Tax Free
Tax Free
10%

Ref
53F
Provided that no tax shall be deducted on
the interest or share of profit arising out of
any deposit pension scheme (DPS)
sponsored by the Govt. or by a Scheduled
Bank with prior approval of the Govt.
(53F2)

SRO No. 415-Law/82 dt. 13 Dec 1982


SRO No. 89-Law/IT/2003 dt. 02 April
2003
SRO No. 154-Law/99 dt 10 June 1999
& 82C (with reference to Section 53F):
Interest upto Tk. 25,000 exempted.
If the interest amount exceeds Tk.
25,000, 10% TDS is allowed on the
whole interest amount and to be
considered as the final payment of tax
as per Section 82C

TDS rate for other incomes under the head Income from Other Sources

Sources of Interest Income


01
02
03

TDS Rate

Ref

10%
10%
20%

52A(2) & 82C


52A(2) & 82C
19(13), 55 & 82C

Royalty [See Section 12(4)(2), 18(6) & 36)]


Fees for professional or technical services
Income from lottery etc.

Income under Section 19:


#

Ref

01

Sec. 19(1)

02

Sec. 19(2)

03

Sec. 19(3)

04

Sec. 19(4)

05

Sec. 19(5)

06

Sec. 19(8)

07

Sec. 19(9)

08

Sec.
19(10)

Goodwill money or compensation:

09

Sec.
19(11)

Benefit or advantage on account of cancellation of indebtedness:

10

Sec.
19(12)

Managing agency commission:

11

Sec.
19(13)

Winning from lotteries, crossword prizes etc:

12

Sec.
19(21)

Unpaid loan:

13

Sec.

Short description of the Section-19


Unexplained credits:
Example-

Unexplained investments:
Example-

Unexplained expenditure:
Example-

Unrecorded investments:
Example-

Unrecorded money, jewellary etc:


Example-

Purchase of assets at a lower price than the fair value:


Example-

Salami or premium for granting leases:


ExampleExampleExampleExampleExampleExample-

Loan or gift received under some circumstances:

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Page 32 of 43

19(21A)

Example-

14

Sec.
19(21B)

Transfer of initial share capital:

15

Sec.
19(24)

16

Sec.
19(26)

Loan taken by a company other than by a crossed cheque or by bank transfer:

17

Sec.
19(27)

Purchase or hire of car at a price exceeding 10% of paid up capital:

18

Sec.
19(28)

Loan or gift taken by an assessee other than by a crossed cheque or by bank transfer:

Example-

Received cash against issuing share capital by an unlisted company other than crossed cheque or bank
transfer:
ExampleExampleExampleExample-

Note: Examples will be added in the next Edition

Examples of some Income from Other sources

Sources of Income from Other Sources

as per the general tax practice

Amount received from any party other than the employer by virtue of his profession or service such as Directors fee;
Insurance commission;
Honorarium from writing articles in newspapers, magazines or journals;

Board meeting fee;


Remuneration as examiner and invigilator;
Income from Dividend;
Income received from vacant land adjacent to assessees house;
Royalty from mines;
Income from Ferry Ghat;
Income from Tuition;
Income from undeclared money, bribe or black money, if identified;
Income from agriculture received from abroad;
Income from underwriting commission for sale of shares and securities;
Income received from foreign govt. as salary or pension;
Income from non-resident husband/wife;
Income from patent/license;
Income from Television or Radio for participating in a program;
Non-agricultural income like sale of forest timber, sale of fruits, sale of honey, sale of fish (other than firm) etc;
Income from rent of boat;
Income from letting out household appliances like furniture or machineries;
Income from sub-letting a house property (like a room) by a tenant;
Casual income / irregular income;
Income from undisclosed sources;
Interest on securities issued by foreign governments;
Interest received on delayed refund;
Any other income not classified under any other heads;
(Ref: taken from the book of Shil, Masud & Alam)

Farid Mohammad Nasir


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Page 33 of 43

8. Exclusions from Total Income: (Sixth Schedule-Part A)


[Non-assessable/Tax Exempted Income]
Following are the tax-exempted income as per Part-A of the Sixth Schedule under Section 44(1):
#

01

02

03

Para-1(1)

Ref

Short Description
Income from property held
under Trust

Para-1A

(See the Sub-Para 2 & 3 to


be more clear about this)
Any service charge derived
from
Micro
Credit
operation of NGOs

Para-2

Contributions received by
the Religious or Charitable
Institutions

04

Para-3

Income of Local Govt.

05

Para-4

Income of Provident Fund


and Workers Participation
Fund

06

Para-5

Special Allowances

07

Para-6

08

Para-7

Income received by the


Trustees on behalf of
specified funds
Income of employees of
Foreign Missions

Para-8

09
10
11

Para-11a

12

Para-18

13

Para-19

14

Para-20

Para-14

Pension
Dividend
Income
of
newly
constructed house
Any share (part) of Capital
Gains of a partner of a firm
Income of a member of a
HUF

Particulars
(1) Any income derived from house property held under trust or other legal obligation
wholly for religious or charitable purposes, and in the case of house property so held in
part only for such purposes, the income applied, or finally set apart for application,
thereto.
Explanation- The provisions of this paragraph shall not apply in the case of a
non-government organization registered with NGO Affairs Bureau
Any service charge derived from operation of micro credit by a nongovernment
organization registered with NGO Affairs Bureau
Explanation- For the purpose of this paragraph, "service charge" means any financial
charge or interest or share of profit, called by whatever name, paid or payable by the loan
recipient for the amount borrowed under micro credit programme from the non-government
organization
Clarification- That means any other income other than service charge is subject to tax.

Any voluntary contributions received by a religious or charitable institution and


applicable solely to religious or charitable purposes
Provided that nothing contained in paragraph 1 or 2 shall operate to exempt from the
provisions of this Ordinance that part of the total income of a private religious trust which does
not ensure for the benefit of the public.
The income of a Local Government [ i.e. Union/Upazilla/Zilla Parishad, City Corporation
etc]
(1) Any income accruing to, or derived by, a Provident Fund to which the Provident
Fund Act, 1925 (XIX of 1925), applies. [PF for only govt. employees]

(2) Any income accruing to, or derived by, Workers Participation Fund established
under the Bangladesh Labour Act, 2006 (XLII of 2006), subject to any such
conditions and limits as may be prescribed.
Any special allowance, benefits or perquisite specifically granted to meet expenses
wholly and necessarily incurred in the performance of the duties of an office or
employment of profit [i.e.- Any special allowances received by any employees]
Any income received by the trustees on behalf of a recognized Provident Fund, an
Approved Superannuation Fund or Pension Fund and an Approved Gratuity Fund.
Any income received by the following persons:
(a) any ambassador, high commissioner, envoy, minister, charge d'affairs, commissioner,
counsellor, consul de carriere, secretary, adviser or attache of an embassy, high
commission, legation or commission of a foreign State, as remuneration from such State
for service in such capacity
(b) a trade commissioner or other official representative in Bangladesh of a foreign State as
his official salary, if the official salary of the corresponding officials, if any, of the
Government, resident for similar purposes in the country concerned, enjoy a similar
exemption in that country;
(c) a member of the staff of any of the officials referred to in clauses (a) and (b), provided
that he is not engaged in any business or profession or employment in BD

Any pension due to, or received by, an assessee


Income from dividend amounting to Tk. 20,000
Income from newly constructed residential house subject to stipulated conditions and
limits as prescribed in this paragraph [See this Para at ITO to know the details]
Any income received by an assessee in respect of any share of income out of the capital
gains on which tax has been paid by the firm of which the assessee is a partner
Any sum received by an assessee as a member of a Hindu Undivided Family where
such sum has been paid out of the income of the family [Bcoz a HUF is separately
assessed]

Gratuity

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Any income of an assessee representing payment received as gratuity [at retirement]

Page 34 of 43

15

Para-21

Any payment received from:

Any payment from:

-Provident Fund
-Recognized Provident Fund

(a) a provident fund to which the provident Funds Act, 1925 (XIX of 1925), applies; or
(b) a recognized provident fund, subject to any such conditions and limits as may be
prescribed; or
(c) an approved superannuation fund, subject to any such conditions and limits as may be
prescribed; or
(d) a workers participation fund established under the Bangladesh Labour Act, 2006 (XLII
of 2006), subject to any such conditions and limits as may be prescribed.

-Approved Superannuation Fund

-Workers Participation Fund

(at the time of retirement)

16

Para-22a

17

Para-24

18

Para-25

Interest on the balance in a


RPF

19

Para-26

Any amount received on


voluntary retirement

20

Para-27

Income
Hillman

of

21

Para-28

Income
business

from

Dividend from Mutual


Fund or Unit Fund
Interest
on
tax
free
government securities

[*SRO No. 384-Law/1982]

Income from dividend of a mutual fund or a unit fund up to Tk. 25,000


Any interest classifiable under the head "Interest on securities" receivable by an
assessee on any security of the Government, which is issued with the condition that
interest thereon shall not be liable to tax.
Any sum representing interest credited on the accumulated balance of an employee in a
recognized provident fund (RPF), as it does not exceed one-third of the salary of the
employee for the year concerned or, an interest at a 14.50%*t (whichever is less)
Any amount received by an employee of a Govt. organization, a local authority, or an
autonomous or semi-autonomous body including the units or enterprises controlled by
it, at the time of his voluntary retirement in accordance with any scheme approved by the
Govt

export

Notwithstanding anything contained in any order or regulation for the time being in
force, any income of an individual, being an indigenous Hillman of any of the hill
districts of Rangamati, Bandarban and Khagrachari, which has been derived solely from
economic activities undertaken within the said hill districts
An amount equal to 50% of the income of an assessee, other than a company not

(See the Paras Explanation)

registered in Bangladesh, derived from the business of export but it shall not apply in case of
an assessee, who is enjoying exemption of tax or reduction in rate of tax by any notification

indigenous

22

Para-29

Agricultural income

23

Para-32a

24

Para-33

Interest from Pensioners


Savings Certificate and
Wage Earners Bond
Income from IT business

Any income not exceeding Tk. 200,000 chargeable under the head Agricultural
Income of an assessee, being an individual, whose only source of income is
agriculture
Any sum or aggregate of sums received as interest from pensioners' savings certificate
or wage earners bond where the total accumulated investment at the end of the
relevant income year in such certificate or bond does not exceed Tk. 500,000
Any income derived from the business of software development or Nationwide
Telecommunication Transmission Network (NTTN) or Information Technology
Enabled Services (ITES) for the period from 01 July 2008 to 30 June 2019:
Provided that the person shall file income tax return in accordance with the
provisions of section 75(2) (c) of the Ordinance.
Explanation : Information Technology Enabled Services (ITES) means- Digital Content
Development and Management, Animation (both 2D and 3D), Geographic Information Services
(GIS), IT Support and Software Maintenance Services, Web Site Services, Business Process
Outsourcing, Data entry, Data Processing, Call Centre, Graphics Design (digital service), Search
Engine Optimization, Web Listing, E-commerce and Online Shopping, document conversion,
imaging and archiving

There is a link between Para-34 and Para-42

Para-34

See the Para-42

25

Income from
poultry etc.

fisheries,

Subject to the conditions made hereunder any income from fisheries, poultry,
production of seeds, marketing of locally produced seeds, cattle farming, dairy farming,
horticulture, frog faming, mushroom farming, floriculture, sericulture for the period
from 01 July 2008 to 30 June 2011(a) if such income exceeds Tk. 150,000, the person shall invest an amount not less than
10% of the said income in the purchase of bond or securities issued by the Government
within six months from the end of the income year and hold such bond or securities till
maturity of such bond or securities;
(b) the person shall file return in accordance with the provisions of section 75(2)(c) of the
Ordinance; and
(c) no such income shall be transferred within five years from the end of the income year:

(Have an sharp eye on FA-2015


whether the SRO No. 208Law/IT/2013 is extended or not)

Farid Mohammad Nasir


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Provided that income from fisheries as mentioned in this paragraph shall not apply to a
company as defined in clause (20) of section (2) of this Ordinance
Income from fisheries poultry etc was fully tax-exempted upto 30 June 2011. From then
tax on these types of income is at the rate of 5% upto 30 June 2013 (SRO No. 238Law/IT/2011) and now at the rate of 3% upto 30 June 2015 (SRO No. 208Law/IT/2013)
Page 35 of 43

26

Para-35

27

Para-36

28

Para-37

Income of any private


agricultural College/University

29

Para-38

Income of new building


with specific characteristics

30

Para-39

Income of SMEs

Income from export of


handicrafts
Tax paid by the Govt. on
behalf of the petroleum
company

Any income derived from the export of handicrafts for the period from 01July 2008 to
30 June 2015
Any amount paid by the Government as tax on behalf of a petroleum exploration
company engaged in exploration of petroleum products in Bangladesh under Production
Sharing Contract (PSC) with the Government of Bangladesh
Income of any private Agricultural College or private Agricultural University derived
from agricultural educational activities
Any income derived from any building situated in any area of Bangladesh, not less than
five storied having at least ten flats, constructed at any time between 01 July 2009 and 30
June 2014 (both days inclusive), for 10 years from the date of completion of construction
of the building, except the building situated in any areas of City Corporation
Cantonment Board, Tongi Upazila, Narayanganj Paurashava, Gazipur Paurashava and
any Paurashava under Dhaka district
Income derived from any Small and Medium Enterprise (SME) engaged in production
of any goods and having an annual turnover of not more than Tk. 30,00,000
Provided that person shall file income tax return in accordance with the provisions of
section 75(2)(c) of the Ordinance

31

Para-40

Income from Zero Coupon


Bond (ZCB)

32

Para-42

Income
farming

33

Para-43

Income from Capital gains


of a Non-resident assessee

from

poultry

Any income derived from Zero Coupon Bond received by a person other than Bank,
Insurance or any Financial Institution, subject to the following conditions:
(a) that the Zero Coupon Bond is issued by Bank, Insurance or any Financial
Institution with prior approval of Bangladesh Bank and Securities Exchange
Commission.
(b) that the Zero Coupon Bond is issued by institution other than Bank, Insurance or
any Financial Institution with prior approval of Securities Exchange Commission.
Any income from poultry farming for the period from 01 July 2011 to 30 June 2015
subject to the following conditions :
(a) if such income exceeds taka 1,50,000/- an amount not less than 10% of the said
income shall be invested in the purchase of bond or securities issued by the
Government within six months from the end of the income year;
(b) the person shall file return of his income in accordance with the provisions of
clause (c) of sub-section (2) of section 75 of this Ordinance; and
(c) no such income shall be transferred by way of gift or loan within five years from
the end of the income year
Any profits and gains under the head "Capital Gains" arising from the transfer of stocks
or Shares of a public company as defined in Kvvbx AvBb, 1994 (1994 mbi 18 bs AvBb)
listed in any stock exchange in Bangladesh of an assessee being a non-resident subject to
the condition that such assessee is entitled to similar exemption in the country in which he is
a resident (This provision is basically for Non-resident assessee)

34

Para-44

Income from Cinema Hall


or Cineplex

(See this Para for the Rate of


Exemption in different years)

35

Para-45

Income
of
industrial
undertaking engaged in the
production of rice brain oil

(See this Para for the Rate of


Exemption in different years)

36

Para-46

Income from production of


corn/maize or sugar cane

Farid Mohammad Nasir


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An amount of income derived from cinema hall or Cineplex which starts commercial
exhibition between 01 July 2012 and 30 June 2019 for the period and at the rate
specified below: if it is set-up in(i) Dhaka or Chittagong divisions (excluding Rangamati, Bandarban and Khagrachari
districts) for a period of five years beginning with the month of commencement
of commercial exhibition:-(ii) Rajshahi, Khulna, Sylhet Rangpur and Barisal divisions and Rangamati, Bandarban
and Khagrachari districts for a period of ten years beginning with the month of
commencement of commercial exhibition:-An amount of income derived by an industrial undertaking engaged in the production of
rice bran oil and commencing commercial production by 30 June 2019 and at the rate
specified below if the said undertaking is set-up in(i) Dhaka or Chittagong divisions (excluding city corporation area and Rangamati,
Bandarban and Khagrachari districts) for a period of five years beginning with the
month of commencement of commercial production:-(ii) Rajshahi, Khulna, Sylhet Rangpur and Barisal divisions (excluding city corporation
area) and Rangamati, Bandarban and Khagrachari districts for a period of ten years
beginning with the month of commencement of commercial exhibition:-An amount equal to fifty percent of the income of an assessee derived from the
production of corn/maize or sugar beet

Page 36 of 43

37

Para-47

Income of an assessee
donated to any fund
established by or under
Prime Ministers Education
Assistance Fund

38

Para-48

39

Para-49

40

Para-50

41

Para-51

Income earned abroad is


brought to BD through
proper channel
Income donated to any
Girls school or college
Income donated to any
Technical and Vocational
Training Institute
Income donated to any
National Level research
Institute

Income of an assessee donated in an income year to any fund established by or under


the provisions of the Trust of Prime Minister's Education Assistance Act, 2012 ( Act
No. 15 of 2012) subject to a maximum of(a) twenty percent (20%) of income of a company or taka eight crore, whichever is
less;
(b) twenty percent (20%) of income of an assessee other than a company or one crore
taka , whichever is less
Any income earned in abroad by an individual assessee being a Bangladeshi citizen and
brought any such income into Bangladesh as per existing laws applicable in respect of
foreign remittance
Income of an assessee donated in an income year by a crossed cheque to any girls' school
or girls' college approved by the Ministry of Education of the government.
Income of an assessee donated in an income year by a crossed cheque to any Technical
and Vocational Training Institute approved by the Ministry of Education of the
government.
Income of an assessee donated in an income year by a crossed cheque to any national
level institution engaged in the Research & Development (R&D) of agriculture, science,
technology and industrial development.

Exempted Income by SRO:


Particulars

SRO

Date

01

Contribution to Presidents Fund

SRO No. 254-Law/1985

June 10, 1985

02

Contribution to Prime Ministers Fund

SRO No. 125-Law/1991

May 05, 1991

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Page 37 of 43

9. Exemptions and Allowances for Assessees Being


Resident and Non-resident Bangladeshi: (Sixth Schedule-Part B)
[Allowance/Rebate for Investment Credit]
Following are the items to be considered for Investment Credit purpose @ 15% under Section 44(2)
#

Ref

Short Description
Life Insurance Premium paid

01

Para-1

02

Para-2

Life Insurance Premium paid a


HUF

03

Para-3

Deduction from salary of Govt.


employee for deferred annuity

04

Para-4

Contribution to Provident Fund

05

Para-5

Employers and Employees


contributions to a RPF

06

Para-6

Contribution
to
Approved
Superannuation Fund

07

Para-10

Investment
in
Savings
Certificates, Unit Fund/Mutual
Fund, any Govt. Securities
and/or Shares of Investment
Companies

Particulars
Any sum paid by an assessee, being an individual, to effect an insurance, or a
contract for deferred annuity, on the life of the assessee or on the life of a wife or
husband or a minor child of the assessee, subject to the limit of such payment, in the
case of insurance, to 10% of the actual sum assured (excluding bonus or other
benefits.)
Any sum paid by an assessee, being a Hindu Undivided Family (HUF), to effect an
insurance on the life of any male member of the family or the wife of any such
member:
Provided that no exemption under this paragraph or paragraph (1) shall
be allowed unless the premium and the proceeds of the life insurance policy or the
contract for deferred annuity, as the case may be, are both payable in Bangladesh.
Any sum deducted from salary payable by or on behalf of the Govt. to any
individual, being a sum deducted in accordance with the conditions of his service
for the purpose of securing to him a deferred annuity or of making provisions for his
wife or children, provided that the sum so deducted shall not exceed one-fifth of the
salary
Any sum paid by the assessee as a contribution to any provident fund to which
Provident Fund Act, 1925 (XIX of 1925), applies.
Clarification- This Para is for the Govt. employees and contributions of
both employees & employers will be considered for investment credit purpose.
Any sum representing the assessee's and the employer's contribution to a
Recognised Provident Fund (RPF) in which the assessee is a participant subject to
the limits laid down in Part B of the First Schedule.
Clarification- This Para is for the Non-Govt. employees i.e. Company,
NGO, Association etc.
Any sum paid by the assessee as ordinary annual contribution to Approved
Superannuation Fund (ASF) in which the assessee is a participant
Clarification- Only the employees contribution
(1) Subject to the maximum laid down in sub-paragraph (2), any sum invested by an
assessee, not being a company (only individual assessees will get this benefit), in the
purchase of the following, namely:
(a) such savings certificates or instruments as the Board may specify in this Behalf
[See the SRO No. 170-Law/IT/2006; & also see the Annexure I to check
what types of Sanchaypatra are considered for investment credit purpose ]
(b) unit certificates and mutual fund certificates issued by any financial institution
or the Investment Corporation of Bangladesh and its subsidiaries
(c) such Government securities (including Development loans or Bonds) as the
Board may specify in this behalf ; and
(d) shares of such investment companies as the Board may specify in this behalf.
Explanation-For the purpose of clause (d) "investment companies" means
companies engaged principally or wholly in buying and selling securities of other
companies and includes a company eighty per cent of whose paid up capital is
employed at any one time as investment in other companies, but does not include a
bank or an insurance company or a corporation which is a member of stock
exchange.
(2) Where any certificate, security or share in respect of which any credit in tax has
been allowed to the assessee earlier, is disposed of by sale, transfer or in any other
manner within five years from the date of its purchase or before the maturity, then the
amount of tax payable by the assessee under the other provisions of this Ordinance
in respect of the income year in which such certificate was so disposed of, shall be
increased by an amount equal to the credit in tax allowed to the assessee in respect

Farid Mohammad Nasir


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Page 38 of 43

08

Para-11

09

Para-11a

10

Para-11b

11

Para-13

12

Para-17

Contribution to a Benevolent
Fund and a Group Insurance
Fund

13

Para-21

Contribution to Aga
Development Fund

14

Para-22

Contribution to Philanthropic
or Educational Institution

15

Para-23

16

Para-24

17

Para-25

18

Para-27

Investment in Computer /
Laptop
Donation to a National Level
Institution set up in the memory
of Liberation War
Donation to a National Level
Institution set up in the memory
of Father of the Nation
Investment in Govt. Treasury
Bond

19

Para-28

Contribution to Deposit Pension


Scheme (DPS)
Donation to a Charitable
Hospital
Donation to an Organization set
up for the welfare of retarded
people
Donation to Zakat Fund

Khan

Invested in secondary shares of


listed companies

of such certificate (hereinafter referred to as the "said amount") and the sum so
arrived at or where no tax is payable by the assessee under the other provisions of
this Ordinance in respect of that income year, the said amount shall be deemed to be
the tax payable in respect of that income year and other provisions of this Ordinance
shall, so far as may be, apply accordingly
(See the Sub-para (2) of Para 10)
An amount not exceeding Tk. 60,000 by an individual in any deposit pension
scheme sponsored by a scheduled bank or a financial institution
Any sum paid as donation by an assessee to a charitable hospital which is
established outside the city corporation area and one year before such payment and
is approved by the Board for this purpose
Any sum paid as donation by an assessee to an organization set up for the welfare
of retarded people, established at least one year before such payment and is
approved by the Social Welfare Department and by the Board for this purpose
Any sum paid by an assessee as Zakat to the Zakat Fund or as donation or
contribution to a charitable fund established by or under the Zakat Fund Ordinance,
1982 (Act No. XI of 1982)
Any sum paid by an assessee, in order to make provision for his wife, children or
other persons dependent on him, to a benevolent fund or any premium paid under a
group insurance scheme if such fund or the scheme is approved by the Board for
this purpose.
Any sum paid by an assessee as donation to any socio-economic or cultural
development institution established in Bangladesh by the Aga Khan Development
Network
Any sum paid by an assessee as donation to a philanthropic or educational
institution which is approved by the Government for this purpose
[See the Annexure II to check what types of donations (donations in
different areas) are allowable for investment credit purpose]
N.B. Donations to any Mosque, Madrasa or any School, College or
University will not randomly be allowable if donations to specific areas are not
approved by the Govt./NBR
Any sum invested in the purchase of one computer or one laptop by an individual
assessee (?)
Any sum paid by an assessee as donation to a national level institution set up in
memory of the liberation war
Any sum paid by an assessee as donation to a national level institution set up in
memory of Father of the Nation
Any sum invested by an assessee, being an individual, in the acquisition, of any
stocks or shares of a company, mutual fund or debenture listed with any stock
exchange
Any sum invested by an assessee, being an individual, in the purchase of
Bangladesh Government Treasury Bond

Income from Association of Persons (AOP) as per Para-15, Part B of Sixth Schedule & Income from a Firm as per
Para-16, Part B of Sixth Schedule are tax-exempted income but included in Total Income for rate purpose. The
assessee will get a rebate of on tax at the average rate for such income.
Investment credit allowed by SRO:
Particulars

#
01

Investment in secondary shares

SRO
SRO No. 60-Law/Income Tax/2012

Date
Feb 02, 2012

See the Para-27 of 6th Schedule Part B for shares purchase through IPO

For More Tax exempted incomes see Annexure-III

Farid Mohammad Nasir


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Page 39 of 43

Annexure I
Interest income from the above mentioned Sanchaypatra, Bonds or Saving A/c will be included in the head
Income from Other Sources not in the head Income from Interest on Securities
Ref: See the SRO No. 170-Law/IT/2006

Ten types of Sanchaypatra (Saving Instruments) have been introduced in Bangladesh till date. Those are:
01. Bangladesh Saving Certificate ( 10 Years)
02. Defense Saving Certificate
03. 5-Years Bangladesh Saving Certificate
04. Bonus Saving Certificate
05. 3-Years Saving Certificate
06. 6-Monthly Profit Basis Saving Certificate
07. Family Saving Certificate (Paribar Sanchaypatra)
08. 3-Monthly Profit Basis Saving Certificate
09. Deposits Saving Certificate
10. Pensioner Saving Certificate
Among those only four types of Sanchaypatra are in effect now. Those are:
01. 5-Years Bangladesh Saving Certificate
02. Family Saving Certificate (Paribar Sanchaypatra)
03. 3-Monthly Profit Basis Saving Certificate
04. Pensioner Saving Certificate

Note: The red marks Sanchaypatra is not presently in effect in Bangladesh

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Page 40 of 43

Annexure II
#
01
02
03

04

05
06

07
08

09
10

List of areas of donations which are allowable for investment credit purpose is as follows. If any assessee donates
any sum, then the assessee will get a rebate of 15% on the donated amount (Para-22 of 6th Schedule Part B)
Area of donations
Date
SRO
Contribution to:
Dhaka Community Hospital
Contribution to:
Ahsania Mission Hospital
Contribution to:
i. Sylhet Diabetic Society
ii. Islamia Eye Hospital & M. A. Ispahani
Institute of Ophthalmology
iii. Kidney Foundation
iv. National Heart Foundation of BD
Contribution to:
International Centre for Diarrhoea Disease Research,
Bangladesh (ICDDR,B)
Contribution to:
Centre for the Rehabilitation of the Paralyzed (CRP)
Contribution to maximum upto 5 lac:
1. Institutions administered by Child Health
Foundation, Bangladesh
i. Child Health Foundation Hospital, Mirpur, Dhk
ii. Child Hospital, Jessore
iii. Hospital for Sick Children, Satkhira
2. Diganta Memorial Cancer Hospital, Dhaka
3. The ENT and Head-Neck Cancer Foundation of BD
4. National Disabled Development Foundation, Mirpur
Contribution to:
Asiatic Society of Bangladesh, Ramna, Dhaka
Contribution to:
1. Jatir Janak Bangobondhu Sheikh Mujibur Rahman
Memorial Trust, Dhaka
2. Rafatullah Community Hospital (RCH),
Thengamara, Bogra
3. Salvation For the Deserving (SFD), Manikgang
Contribution to:
Liberation War Museum, Segunbagicha
Contribution to:
Society for Assistance to Hearing Impaired Children
(SAHIC)

Farid Mohammad Nasir


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SRO No. 92-Law/2008

April 10, 20008

SRO No. 202-Law/Income Tax/2005

July 06, 2005

SRO No. 109-Law/2006

June 07, 2006

SRO No. 232-Law/2006

Sep 24, 2006

SRO No. 42-Law/Income Tax/2008

Feb 24, 2008

SRO No. 316-Law/2008

Nov 18, 2008

SRO No. 32-Law/2009

March 09, 2009

SRO No. 33-Law/2009

March 09, 2009

SRO No. 116-Law/2010

March 15, 2010

SRO No. 11-Law/2011

Jan 10, 2011

Page 41 of 43

Annexure III
Tax exempted incomes as per SROs (Date-wise)
#
01

Date

SRO
Brief description of the SROs
Scholarships granted to meet the cost of educations (Para-4)
Rations received by Armed Forces or territorial force (Para-13)
(SRO

178 & 156 is the amendment of SRO 454)

31 Dec 1980

SRO No. 454-Law/1980


SRO No. 178-Law/Income Tax/2002
SRO No. 156-Law/Income Tax/2007

03 March 2002
28 July 2007

Monetary award granted by the Cultural Heritage Fund


for outstanding contribution in the field of Art and
Culture
Interest accrued on a non-resident currency account
Income of Welfare Fund established for the welfare of
the Tea Garden Workers
Income of Stock Exchanges
Tax on tax amount paid by the paid by the employer to
employee
Income of the District Sports Association, Divisional
Sports Association, National Sports Association and
National Sports Council (NSC)
Monetary award granted to Govt. employees by the
Govt. for outstanding contribution in the of official
duties
Interest on DPS of bank approved by the Govt.
Income of a new hospital for 5 years

SRO No. 39-Law/1982

19 Jan 1982

SRO No. 415-Law/1982


SRO No. 239-Law/1987

13 Dec 1982
29 Sep 1987

SRO No. 102-Law/1996


SRO No. 192-Law/1999

18 June 1996
01 July 1999

SRO No. 298-Law/Income Tax/2000

28 Sep 2000

SRO No. 245-Law/2001

29 August 2001

SRO No. 89-Law/IT/2003


SRO No. 204-Law/Income Tax/2005

02 Feb 2003
06 July 2005

11

Income of Army Welfare Trust established for the welfare of


the ex-army personnel, their children and dependents

SRO No. 23-Law/2007

22 Feb 2007

12

Income of private power generation company for 15


years

SRO No. 188-Law/Income Tax/2009

01 July 2009
06 July 2011
01 July 2013
01 July 2013
01 July 2010

02

03
04
05
06
07

08

09
10

13
14
15
16

SRO No. 235-Law/Income Tax/2011


SRO No. 211-Law/Income Tax/2013
SRO No. 213-Law/Income Tax/2013

SRO No. 268-Law/Income Tax/2010


Income of a public university
10 Nov 2011
SRO No. 333-Law/Income Tax/2011
Income of Mutual Fund (itself)
SRO No. 219-Law/Income Tax/2012
27 June 2012
Income of industries set up in EPZ
01 July 2013
SRO No. 210-Law/Income Tax/2013
Income (other than Income from Interest & Income from
Business) of Chamber of Industry & Commerce,
Commerce Organization, Federation of Industry or
Commerce approved
The list is not an inclusive one. There are many tax-exempted incomes but the important ones are enumerated here.

Annexure IV
Non-assessable incomes some of which are enumerated below:
1. Gift received on Birthday or Marriage Anniversary
2. Gift against affection or love
3. Receipt of money taken from the streets with no claim
4. Honorarium of Jury
5. Reward of prize Bond or Gift Cheque
Example of some assessable casual and non-recurring income:
1. Income from lottery, cross-word or horse-race completion
2. Honorarium received as a middleman to settle a dispute
3. Reward from the employer for extra-ordinary effort
4. Profit of sale of goods through auction
5. Remuneration of professional actors/actresses, players, dancers, musicians, singers etc
6. Reward received by a lawyer from the client for winning a case

Farid Mohammad Nasir


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Page 42 of 43

Bibliography
1.
2.
3.
4.
5.
6.
7.
8.

Income Tax Ordinance 1984 as amended upto June 2014


Income Tax Rues 1984 as amended upto June 2014
Finance Acts of previous years enacted by the Parliament
SROs relating to Income Tax, issued time to time
Paripatra of previous years
Taxation I Manual of ICAB
Taxation II Manual of ICAB
Bangladesh Income Tax Theory & Practice - Shil, Masud and Alam

Last but not the least


It is my great pleasure to have been at the end of the Handbook of Income Tax (HIT) after a rigorous effort and a
long time. Once again is replied that this handbook (Independence Edition) is the first edition in the form as HIT.
So some errors can be found in this handbook and some spellings can also be wrong as it a paper of near about
twenty thousand words which have been typed solely by me. In this handbook I have tried to support all the issues
(items) with reference to substantiate the Handbook. Despite that you must have noticed that some issues in the
portion of Income from Salaries cannot be supported with references, and some matters throughout the Handbook
have been marked RED as those items could not be substantially supported with references as per ITO, ITR or
SROs. In the next edition of the HIT, I will try to substantiate all the missing issues/items to support with reference.
In this regard I seek your kind and sincere response/suggestion/reference to make this Handbook more valuable,
more readable and most usable for the readers and users of the Handbook.
Wish you all the very best.

Thanking you

Farid Mohammad Nasir


Date: 17 April 2015

Happy Taxing

Farid Mohammad Nasir


farid.pq@gmail.com
www.fb.com/farid.pq

Page 43 of 43