INCOME TAX HANDBOOK &

THE FINANCE ACT 2021

Presented By Team LSF
 Comparison of National Budget at a Glance
FY 2020-21 (Revised) FY 2021-22
Particulars % Changes
(Amount in Crore Taka) (Amount in Crore Taka)
Total Size of Budget 538,983 603,681 12%
Total Revenue Earnings 351,532 389,000 10.66%
Earnings from NBR 3,01,000 330,000 9.63%
Budget Deficit 1,87,451 214,681 14.53%
Inflation 5.4* 5.3 1.89%
GDP Growth 6.1** 7.2 18.03%

*https://www.bb.org.bd/econdata/inflation.
**Budget speech of finance Minister, dated 03 June 2021
 Source and Allocation of Budget
Sector Budget20-21 Revised Actual 20-21 Budget
20-21 (up to March) 21-22
Total tax revenue 378,000 351,532 222,202 389,000
NBR tax 330,000 301,000 180,854 330,000
Non NBR Tax 15,000 15,000 4,628 16,000
Non tax receipt 33,000 35,532 36,720 43,000
Total Expenditure 568,000 538,983 225,588 603,681
Development Expenditure 215,043 208,025 58,088 237,018
Non-development revenue
311,190 302,547 158,624 328,840
expenditure
Annual Development Program 205,145 197,643 54,796 225,324
Development Expenditure 215,043 208,025 58,088 237,078
Other Expenditure 41,767 28,411 3,386 37,763
Budget Deficit (190,000) (187,451) (3,386) (214,381)
Financing
Domestic Source 109,983 115,052 (8,614) 113,453
External Source 80,017 72,399 8498 101,228
In Which banking source 84,980 79,749 13,733 76,452
Source : Finance Division
NBR Collection Budget
Comparison at a Glance
Sources of
2020-21 Receipts 2021-22
Total Estimated Receipts
Total Estimated Receipts
(In crore TK)

125,162 (37.93%) VAT 127,745 (38.71%)

103,945 (31.50%) TAX 104,952 (31.80%)

43,078 (13.05%) Import & other Duty 42,838 (16.50%)

57,815 (17.52%) Supplementary Duty 54,465 (12.98%)

DIRECT TAX
 Corporate Tax
Changes in tax rates for
Corporate
Corporate tax rate for the listed company
has been reduced to 22.5% from 25%

Corporate tax rate for other than listed company

has been reduced to 30% from 32.5%

Effect : Business-focused tax rate

Artificial Judicial Person

• Tax Rate for "Artificial Judicial Person"

has been changed from slab rate to 30%

Slab
• @30%
Rate
One Person Company (OPC)
Tax Rate has
been fixed at
25%

This will encourage individual investors to be

corporate through OPC
 Minimum Tax (82c)

Tax collected at source on import of goods by

industrial undertaking engaged in production of
perfumes & toiletries waters will be considered as
minimum tax (final settlement).

Effect: Total cost will increase for the manufacturers of these products
Tax incentive on Recruiting Third Gender

Tax rebate lower Conditions

of 5% of tax paid or applied!!
75% of total • 10% of total staff
salary paid to tra employed or
nsgender • 100+
employees employees.

Effect: This will create job opportunities for Third Gender individual, from now single company
will motivate to hire 10% or 100 plus number of this kind of employees for these tax benefits
 IT Enabled Services
• Newly added IT enabled services eligible for tax exemption until
June 2024:

Cloud Service System Integration e-book publication e-learning platform

Mobile application
Development service IT Freelancing
 Tax relief for women entrepreneurs
For men limit
is BDT50 lacs Must comply with any
provision of this
Ordinance.!!

Threshold for Annual Turnover

for Minimum Tax

BDT50 lacs in 2020, and in 2021:BDT70 lacs

 Micro Credit Business
• Income from micro credit operation registered with microcredit
regulatory authority apart from NGO affairs bureau will be
exempted from tax.
Increase in Advance Income Tax
5% 5% 5% 20%

Imported fruits Cash register Imported propeller Wine & Perfume

0% 0% 0% 5%
Decrease in advance income tax

2% 1% 3%

Import of raw Ocean going vessel Coco substrate

material for cement
production

3% 2% 5%
TAX EXEMPTION
Exemptions
Agro entrepreneurs 10 Years
Hospital 10 Years
Skill Development Institute 10 Years
Hardware manufacturer 10 Years
Factory of 3/4 Wheelers 10 Years
Home Appliances 10 Years
Light Engineering Industries 10 Years
 New Agro entrepreneurs
• Investment in the following sectors will enjoy Tax Holiday up to
10 years.

Locally grown fruits Milk and Dairy Manufacturing of Baby food

and vegetables production Agricultural machineries production from
locally grown Agricultural
Products

Effect: Employment opportunity will create

through new investments.
 Skills development institution
• Institution offering professional training on following sectors
will enjoy tax exemption for 10 years.

Automobile Aircraft maintenance Food Glass Footwear

Poultry farming, animal Mining

Ceramics
health and production service
 Continued…….

Agriculture Fisheries IT and Science Pharmacy, nursing, Radiology and imaging,

Integrated Medical ultrasound, dental

Ship building, leather, refrigeration, Garments design and pattern making,

mechanical, mechanist clothing and garments finishing
Effect: Very good move for making human capital
 Made in Bangladesh Brands
• Tax holiday for the production of the following products
in Bangladesh.

Three or four wheelers Home and kitchen appliances

10 years 10 years
(10 more years if investment at
least Hundred Crore taka)

Effect: Will increase the made in Bangladesh products categories

Light Engineering industry
• Manufacturer of light engineering products will enjoy tax
exemption for 10 years

Condition:
Should be used as spare parts at factory, not for
the whole machine
 IT Hardware Manufacturers
• Manufacture of IT hardware will enjoy tax exemption for 10 years

Motherboard Casing UPS USB & Pen drive CCTV

Speaker Sound system Power supply

Effect: More investment and more employments will create

Healthcare Sector
Medical factory Construction Area Tax holiday period
Construction of 250-bed General Other than Dhaka, Chittagong, Gazipur &
10 years
Hospital Narayanganj
Construction of 200-bed Specialized Other than Dhaka, Chittagong, Gazipur &
10 years
Hospital Narayanganj

Effect:
Investment in this sector will Increase
and the rural people will get healthcare
facilities
WITHHOLDING TAX
Specification of payment channel and
effects
• If payment not made through following channel shall be 50% of
higher Tax Rate

Bank transfer Mobile Financial Services Any other digital means approved
by Bangladesh Bank

Effect: Encourage payments through formal channel

 Limit on cash transaction for raw material

cash transactions
beyond Taka 500,000

Previously Now for the purchase of raw

material shall be
considered as an
inadmissible expenses

Limited up to
500,000 taka

Effect: This will encourage transactions through banking channel

 Supply of goods and execution of contract
Threshold level of Previous Rate Threshold level of Current year Rate
base amount base amount
Up to 15 lac 2% Upto 50 lac 3%
Above 15 lac to 50 lac 3% Above 50 lac to 2 crore 5%
Above 50 lac to 1 crore 4% Above 2 crore 7%
Above 1 crore 5%

One slab reduced and Tax will increase for the contractor and supplier

TDS @ 2% will be applicable for the company engaged in cement, iron or

iron products on the payment of any amount.
Reduced by 1%
e-Commerce platform now withholding entity!
e-commerce platform, not being any other specified persons, called by
whatever name having annual turnover exceeding Taka one crore list
as withholding entity.
Stevedoring /berth operation

Section 52AA (12) Up to 25 lac Above 25 lac

On commission or fee 10% 12%
On gross bill amount 1.5% 2%
TDS rate TDS TDS rate TDS

Effect: Tax will be increased

WPPF for Non-Taxable Employee

Conditions:

• The beneficiary does not have taxable income

• WPPF ≤ TK25,000

Effect: Benefits for non-taxable employees

Supply of electricity
• Supply of electricity will be subject to TDS @ 6% in the absence
of tax exemption certificate from NBR. Section: 52N.
Where a person is exempted from tax or is
subject to a reduced tax rate in an income
year, the Board may, on an application made
in this behalf, give a certificate in writing that
the payment for that income year shall be
made without any deduction or with
deduction at a proportionately reduced rate,
as the case may be.
 Inward remittance on sub-contracting
• Inward remittance on account of sub-contracting service to the
foreign controller shall be subject to TDS @ 7.5% instead of 10%

Effect: Sort of incentive for local company; rate i.e., 7%

 AIT at Import Stage
• AIT at import stage shall not exceed 20% on the value of imported
goods: Section 53
Collection of Tax from Recruiting Agents
• Recruiting agent need to submit tax challan to the director general,
bureau of manpower, employment and training for. Section 53B:

Activity Tax

Issue/ renewal of license 50,000 taka

10% of service charge or fee

Grant clearance for export of
received by recruiting agent for
manpower by recruiting agencies
export of manpower
 Tax collection through public auction
• Proposed collection of tax at the rate of 10% instead of earlier 7.5%
at the time of making payment regarding sales through public
auction.

NBR
revenue
will increase

For sale of tea through public auction the rate of tax has been only 1%
Effect: Benefits for tea production business
Discount /Commission on Distribution
• Firms will be deemed as company regarding collection or
deduction at source from commission, discount, fees on the
distribution of the products

Effect: NBR Tax net U/S 53E will be increased

Sukuk- Tax on Transfer of Property
• No TDS on transfer to a Trust/SPV set up solely for issuing
Sukuk approved by government or Securities Exchange
Commission & vice versa.

Effect: Promoting Islamic Banking Instruments

AIT on Electric Car
• “Kilowatt/kw” introduced in addition to “cc” as a measuring unit
for engine capacity of motor car
SL Types and engine capacity of motor car Tax (Tk)

1 Upto 75kw 25,000

2 Above 75kw or 100kw 50,000

3 Above 100kw or 125kw 75,000

4 Above 125kw or 150kw 1,25,000

5 Above 150kw or 175kw 1,50,000

6 Above 175kw 2,00,000

Effect: New guideline is now available for electric car

Guidelines for motor car owners
• Deadline to register or fitness renewal of motor Car is 30th June

any person fail to pay tax in

previous year, will pay only
(arrear amount+ current year
payable amount), no penalty
Miscellaneous
Extension of Time limit
• Facilitator will get 3 months time instead of 2 months to reach
any agreement regarding any litigation under ADR.

Effect: This may delay to settle the process

Empowering Officers
Power to verify deduction or collection
Power to call for information
of Tax

Directors general of inspection (Taxes) Commissioner of taxes

Directors-General of Inspection (Taxes)

Director General

Central Intelligence Cell

e-TIN mandatory for four potential taxpayers
• Obtaining e-TIN is mandatory in the following cases

Purchasing savings instruments

Apply for building design approval e-TIN (Sanchayapatra) of Taka
from municipality office
exceeding 2 lakhs

Opening postal savings accounts

Obtaining registration of co-
of Taka exceeding
operative society
2 lakhs

Effect: It will bring more people under the tax compliance

 Higher Revenue Earner Fish farmers will
pay more tax
• Fish farmers to pay @15% on annual income exceeding Tk 30
lac. Previously the rate was 10% for income above tk. 20 lac

Previous Current
First 10,00,000 income First 10,00,000 income
from fisheries 0% from fisheries
0%

Next 10,00,000 5% Next 10,00,000 5%

The remaining balance 10% Next 10,00,000 10%

The remaining balance 15%

 Deposition of tax through e-Payment
• Automated challan or e-payment is mandatory for the payment
of tax up to Tk 5 lac

Up to
Tk 5 lac

Effect: Tax payment process will be easier and transparent

 Depreciation allowance timing will increase
for General Building and Factory Building

10% 20%

Buildings (general)
5% Factory Building
10%
Effect: Timing for depreciation allowance will increase
Personal Tax
Income Tax Calculation and Return
Submission Cycle
Tax Day (Nov
30)

Settlement of Self
Income Tax Assessment

Submission Determining
of Income Tax Taxable
Return Income

Calculation of Determining
Net Income Tax Exempted
Tax Payable items
 82BB: Universal Self Assessment

• July 1 to 30 November
• Tax Fair– This year has not yet scheduled because of Covid-19 pandemic
situation
• Can voluntarily file amended return after paying unpaid taxes and interest
thereon
• If errors identified by DCT, he/she will give opportunity to defend and file
amended return paying unpaid amount
Submitted return on time will be treated as the Acknowledgement of
Assessment Order
 Personal Income Tax Return: IT-11GA2016
The following schedules shall be the integral part of this return and
must be annexed to return in the following cases:
 Schedule 24A will be applicable for- income from salaries
 Schedule 24B will be applicable for- income from house property
 Schedule 24C will be applicable for- income from business or
profession
 Schedule 24D will be applicable for- investment and claim for tax
rebate
 Required Information & Documents
Period: July 1, 2020 to June 30, 2021

 Salary Certificate with Tax Challan

 Bank statement, DPS, Savings Certificates, Credit Card, BO Account
statement
 Car Tax, Property Tax related documents
 Personal/ Home Loan statement including instalment payment
 Insurance Policy/Premium related document
 CSR/Donation related documents
 Land, Furniture, Ornaments, Electronics good etc.
 Tax- free Income Limit

• General (Male)– Individuals & Firms Tk. 300,000

• Female, Third Gender, and Senior
& Citizens aged 65 years and above Tk. 350,000
• Physically challenged persons Tk. 450,000
• War-wounded gazetted freedom fighters Tk. 475,000
For parents or legal guardians of physically challenged persons the zero Tax
Limit will be increased by Tk 50,000.
 Tax Rate for Individual and Firm
Taxable Income Slabs Tax Rate
First Tk.300,000/ 350,000
Nil
/450,000 /475,000
For Bangladeshi individuals, Next Tk. 100,000 5%
resident foreigners, and firms Next Tk. 300,000 10%
Next Tk. 400,000 15%
Next Tk. 500,000 20%
On Balance 25%
For non-resident foreigner, flat tax rate will be 30%
Surcharge
• Minimum limit on surcharge has withdrawn and no surcharge on
wealth applicable for person who do not have taxable income
• Proposed five slabs in place of the existing seven slabs during
calculation of surcharge for individual taxpayers
 Investment allowance limit
• Eligible amount for the investment allowance has reduced as follows:

25% of total income excluding

For
82c income. Actual investment
2021-22 BDT 10,0000,000
25% of total income excluding For
82c income. Actual 2020-21
investment BDT 15,000,000
 Savings instrument of minor
• e-TIN of parent will be considered as e-TIN of a minor at the
time of purchasing savings instrument.

Effect: Saving of income as savings instrument of minor will not

attract extra withholding tax of 5%
 Wealth Declaration
• An individual being a non-resident Bangladeshi, or a resident
foreigner may declare their wealth from Bangladeshi part in their
asset and liability statement.
• Statements of assets, liabilities and life style (IT-10B2016 & IT-
10BB2016) should be filed along with the income tax return, if the
assessee:
 has in the last date of the income year, a gross wealth exceeding BDT
4,000,000; or
 owns a motor car; or
 has made an investment in a house property or an apartment in the city
corporation area
 Investment for Tax Credit
• Both employees’ and employers’ contribution to a Recognized
Provident Fund.
• Investment in Savings Certificate & DPS up to BDT 60,000.
• Donation to approved Zakat Fund or any approved Charitable Fund.
• Investment in listed companies shares, stock, mutual funds and
debentures.
• Investment in Bangladesh Government Treasury Bonds.
• Life insurance for own, spouse or minor child up to 10% of the actual
Insurance amount.
• Different welfare funds approved by NBR. And some others
approved fields.
 Tax calculation for Govt. employees

Taxable income only:

 Salary
 Bonus
 Festival bonus
Bhoishakhi Allowance and Retirement benefit is the name of lump
amount is also tax free
 Tax Paid

 Tax deducted or collected at source

 Advance tax paid
 Adjustment of tax refund
 Amount paid with return
 Minimum Tax for Individual
• Minimum tax for per person having more than 3 crore of receipt.

0.5% Minimum Tax

0.25% Minimum Tax

This will not apply for those who are engaged in mobile phone
operation & manufacture of tobacco-based products
 Disclaimer!
This presentation is intended to provide information, but is not a
substitute for legal or accounting advice.
 H M Mainuddin Ahammed FCMA
Experienced VAT & Tax professional
Chief Executive, LSF & Co.
Cost & Management Accountants

Contact :
Phone: 0173-0000-113
Email: ceo@lsf.com.bd
Web: www.lsf.com.bd