Consequence of non-compliance

The deducting authority will be deemed to be an assessee in default and shall be personally
liable to pay the taxes (sec. 143(1)
TDS rate will be 50% higher in case of no PSR (other than payment to non-resident) and
transection without bank transfer. Thisprovision is applicable tó all TDS sections [sec. 142]
*Additional 2% per month is also to be paid if it is not paid within the stipulated
time.[sec. 143(3))
Penalty not exceeding Tk. 10,00,000 may be impo_ed for being non-compliance of
any other tax
deducted provision oftreasury.
to Govt. chapter-7[ sec.
other143(2)]
than non/short deduction or non-deposit of

$It may be treated as an offence which is punishable with imprisonment for a term up
to year
without with or without
reasonable fine315]if
cause.[sec. dedúcting authority fails to deduct/collect tax
Revenue expenditure will be treated as business income for non-TDS [sec. 55(a)]
Capital expenditure will be treated as income from other sources for non-TDS (sec.
67(7)]
Where aperson issues a TDS certificate without actual TDS, he shall be
liable to pay the amount.(sec. 144] personally

31

Monthly withholding tax return

>Every company, Partnership Firm, Association of Person, Private
Hospital, Clinic, Diagnostic Centre, Local authority and
bodies shall have to file withholding tax return to the Autonomous
every month at the form prescribed at Rule-24A concerned DCT
of treasury challan asa proof of TDS. accompanied by copy
[section-177]
> Such return must be filed by 15tn of
the following month. DCT may
extend maximum 15 days time to submit such
withholding tax return.

END OFTHE PRESENTATION

Tleankge
32
 Capital Gain Tax
Ranjan Kumar Bhowmik rCMA
Former Member
National Board of Revenue

1. Capital and Revenue

is the
Capital is fund and income is the flow of fund. Similarly, capital is wealth and incomeand the
service of wealth. A stock of wealth existing at a particular point of time is called capital
flow of services through a period of time is called income. The distinction between capital and
revenue is of great importance from the income tax point of view, as tax is levied on income not
on capital (except capital gain).

Areceipt is not taxable when it is referable to fixed capital but it is taxable as a revenue item
when it is referable to circulating capital like stock-in-trade. Circulating capital or stock-in trade is
also known as trading asset and fixed capital as fixed asset. An asset may be the capital asset in
the hands of one person and a trading asset in the hands of other and the nature of receipt may
consequently vary according to the nature of trade in connection with which it arises. The
determining factor must be the nature of the trade in which the asset is enmployed. The land upon
which a manufacturer carries on his business is part of his fixed capital but the land with which a
dealer in real-estate carries on his business is part of his circulating capital.

2. Basic principles of capital gain

Section 31 of the Income Tax Ordinance 1984 provides that tax shall be payable by an assessee
under the head "capital gain' in respect of any gainarising from the transfer (i.e., sale, exchange
or relinquishment, etc.)of any capital asset. Such gain shall be deemed to be the income of the
income year in which the transfer (i.e., sale, exchange, relinquishment, etc.) took place.

Any gain arising from the transfer of a capital asset (both movable and immovable) as defined in
section 2(15) of ITO,1984 is chargeable to income tax at the rate prescribed at paragraph 2 of
the Second Schedule of the Ordinance.

Capital Transfer Capital Capital

asset gain gain tax
[Sale, exchange,
[As per relinquishment] [As per [As per Para
section sections 31, 2 of Second
2(15)] [As per section 32]
2(66)] Schedule]

Similarly, aloss under this section can be claimed only if it is

asset and not merely because the capital arising from a transfer of a capital
the intendingpurchaser is forfeited. asset becomes valueless or the earnest money paid by

Capital Gain Tax Prepared by Ranjan Kumar Bhowmik FCMA Ex-Member, NBR as
on 18/5/2023 Page 1
 3. Capital asset asset is defined in section
capital asset. Capital
due to the transfer of
al gain arises onlycapital property of any kind held by an
assessee, whether
asset means
<(l9) OT TTO 1984 where profession, but does not include
Or not connected with his business of stores or raw materials
stock-in-trade (not being stocks and shares),consumable
(2) Any profession;
held for the purposes of his business or
movable property (including wearing apparels,
(b) Personal effects. that is to say, exclusively for
and vehicles), which are heldprofession
jewellery, furniture, fixture. equipment purposes of the business or of the
personal use by, and are not used for
assessee or any member of his family dependent on him;

excluded from the definition of

Ine gains made on the transfer of cetain assets which are
Capital Asset in section 2(15) of ITO, 1984 do not attract tax.

4. Transfer of Capital Asset

Transfer, in relation to a capital asset or part of a capital asset, as per section 2(66) of ITO, 1984
includes the following:
(a) sale,
(b)exchange or
(c) relinquishment of the asset, or
(d) the extinguishment of any right therein,
But it will not include the following:
a) Any transfer of the capital asset under a gift, bequest, willor an irrevocable trust;
b) Any distribution of the assets ofa company to its shareholders on its liquidation; and
c) Any distribution of capital assets on the dissolution of a fim or other AOP or on the
partition of a HUF.

Although the definition of transfer does not include compulsory acquisition of the asset but
provision has been made at section 52C for deduction of tax at source from compensation
against acquisition of property by the Govt.
A
sale by the receiver appointed by the Court would be covered by this section. Alease of land
would be a transfer but the salami or premium paid for the lease is not to be treated as capital
gain rather it would be income under the head income from other sources' as mentioned at
section 19(9).
The mere grant of the right of management of acapital asset would not be covered by section
2(66) but it applies even gain arises from the relinquishment of a capital asset. Capital gains may
arise in exchange of property. For example. land is given to a real-estate company in exchange
of 2 flats andthe land was valued at a higher price than the cost resulting in increase of
wealth.
 The compensation received from an insurance company on the sinking of a ship is not liable
tocapital gain tax due to the following:
(a) When the ship is sunk and lost, it is not possible to say that it is transferred
(b) The word transfer as per section 2(66) would include cases in which rights are
extinguished either by the assessee himself or by some other agency but not those in
which the asset is merely destroyed by a natural calamity
(c) The insurance money represents compensation for the pecuniary loss suffered by the
assessee and cannot be taken as consideration received as a result of the transfer which
is the basis under section 2(66) for computing capital gain.
But where acapital asset is destroyed by fire and under the insurance policy the burnt or
salvaged property belongs to the insurer, there is a transfer of the original asset in a changed
form and the provisionof section 2(66) willattract. Foreign currency is like any other commodity
and when it is converted into Bangladeshitaka it is virtually a sale of the commodity for a price.
Therefore, tax is leviable under section 31 on capital gain arises on the conversion (sale) of
foreign currency held as a capital asset.
5. Capital gain tax on shareholders when two companies amalgamate
In a case where company A amalgamates with and merges into company B and the
shareholders of company A are allotted shares in company B, a question arises whether
those shareholders would be liable to capital gain tax. The answer is no as because capital
gain tax would not be payable unless the amalgamation involves sale or exchange or a
relinquishment of an asset or the extinguishment of any right. It is clear that amalgamation
would not involve any sale or transfer or exchange either. So, there is no question of gain
tax. The allotment of shares by a company cannot be regarded as a transfer of property by
that company.

If capital gain arises from any transfer of capital asset in a scheme of amalgamation then
gain tax will not be applicable as per section 32(5A) of ITO,1984. But if the consideration
received by the shareholders of the amalgamating companies in any manner other than the
shares of the amalgamated company shall be subject to applicable gain tax.
6. Calculation of capital gain from transfer of business [Section 32A]
Capital gain from transfer of business or undertaking shall be computed after deducting the
following from the full value of the consideration:
lal The book value of asset minus liabilities as on the date of transfer.

[b] Any expenditure incurred solely in connection with the transfer.

6. Time to recognise capital gain
Capital gains are assessable as the income of the year in which the
transfer takes place even
though money may be realised later. For determining the year of
is not the date of the agreement to sell but the date of chargeability, the relevant date
sale.

Capital Gain Tax Prepared by Ranjan Kumar Bhowmik FCMA Ex-Member, NBR as on
18/5/2023 Page 3
 8. Computation of capital gain of capital
capital gain. The amount which the
Section 32 of ITO 1984 lays down the mode of computing consideration for
gain is arrived at by deducting two items from the full value of the
transfer is made namely:
the transter;
(a) Any expenditure incurred solely in connection with
(b) The cost of acquisition of the capital asset; and
(C) Any capital expenditure incurred for any improvements thereto.
9. Cost of acquisition
sales
Tne general principle of computing capital gain is to deduct cost of acquisition from the
price But where it becomes the property of the assessee under a deed of gift, bequest or wl O
under a transfer on a revocable or irrevocable trust or on any distribution of capital asses
Ilquidaton of acompany or on anv distribution of capital assets on the dissolution of a im or
other AOP or the partition of aHUF, the actual cost of acquisition to the previous ownel O e
capital asset as reduced by the amount of depreciation, if any, allowed to the previous owne;
and where the actual cost of acauisition to the previous owner cannot be ascertained, the fair
market value at the date on which thecapital asset became the property of the previous Owner.
Proviso to section 32(2) specifically provides that if the asset is one in respect of which the
assessee has obtained depreciation allowance in any year, the cost of acquisition is taken to De
ne wDV as adjusted that means diminished or increased by any balancing allowance or
balancing charge under section 19(16) or 19(17) or section 27(1) () or section 29(1) («i). The
adjustment is with reference to balancing allowance actually deducted or balancing charge
actually levied. If for any reason no such balancing allowance is actually deducted or balancing
charge actually levied, the WDV must be taken without any increase or diminution.
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.
10. Determination of fair market value
Where in the opinion of the DCT, the fair market value of a capital asset transferred by an
assessee as on the date of the transfer exceeds the full value of the consideration declared by the
assessee in respect of the transfer of such capital asset by an amount of not less than 15% of the
value so declared, the fair market value of the capital asset shall, with the previous approval of the
IJCT,be determined [section 32(3)].

Fair market value is higher DCT willdetermine

than the consideration by value taking approval
more than |5% from IJCT
If DCT determines
different value than the
value stated by the
transferor

Fair value is higher than the Government may

consideration by more than offer to buy the
25% capital asset

Capital Gain Tax Prepared by Ranjan Kumar Bhowmik FCMA Ex-Member, NBR as on 18/5/2023 Page 4
 11. Offer to buythe
capital assets bythe Government
Where in the opinion of the DCT the fair market value of a
capital asset transterre
assessee as on the date of the transfer exceeds thedeclared value thereof by more than 257% O1
SUcn declared value, the Government may offer to buy the said
asset in such manner as iG
NBR may prescribe [section 32(4)].

14 Transfer of capital asset used in the business will not attract any gain tax:
A capital gain arising from transfer of plant., machinery, equipment, motor vehicle, furniture,
fixture and computer which immediately before the date on which transfer took place was being
Used by the assessee for the purposes of his business or profession shall be exempted from
payment of the capital gains tax up to the extent and upon fulfillment of the conditions as
mentioned below: -

(a) A new plant, machinery, equipment, motor vehicle, furniture, fixture and computer
have to be purchased for the purposes of his business or profession within a period
of one year before or after the date of transfer.
(b) The declaration shall have to be filed for exemption before the assessment is made.
(c) When the capital gain is greater than the cost of the new asset, the capital gains up
to the extent of cost of acquisition of the new asset shall be exempted and the
balance shall be charged to tax. In determining the depreciation on such asset, cost
shall be taken to be nil.
(d) When the capital gain is equal or less than the cost of the new asset, no tax shall be
charged on the capital gain.
The time-limit for purchase of the new asset can be extended by the DCT with prior approval of
the IJCT [Section 32(5)]

13. Some other tax exempted capital gains

Some other capital gains are exempted from gain tax. These are -
(a) Transfer of capital asset being buildings and lands toa new company: When
buildings and lands are transferred to a new company for setting up an industry and
the whole amount of capital gain arising out of such transfer is invested in the equity
of the said company, then the capital gain shallnot be charged to tax in the year of
transfer. Section 32(10)
(b) Transfer of capital asset of a firm to a new company: When capital gains arise
from the transfer of capital asset of a firm to a new company registered under the
Companies Act, 1913/1994 and the whole amount of capital gain is invested in the
equity of the said company by the partners of the firm, then the capital gain shall not
be charged to tax in the year of transfer. section 32(11)
14. Tax rate in respect of capital gain
Capital gain tax is different from regular tax and is prescribed in Para 2 of Second Schedule of
Income Tax Ordinance, 1984.
Capital gain in the hands of acompany other than the capital gain arising out of disposal of share
will be taxed as a block of income separate from other income of the assessee company at a flat
rate of 15% regardless of the periodof holding of the asset from the date of its acquisition.
If the assessee is other than a company and the asset is transferred before the expiry of five
years from the date of its acquisition, the capital gains will be taxed at the usual tax rate
applicable to the assessee's total income including the capital gain. If the asset is transferred at
any time after the expiry of five years from the date of its acquisition, the capital gain will be taxed

Capital Gain Tax Prepared by Ranjan Kumar Bhowmik FCMA Ex-Member, NBR as on 18/5/2023 Page 5
 including capital gain or on capital
at the usual tax rate applicable to the assessee's total income be specified as below:
gain @15% whichever of this two is lower. Thus, in short, the rate can

Situation Tax rate

Capital gain arises to
@ 15%
(a) company
(b) other than company Disposal within 5 years At regular slab rate
Disposal after 5 years @ 15%,

15. Special tax rates on capital gain from sale of shares

As per SRO 196-AINITI2015 dated 30/6/2015, special reduced tax rate is applied on capital gain
from sale of shares by specified persons as mentioned below:
The following reduced tax rates are applicable on the income earned from transaction of shares
listed the Stock Exchanges:
SI. Nature of taxpayer's income Tax rate

(a) Any income earned from trading of shares/securities by any Sponsor

Shareholder / Director of a Bank, Financial nstitution, Merchant Bank,
5%
Insurance Company, Leasing Company, Portfolio Management Company,
Stock Dealer or Stock Broker Company

(b) Any income earned from trading of shares/securities by any Shareholder

[excluding the Sponsor Shareholders/Directors] having 10% or more shares of
5%
the total paid up capital of a company Icompanies listed at any time during
the income year

(c)|Ifa shareholder is a company or firm 10%

1. In case of transferring the shares by any sponsor shareholder / director tax will be
deducted @5% on the difference between transfer value and cost of acquisition of the
securities as per section 53M of the ITO, 1984.
2. The income from trading of shares of all other type of taxpayers excluding those
mentionedin the above list is exempted from tax.

16. Conditional gain tax exemption in case of non-resident assessee

Capital gain from transfer of shares listed with stock exchange in Bangladesh of non-resident
assessee is tax free subject to the condition that he/she is entitled to similar exemption in his/her
home country. [6hschedule (part-A)para-43]
Sources: [1] Income Tax Ordinance, 1984
[2] Share market related SRO no: 196 dated 30/6/2015

The End

Capital Gain Tax Prepared by Ranjan Kumar Bhowmik FCMA Ex-Member, NBR as on 18/5/2023
Page 6
 Penalty for violation of tax law
Ranjan Kumar Bhowmik rcMA
Former Member
National Board of Revenue

1.Penaltyv for failure to file return (section 266(1)]

DCT may impose penalty 10%
Where aperson fails, without reasonable cause, to file a rcturn, the
whichever is higher and if the failure
of the tax levied on the last assessed income or Taka 1,000/-
during which such
continues, the DCT may impose an additional penalty of Taka 50 for every day
failure continues.
However, the amount of this penalty shall not exceed taka 5,000/- in case of an individual taxpayer,
who has never been assessed before.
This penalty shallbe 50% of the tax payable on the last assessed income or taka 1,000, whichever is
higher, in case of an individual taxpayer whose income has been previously assessed to tax;
2.Penalty for failure to file withholdingtax return (section 266(2)\(a)l
Where a person, without reasonable cause, fails to file withholding tax return, the DCT may impose a
penalty @10% of the tax levied on last assessed income or taka 5,000/-, whichever is higher and if
the failure continues, the DCT may impose an additional penalty of Taka 1,000 for every month or
fraction thereof during which such failure continues;
3.Penalty for failure to issue tax deduction certificate [section 266(2)(b)|
Where a person, without reasonable cause, fails to issue tax deduction certificate, the DCT may
impose on such person a penalty which may extend to Tk. 5,000/- and additional penalty of Tk.
1,000/- in case such failure continues;
4.Penalty for failure to furnish information as required under section 200
(section 266(2)(c)l
Where a person, without reasonable cause, fails to furnish information
required
ITA,2023,the DCT may impose a penalty of Tk.50,000 and Tk.500for every dayunder section 200 of
failure continues. during which such
5.Penalty for not maintaining accounts in the prescribed manner
(section 267]
Where any person fails, without reasonable cause, to
72(3) of Income Tax Act, 2023, the DCT may imposemaintain accounts as per provision of section
the amount of tax payable and in case penalty not exceeding one and a half times of
where income is below taxable ceiling then
5,000/-; maximum Tk.
Where any person deriving income from rent
comply with the provision of section 72(3) of ofthetangible property fails, without reasonable cause, to
of 50% of tax payable or Income Tax Act,2023 the DCT may impose
Tk.5,000 whichever is higher. penalty
6.Penalty for using fake Taxpaver
Identification Number (TIN) (section 268]
Where any person, without reasonable
cause, use TIN of another person or a
impose penalty on such person a sum not
more than Tk.20,000/ fake TIN,the DCT may
 7.Penalty for failure to pay advance tax [section 2691
cause, failed to pay advance tax in
Where the DCT found that any person has, without reasonable
such estimate of tax payable
accordance with the provisions of section 154 of the Act or furnished any
impose on such person a
by him under section 155, which to his knowlcdge or belicf is false, he may tax payable by such
advance
penalty not exceeding such amount as is the differcnce between the
person and the tax actually paid.
8.Penalty for non-compliance of notices (section 270|
notice issued by the DT,
Where any person, without reasonable cause, does not comply with any tax chargeable on his
then the DCT may impose on such persona penalty which will not exceed the
total income.

9.Penalty for failure to pay tax as per return (section 271|

of the Act, then he
If the DCT found that any person has not paid tax as required under section 173
return or 100%
may impose on such person penalty not exceeding 259% of the total tax payable as per
of the shortfall as the case may be.
10.Penalty for concealment of income [section 2721
Where, in the course of any proceeding under Income Tax Act 2023, the DCT, the AJCT, the CT
(Appeals) or the Taxes Appellate Tribunal found that any person has concealed his income or
furnished inaccurate particulars of such income or understated the value of any immovable property
with a view to evading tax he shall impose on such persona penalty equal to A + B.

A =evaded tax X 15%,

B= evaded tax X 10% X C

C=Total number of years from the assessment year in which the tax evasion occurred to the
assessment year in which the tax evasion was detected.
11.Penalty for false audit report signed by chartered accountant (section 2731

Where, the DCT or Additional Commissioner of Taxes (Appeals) or Commissioner of Taxes

(Appeals)or the Tax Appellate Tribunal found that the audit report is not properly certified by the
Chartered Accountant to the effect that, in respect of keeping accounts, preparing statements and
reporting as per International Accounting Standard (IAS) and International Financial Reporting
Standard(FRS) and auditing as per International Standard of Auditing (1SA); or the report is false or
incorrect, then they can impose penalty of minimum Tk.50,000 and maximum Tk. 2,00,000 upon the
charteredaccountant who signs such false audit report.
12,Penalty for filing fake audit report [section 274|

Where, in the course of any proceedings under Income Tax Act, the DCT, or Additional
Commissioner of Taxes (Appeals) or Commissioner of Taxes (Appeals) or Taxes Appellate Tribunal
found that, the audit report is not signed by the Chartered Accountant or is believed to be false, the
said authority or, as the case may be, the Tribunal can impose a penalty of Tk.1,00,000 on the
concerned taxpayer who prepared fake audit report in the name of CA firm.
13.Penalty for default in payment of tax (section 275|
In cases where a taxpayer defaults or is deemed to be in default in payment of tax, the DCT may
impose penalty up to 100% of thearrear tax.
14.Penalty for failing to notify the DCT within 15 days of business discontinuance [sec. 191(4)1
 When any business is discontinued., anoticeof such discontinuance must be given to the
1> days of such discontinuance of the business accompanicd by a return of total DCTwithin
income for the broken
period. If the person discontinuing such busincss fails to give such notice, the D.C.T. may impose
penaltya sum not exceeding the amount of tax asscsscd on him during thc previous year.
15.Penalty for non-compliance with notice related to the calculation of arm's length price in
connection with Transfer Pricing issues [section 276|
Wnere any person fails to comply with any noticerelated to the calculation of arm's length price, the
DCImay impose on such person a penalty not exceeding 1% of the value of each international
transaction executed by the person.
1o.Penalty for failing to keep, preserve or deliver any information or document or record
related to international transaction [section 2771|
Where a person fails to keep, preserve or deliver any information or document or record as required
by the Act, the DCT shallimposeon such persona penalty not exceeding 1% of thevalue of every
international transaction carried out by the person;
17Penalty for failure to submit statements related to international transaction (section2781
Where any person having international transaction fails to submit statements related to the
international transaction with the return, the DCT may impose a penalty not exceeding 2% of the
value of each international transaction carried out by the person;
18.Penalty for not submitting statement certified by Chartered Accountant or Cost and
Management Accountant [section 2791
Where any person fails to submit a statement certified by Chartered Accountant or Cost and
Management Accountant as required by the DCT in writing, he may impose a penalty not exceeding
Tk. 3,00,000 on such person.
Conclusion:
1.No penalty shall be imposed without giving a reasonable opportunity of being heard.
2.Penalty under section 266, 275,276,277,278 and 279 cannot be imposed by the DCT without
taking
prior approval from the IJCT.
 Tax Assessment

Ranjan Kumar Bhowmik rMA

Former Member
National Board of Revenue

1. Self-assessment (section 180-182)

A "Self-Assessment Return" filed by a person for any assessment year shall be

deemed to have been completed, if the said return is filed in compliance with all
provisions mentioned at section 169 and tax as per return paid in full. If any return
filed without complying with the provisions mentioned at section 169 shall be
deemed to be an "ordinary return".

After filing the return, if it is found by the assessee himself that proper tax was not
paid due to error in tax calculation or rebate calculation and by so doing less tax was
paid, then the assessee may file an amended return within 180 days stating the
reasons in awritten statement paying differential tax plus simple interest @ 5% per
month on that differential tax before filing such amended return.

Return Processing (section 181)

The DCTmay also process the original return or anmended return in the light of any
mathematical erTor in the return filed or any false claim in the light of any statement
or document filed with the return.
Ifas a result of return processing by the DCT, there is any
the tax amount shown in the discrepancy between and
"self-assessment returns or amnended return and tax
amount calculated by the DCT, then the DCT may issue a notice to the
assessee:
a) informing the assessee about the difference
amount of tax;
b) giving an opportunity to the assessee to explain its
additional tax liability arising from return processing; and position about the
c) giving an opportunity of filing amended return
mentioned in the notice and paying taxes as a resultadjusting the difference
of the said processing.
However, interest will not attract on such delay payment;
After giving such notice, the DCT shall ensure that:
a) the assessee has submitted amended return with short
within the date specified in the notice; payment of tax
b) the difference referred in the
amended return. notice has been properly addressed in the
In case of
non-compliance from the
creating the short payment as demand.assessee side, the DCT will issue demand notice
Tax Assessment prepared by Ranjan Kumar
Bhowmik FCMA (as amended up to 24/8/2023) Page 1 of 6
 Tax Audit (section182)
Board with
Revenue (Board) or any authority under the
a) The National Board of
in the manner prescribed by the Board, select
may, Taxes
the approval of the Board the same to the concerned Commissioner of
returns for audit and forward
for the purpose of
audit.
Taxes, within 7 (seven) working days from the date of
b) The Commissioner of
the list of returns selected for audit, shall appoint an inquiry team, audit
receipt of case and all inquiry teams, audit
teams
team and audit curator for each audit will send to the Audit Curator and
concerned on the date of signing such order
the DCT.

DCT shall, within 7 (seven) working days of the receipt of the order under
c) The
infornming him about the audit and send a
(b)above issue a notice to the taxpayer
copy of such notice to the inquiry team.
DCT within 60 (sixty) days and
d) Each audit team will send inguiry report to the
is not possible to submit
send acopy of such report to the Audit Curator. If it
apply for time
inquiry report within 60 days, then the concerned team may
extension and the DCT may extend the time up to 60 (sixty) days.
e) After submission of the inquiry report, audit team will proceed as per audit
manual as prescribed by the Board.
f) The audit team shall submit the draft report to the assessee and will invite written
explanation.
g) The audit team shall submit the audit report to the Audit Curator within 300
(three hundred) days.
h) The Audit Curator, within 7 (seven) working days of the submission of the report
by the Audit team, will recommend to the Commissioner of Taxes for completion
of the audit proceedings and authorize the DCT to carry out the audit.
i) The Commissioner of Taxes, on receipt of the recommendation from the Audit
Curator, shall take an appropriate decision within 7(seven) working days.
i) Within 7 (seven) working days after receiving approval from the Audit Curator,
the DCT will send the audit report to the taxpayer and send a notice requiring the
taxpayer to file revised return reflecting the findings of the audit and requesting to
pay the required taxes and conduct any other course of action as recommended by
the Audit Curator.
k) If the revised return is filed by the assessee and if the DCT is satisfied that the
findings mentioned in the audit report are duly reflected in the revised return, he
may accept the revised return and send a letter to the taxpayer stating that the
audit has been completed.
I) Where after notice as in ()above no revised return is filed or the revised return
which has been filed does not reflect the results of the audit, the DCT may assess
the tax based on the audit report at his best judgement.

Tax Assessment prepared by Ranjan Kumar Bhowmik reMA (as amended up to 24/8/2023) Page 2 of 6
 m) No tax shall be assessed under clause (k) above
unless
i) the investigation and audit phase ends;
i) the taxpayer is notified about the audit report; and
iii) the taxpayer fais to file the revised return in compliance with the
notice sent is in clause (i) above.
n) Noreturn or amended return shall be selected for audit under (a) above, if return
(other than return of banks and financial institutions) or amended return shows at
least 159% higher income of the immediately preceding assessment year and such
return or amended return fulfilled the following conditions:
i) return is accompanied by evidences in support of any tax exempted
income;
ii) return does not show any gift;
iii) return does not show any tax exempted income u/s 76;
iv) return does not show any refund;
(v) In case of company tax payers, it has filed the return of withholding tax
ws 177 and complied with the provisions of tax deduction.

2. Assessment on the basis of correct return (section 183)

Where in the opinion of the DCT normal return or revised return submitted by the
assessee is correct and complete in all respect, then he shall assess total income on
the basis of that return and communicate the assessment order within 30 days fromn
the date of such assessment. The following are the restrictions to do
under this section:
assessment
i. Return must be filed within the prescribed time;
i. Tax as per return shall be paid before submission of return;
i. Such return does not show any loss or lesser income than
the last
assessed income.
iv. Assessment on the basis of such return does not result in refund.
V. TIN must be mentioned at such return.

3. Best Judgement Assessment (section 184)

Where any assessee fails to file return required by a
filed any revised return u/s 175 or failed to notice u/s 172/212 and has not
comply with the requirements of notices
u/s 183(3), 183(5) or 193, the DCT shall assess
income to the best of his judgment.
4. Provisional Assessment (section 185)
The DCT is empowered under section 185 of ITA, 2023
assessnment in a summery manner to make provisional
i. On the basis of
return and statements, where return has
allowing tax depreciation as per 3rd Schedule and also been filed (after
loss carried forward); or after setting off any
ii. On the basis of
readily
judgement, where no return has beenavailable
filed.
information or on the basis of best
Tax Assessment prepared by Ranjan Kumar Bhowmik FCMA (as
amended up to 24/8/2023) Page 3 of 6
 As the name indicates that it is not final, just an assessment done provisionally to
collect tax before regular assessment. There shall be no right of appeal against
provisional assessment. Rather all penal measures can be enforced to recover tax as
per provisional assessment.
5. Assessment of Partnership Firm (section-187+188+189)
Like other category of assessee, DCT will assess the income of the partnership firm
and determine the tax payable thereon by the firm. He will also apportion the after
tax profit among the partners. (Section-187)
If DCT found at the time of assessment of a firm that a change has occurred in the
constitution of the firm, the assessment shall be made on the re-constituted fim but
the conditions are:
(1) Income will be apportioned between those partners
who were partners
during the income year.
(2) When tax assessed on any partner is not recoverable from him it
will be
recovered from the re-constituted firm (Section-188(2). If it is found at the time of
assessment of a firm that a new firm has been
firm, DCT will make 2 assessments one for the constituted succeed the previous
to
successor firm. (Section-189) predecessor firm and the other for the
6. Assessmentin case of succession of business otherwise than on death (sec. 190)
Where any person carrying on business has been
by another person, the predecessor shall be succeeded otherwise than by death
assessed for the period up to the date of
succession and the successor shall be assessed for the period after the date of
succession. Provided that
(1) Where the predecessor cannot be
the successor
found the assessment shall be made on
(2)) Where tax is not recoverable from
the
from the successor who shall be predecessor it is to be recovered
entitled to recover it from the
predecessor.
7. Assessment in case of discontinued business (section 191)
When any business is discontinued, a notice of
such
the DCT within 15 days of such discontinuance of discontinuance
the
must be given to
business
If the person accompanied such
return of total income for the broken by a
period.
business fails to give such
the amount of tax assessed notice, the DCT may impose penalty adiscontinuing
sum not exceeding
on him during the previous year.
8. Assessment in case of person
leaving Bangladesh (Section 193)
Whenever any person is leaving Bangladesh and has no
DCT may proceed to assess him for all the intention to comne back, the
assessments remain pending as well as for thecompleted income years for which his
broken period up to the probable date
of his departure from
Bangladesh.
Here is deviation from the usual
be completed before the practice as the assessment of the broken
commencement of the relevant period may
important thing to note here is assessmnent year. One
least seven days time to file his that, the assessee is entitled under the law to get at
Tax Assessment return and statements of income.
prepared by Ranjan Kumar Bhowmik FcMA (as amended up to
24/8/2023) Page 4 of 6
 9. Assessment of deceased person (Section- 194)

Whenever any person dies, his executor, administrator or other legal representative 1s
liable under the law to pay out of the estate of the deceased any tax which was
payable by him and any other tax liability which might be payable in consequence of
any assessment made after his death. Liability of the legal representative is limited to
the extent to which decreased estate is capable of meeting the liability.
Legal representative shall be deemed to be an assessee for this purpose, provided a
notice is given to him as per section 194(2).
10. Spot assessment (section 195)
Where an assessee who has not previously been assessed but has taxable income or
has compulsion to submit return or has compulsion to comply with any requirement
of tax law or fails to comply with any requirement of tax law, the DCT may fix tax
on the spot if empowered by the Commissioner of Taxes.
11. Escaped Assessment (section 212)
The following situations shall bedeemed to have escaped payment:
1. The income or any part of incomehas escaped assessment
2. The income has been under assessed
3. Excessive loss, relief, deduction or allowance in the return has been claimed
4. Tax liability has been shown or computed lower by
[a]Concealment/misreporting of any income
[b] Concealment/misreporting of any assets
[c] Concealment/misreporting of any expenditure
[d] Concealment/misreporting of any particulars at IT10B or IT10BB
1. Income has been under assessed or has been assessed at a lower rate than due tax rate
2. Taxable income has been shown as tax exempted income.
3. Excessive depreciation allowance or any other allowance has been claimed
4. Tax has been paid or computed lower than due amount by reason of lower tax base

Preconditions:
i) Section 212 can be initiated by the DCT if he has reason to believe that any
sum payable by an assessee has escaped payment.
ii) Before initiating the proceeding under section 212 previous approval in
writing from the IJCT is to be taken, except in a case where a return has not
been filed.
Notice under section 212 can be issued:
(1) Atany time where no return was filed and no
assessment was made.
(2) Within 6years from the end of the assessment year where assessment for that
year has been completed.
(3) If an assessee conceals any assets which he
acquired
will deem that the asset is acquired in the 6th year andbefore years then the DCT
6
issue notice accordingly.
Tax Assessment
prepared by Ranjan Kumar Bhowmik rCMA (as amended up to 24/8/2023)
Page 5 of 6
3 Assessment in case of minor, lunatic, idiot. beneficiaries of any trust (sec 252(4))
Minors, lunatics and idiots are assessable to tax as beneficiaries through their
guardians and trustees in the same way and to the same extent as it would have been
livable and recoverable from such beneficiaries of full age or sound mind in direct
receipt of any income profits and gains. In the like manner, the beneficiaries of any
property managed by a Trust, Court of Words, receiver or manager will be brought
to tax through the Trustees, Court of Words, receivers or manager.
4. Assessment of non-resident shipping business (Section 259)

If any Ship calls on any port in Bangladesh, the aggregate of the receipt arising from
the carriage of passenger, livestock, mail or goods shipped at the port since the last
arrival of the ship or at any port outside Bangladesh for which amount is received or
deemed to be received in Bangladesh shall be treated as income received in
Bangladesh and in this case tax rate will be 8% (usually tax rate is 4% incase where
there is a double taxation avoidance agreement with the country the ship is
originated).
5. Assessment of non-resident airlines (Section 260)
If any foreign aircraft calls on any airport in Bangladesh, the aggregate of the
receipts arising from the carriage of passengers, livestock, mail or goods loaded at
the said airport into that aircraft shall be deemed to be income received in
Bangladesh and in this case tax rate will be 3% (usually no tax in case where there is
a double taxation avoidance agreement with the country the aircraft is originated).
6. Bar to raise question against assessment (Section 196)

Notwithstanding anything contained in any provision of the Income Tax Act,2023 or

any other law of the country, no authority other than the tax authority, Taxes
Appellate Tribunal and Bangladesh Supreme Court shall have right to raise question
against any assessment done as per Income Tax Act.2023.
If any adverse action is taken violating the above law, it shall be null
and yoid and
will have no legal effect.

The End

Tax Assessment prepared by Ranjan Kumar Bhowmik rCMA (as amended up to

24/8/2023) Page 6 of 6
 Income Tax Return

TAX
Paper presented by:

Ranjan Kumar Bhowmik FCMA

Former Member
National Board of Revenue

Presentation outline
Introduction
Mandatory requirement of filing return
Persons who are not required to file return
Place where Return is to be submitted
What documents to be submitted with
return ?
Tax day
When amended and revised return can be
filed ?
TINDe-registration
Penalty for non-submission of return
 Introduction

Every person who is reguired to file return of

incomeshall have to fill-up the return form
prescribed bythe NBR, which shall also be verified
in the manner indicated in that form.

For individual assessee the return together with

thestatement of assets, liabilities and expenditure
and also the life style statement shall collectively
constitute a valid and complete return.
2

Persons required to file return of income:

1. If his taxable income during the income year exceeded the

non-taxable ceiling of income (now it is Tk. 3,50,000/- for the
assessment year 2023-24)

2. If he was assessed to tax for any one of the 3 years

immediately preceding the year under consideration.

(Section 166 of Income Tax Act,2023]

4
 Company

Any resident or non-resldent individual having fixed base in Bangladesh.

Partnership Firm & It's partner

Association of Person

(3) If the Shareholder director /shareholder employee of a company

person is a

Anemployee holding managerial or executive position in any business

If any person is required to be registered as assessee u/s 161

If any person is required to furnish proof of submission of return ws 164

If any person has any exempted income or income where reduced tax rate is
applicable.

does not require ftr iteone

(a) Public University
b) Educational
MPO which doesInstitution receiving Govt.
not follow any benefits under
English version curriçulum
(c) Bangladesh Bank.
(d) Local authority.
The person does (e) Statutory Govt,
not require to file authority or autonomous body who has no
income other than fund
return of income
income. received from Govt. and interest
(0 Govt. Provident Fund
and Govt. Pension Fund.
(g) A
non-resident individual having no fixed base in
Bangladesh.
(h) Any person which the
income NBR exempt from filing
return of
6
 Place where Return is to be submitted

(1) Return is to be submitted at concerned circle office as

per jurisdiction.
(2) Non-resident Bangladeshi may file their return at
nearest Bangladesh mission. The missions
send the return to the NBR and NBR again will will then
return to the concerned circle office. send the
(3) Return can also be
the NBR every year. submitted at Tax Fair organized by
(4) The system of online
return filing has been
introduced on 1st November,2016 and by doing all
categories of assessee now can easilyso submit their
tax return through online.

What documents to be submitted with return ?

It is mandatory to submit
audited statement accounts at the time
of
Company of filing return and a separate calculation sheat is to be submitted if
income shown at return differsfrom audited
statement of accounts,
Shall furnish statements of assets, liabilities and
expenses if he
(a) has gross wealth exceeding
(b)owns a motor car; or Tk.40,00,000; or
(c) has made investment in a house
coporation area
property or an apartmant in the city
(d) has owned any asset in foreign countries
(e)lHas become shareholder director of any company
Individual
|Shall also furnish life style statement along with the
return if:
(a)lhis income exceeds Tk.5,00,000; or
(b)| he owns a motor car;or
(c)]he has made investment in a house property or an
corporatior area apartment In the city
(d) he has any income from business
(e)he has become shareholder director of any
company
(Section 167 and 168 of IT Act.2023)
 Tax day
Type of assessee Tax day within Remarks
which return must
be submitted
Bank, Insurance and other non 15th September Delay interest willbe imposed @4% per month on the
banking Financial Institution assessed on total income for the
difference between the tax
Acompany which is a subsidiary Within 1th of assessment year and tax paid in advance along with tax
|or holding company of a parent deducted or collected at source.
company incorporated outside
the th month
Bangladesh if such company from the end of first
Period of delay interest: the period will start from the
requires to follow adifferent the income year day immediately following the Tax day to:
|financial year for the purpose of
consolidation of its accounts with
the parent company; [1] The date of filing return where return is filed
All other company 15th January not filed
[2] The date of regular assessment where return is
Other than company 3oth November
However the period shall not exceed 24 months.

Encome year ncome vear Assessment yea Tax Day

ended on For company taxpayer
30.06.2023 2022-23 2023-24 15.01.2024
01/10/21 to 30/9/22 2023-24 15.09.2023
30.09.2022
31.12.2022 2022 2023-24 15.09.2023
31.03.2023 2023-24 15.10.2023
01/4/22 to 31/3/23
01/8/22 to 31/7/23 2024-25 15.09.2024
31.07.2023

Amended retun&Revisea return

After filing return under self assessment scheme if any assessee finds that
unintentionally tax has been computed/paid short, then he may file an
amended return within 180 days from the date of filing return attaching
the following: Ref: Section 180
1. awritten statement about the mistake.
2. a proof of tax paidalong with interest @5% p.m. which was
computed/paid short.

Assessee willget an opportunity to submit amended return against notice

u/s 181 relating to any adjustment in respect of any arithmetical error in
the return or incorrect tax or rebate computation. DCT can issue such
notice within 1 year from the date of filing return. Ref: Section 181

Revised return can be submitted, without reducing tax liability, before 1t

hearing date or before 6 months of time barred whichever is earlier. Ref:
Section 175

10
 Penalty for non-submission of return
Amount of penalty Reference section Pre-conditions

10% of the 266 In case of a new individual

last assessee whose income
assessed tax Whichever is
was not previously
higher
assessed then penalty shall
Tk. 1,000/ not exceed Tk. 5,000
+
Tk.50per In case of existing
day during individual assessee penalty
which the shall not exceed 50% of last
default assessed tax or Tk, 1,000
continues whichever is higher.

11

TIN de-registration
Person leaving
Bangladesh
Winding up
TIN de-registration

Deceased person Closure of

Branch/Liaison office
RIP

CLOSED
Tleankg
 Banglade agement

TAX
Paper presented by:

Ranjan Kumar Bhowmik :FCMA

Former Member
National Board of Revenue

PRESENTATION OUTLINES
> Introduction
>Principles of good tax system
> Cannons of Taxation
> Direct tax Vs. Indirect tax
> Legacy of Income Tax law
> Bangladesh tax structure
Present tax rate
Reduced tax rate with SRO reference
> Tax reforms

(2
 Introduction
"Taxes are dues that we pay for the privileges of membership in an
organized society." Tax is a compulsory payment made to the
Governnent for services it provides us, though people may not be
completely satistied or convinced with these services.
Income tax, as we all know, is a tax on income. VAT is also
different from income tax in so far as in VAT, the incidence can be
shifted but income tax is an ultimate burden.

Income tax is an annual tax in the sense it is assessed on the income

year basis. Income tax is a one stage tax and an income once taxed
is never taxed again.
Income tax is equitable and progressive. Its moral, ethical and legal
basis is stronger than those of indirect tax.

Principles of go0d tax system

Tax system should
rot have any Good tax Systemis based
sdvete effect Certainty Equity cn thepeople' ability to
pey
Tax shoud
be charged Principle
acording toProgressivity
the income
based on
t.x
Simplicity toTaxpayer shou'd abe
uncerstard the
distribution polictes
Iax structure shoukd
rot be cheiged Stability Convonicnce Tak $houd bÇ collected
tegularty in conyeniernt nanrer

4
 Canons of Taxation
Canons of Taxation are the main basic principles/rules set
to build a 'Good Tax System'.

Adam Smith gave following four important canons of

taxation, they are:
> Canon of Equity
> Canon of Certainty
> Canon of Conyenience
Canon of Economy

Canons of Taxation
Canon of Equity: Every person should pay to the government
depending upon his ability to pay.
Canon of Certainty: The tax which an individual has to pay should
be certain., not arbitrary. The tax payer should know in advance how
much tax he has to pay, at what time he has to pay the tax, and in what
form the tax is to be paid to the government

Canon of Convenience: The mode and timing of tax payment should

be as far as possible, convenient to the tax payers. For example, land
revenue is collected at time of harvest, income tax is deducted at
source at the time of payment.

Canon of Econonmy: This principle states that there should be

economy in tax administration. The maximum part of tax collection
should be brought to the government treasury.
6