Name: Raiyan Rabbani

ID: 17241087
Section: B

Lecture- 22

Admissible Expenses of Income from Interest on Securities:

In computing the income under the head “Income from interest on Securities” the following
deductions from respective interests are allowable [Section-23]:
Bank commission/Charges for collecting interest: Bank commission or charges which have
been deducted by the bank for collecting interest will be an allowable expense. If bank
commission is charged for purchasing securities, it will be considered as a capital expenditure
and hence not to be considered as an allowable expense.
Interest on borrowed capital for investment in securities: Any interest on money borrowed for the
purpose of investment in the securities by the assessed will be an allowable expense.
It should also be noted that no deduction will be allowed in respect of interest payable outside
Bangladesh on which tax has not been paid or deducted.

TAX EXEMPTION ON INTEREST ON SECURITIES:

Interest on less tax government securities are exempted (full) up to the following extent as per
ITO, 1984:
Amount of the interest on tax-free government securities
Amount of interest/income from zero-coupon bond.
Cum-Interest and Ex-Interest Transactions:
Generally, interest on securities is given on a particular day at regular intervals. When interest on
securities is received, it is added with the total income for taxation purpose. Sometimes to avoid
tax on interest on securities some people sells or transfers their securities including interest to
other people just before the due date. This type of interest is known as cum interest transaction.
Since securities are capital asset, no tax is given on the disposal value of the securities.
Deduction of Tax at Source from interest on securities:
According to section 51(1) of the ITO, 1984, tax is deducted at source from interest on
government securities or other securities approved by government e.g. debentures. No tax is
deducted at source from interest on tax-free government securities and income received from
zero coupon bond by any person other than banks, insurance and financial institutions. In
Bangladesh, the rate of tax deducted at source from interest on securities is 5%.
Items Included in Investment Allowance:
Purchase of debentures or debenture stocks or zero-coupon bond from stock exchange through
IPO or secondary purchase.
Purchase of government securities including development loans or bonds as specified by the
NBR.
Purchase of Bangladesh Government Treasury bill.

Lecture-23

Computation of Capital Gains:

The income under the head capital gains shall be computed after making the following deduction
from the full value of the consideration received or according from the transfer of the capital
asset or the fair market value thereof, whichever is higher, namely:
Any expenditure incurred solely in connection with the transfer of the capital asset (e.g.
advertisement, brokerage, stamp duty, registration fees, legal expenses etc.
The cost of acquisition of the capital asset and 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 (deductions from interest on securities), 29
(deductions from income from business or profession) and 34 (deductions from income from
other sources).
Tax Exempted Capital Gains:
Capital Gains are exempted from taxes in following cases: Capital gain arising from the
transfer of capital asset used for the purpose of business [Sec 32(5)]: If the capital gains, arising
out of transfer of capital assets used In the business or profession, is used fully or In part to
purchase a new capital asset with. a period of one year before or after the date of transfer and if
the assessed elects in writing before the assessment for nailing over.
Capital gain arising from the transfer of Government Securities [Sec 32(7)]: if capital gain arises
from transfer of capital assets being government securities in Bangladesh; [Sec 32(7)]
Capital gain arising from transfer of capital being buildings or lands to a new Company [Sec
32(10)]. If capital gain arises from the transfer of capital assets being buildings or lands to a new
company for setting up of an industry, and if the whole amount of capital gain is invested in the
equity of the said company;
Capital gain of a firm arising from transfer of its capital user to a new company [Sec 32(11)]: If
pita' gain arises from the transfer of capital assets 4 a firm to a new company and if the whole
amount of capital gain is invested in the equity of the sold company by the partners of the said
firm.
Capital gain arising from the transfer of securities approved by Sec and traded in stock
exchanges in some specific cases: If capital gain arises from the transfer of securities approved
by SEC and traded in stock exchanges.