A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a

functional equivalent of a state. Taxes consist of direct taxes and indirect taxes.

“Pecuniary burden laid upon individuals or property to support the government a payment exacted by
legislative authority”.

Tax is not a voluntary payment or donation but an enforced contribution, exacted pursuant to legislative
authority and is any contribution imposed by government whether under the name of VAT, Custom,
Excise, or other name.

Taxation means imposition of a non-penal yet compulsory levy for transfer of resources from
private to public sector, imposed by the public representative based on pre-determined criteria
and without reference to any specific commitment, in order to accomplish some nation’s
economic and social objective. These are dues that we pay for the privileges of membership in an
organized civil society. Tax is imposed in the assessment year based on income year.

Assessment year: The assessment is a period of 12 months just following the income year means
computation of total income and tax payable there on.

Income year: Income year is the year when the income is earned.

The income tax is administrated Income Tax Ordinance, 1984 and the Income tax Rules, 1984 as
well as notification made under the Ordinance. The charge of tax of a person depends on its
residential status. Total world Income of a resident charged to tax in Bangladesh. Whereas, a
non-resident’s Bangladesh income is only charged to tax in Bangladesh. There are seven heads
of income. They are salary, interest on security, house property, agriculture, business and
profession, capital gain and other sources.

Submission of income tax returns is generally due by 30th September in case of non-companies
and by 31st December in case of companies.

Assessment is made in several procedures. They are self-assessment, presumptive assessment,

spot assessment, pre-audit based assessment. Certain percent of self-assessment cases selected
for audit.
 Income

Assessable Income Non-Assessable

Income

Taxable Income
Non-taxable Income

Income: Income means anything received in cash or in kind unless exempted by laws.

1) Assessable Income: Assessable Incomes are those incomes, which are included in the
determination of total income of a taxpayer.
a) Taxable Income: Taxable Incomes are those incomes that the tax is to be paid on
those incomes.
b) Non- Taxable Income: Non – taxable income is taken into total income for
taxation rate purpose but no tax is to be paid on this part of income.

2) Non- Assessable Income: Non- assessable incomes are those incomes which are not
included in the determination of total income of a taxpayer.
 Classification of Tax
System

Single Tax Multiple Taxes

1. Single Tax: Only one tax for everybody. Single tax is the poll tax or the head tax or
adolescent tax, which is imposed on a person simply because he is there in the society.

2. Multiple Taxes: A system under which different types of taxes shall be levied by the
govt. according to suitability. Ex. Income Tax, VAT.
 Types of Taxation

Progressive Tax
Direct Tax Regressive Tax
Indirect Tax Proportional Tax

a) Direct Tax: Direct tax is a sort of tax the impact of effect incidents and which fall back on the
person on whom it is imposed.

EX: Income Tax, Marriage Tax etc.

b) Indirect Tax: Indirect taxes are those burden of which can be passed on others through price
vehicles.

c) Progressive Tax: The tax rate increases as the taxable income/amount increases.

d) Regressive tax: The opposite of a progressive tax is a regressive tax where the tax rate
decreases as the taxable income/amount increases.

e) Proportional Tax: In between is a proportional tax, where tax is fixed as the amount to
which the rate is applied increases.
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a) Resident taxpayer: Anyone who lives in the taxable territory for 182 days in the income
year or 365 days in the last four years preceding the income year and 90 days in the income year
than he is a resident.

b) Non- resident: A nonresident is a person who is not a resident.

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 Assesses and Tax payers are not apart from each other rather alike.

Firm:

The head office of the firm should be registered in Bangladesh. Then it will be permitted as a
resident. Otherwise, the higher rate of taxes will be imposed on the firm as a non-resident.

Companies:

Given below are under companies of Non-Corporate Assesses.