Salient features and Practical Implications of

the ITA 2023

Preface

This presentation provides an overview of the changes brought in by the Income Tax
Act 2023. The handouts has been prepared on the basis of publicly available sources
i.e. NBR website.
The information contained in this document is of a general nature and is not intended
to address the circumstances of any particular individual. Although we aim to
provide accurate and timely information, we do not provide assurance that such
information is accurate as of the date it is received or that it will continue to be
accurate in the future. No one should act on such information without appropriate
professional advice after a thorough examination of the particular situation.
 Discussion Points

High Level overview on ITA 2023

Corporate Income Tax

Withholding Tax

Personal Income Tax(PIT)

High Level Overview on ITA 2023
Effective date of Income Tax Act 2023

Kindly note that, in accordance with section 1(2) of the recently

approved Income Tax Act 2023, the Act will take immediate effect.
According to Section 5(b) of The General Clauses Act 1897, if an Act of
Parliament does not specify a particular date for its commencement, it
shall come into operation on the day when the assent is first published
in the official Gazette. Consequently, the newly published Income Tax
Act 2023 is effective starting from 22 June 2023.
Effective date of Income Tax Act 2023

Tax Rate AY 2023-24 As per the Finance Act 2023

Assessment for the FY As per ITA 2023 as effective from 22 June 2023
2022-2023 (AY 2023-2024)

Deduction of Tax Effective from 1 July 2023 to 30 June 2024

Assessment Procedure for AY 2023-24
Corporate Income Tax (CIT)
Categorical Deduction List

NEW

General deductions
ITA, 2023
Specific deductions
New Structure of Admissible
Expenses
Bad debt

Financing expenses
Areas of Tax Admissible Expenses

Section As per ITA 2023 Particulars

49(ka) Raw Material expense, Obsolescence of inventory General deductions
49(kha) Land Development Tax, Municipal tax General deductions
49(ga) Rental Expense & Repairment of Office Premises General deductions
49(gha) Salary and Wage expenses General deductions
49(uma) Repair expense of Buildings, Machinery, Plant or furniture General deductions
49(ca) Insurance Premium General deductions
49(cha) Utility Expenses General deductions
49(ja) Goods Transport expense, Clearing and Forwarding Expense General deductions
49(jha) Commission, discount expense General deductions
49(nio) Advertisement and promotional expense General deductions
49(Ta) Training expense General deductions
49(Tha) Hotel and residential expense of sales agent General deductions
49(Da) Travelling and conveyance expense General deductions
 Areas of Tax Admissible Expenses

Section As per ITA 2023 Particulars

49(Dha) Internet and telecommunication expense General deductions
49(Na) Legal, audit and professional fees General deductions
49(ta) Entertainment expense General deductions
49(tha) Realized forex loss General deductions
49(da) Club membership fees General deductions
49(dha) Foreign travel expense of Govt. trade delegation General deductions
49(na) Royalty, technical knowhow fees, head office expense General deductions
49(pa) WPPF General deductions
49(fa) Any expense incurred solely for business purpose General deductions
50(ka) Depreciation expense Specific Deductions
50(gha) Amortization expense Specific Deductions
50(uma) Research and Development expense Specific Deductions
51 Bad Debt Expense Bad Debt
52 Interest expense Interest
 New Areas of Tax Admissible Expenses

Specific Expenses Omnibus Expense

Raw Material expense, Obsolescence of inventory

Utility Expense
“
Transportation Expense
Discount & Commission
Travelling and conveyance expense
Internet and telecommunication expense
Advertisement & promotional expense
Training Expense
Hotel and residential expense of sales agent
WPPF
Realized forex loss
“
Admissibility of Forex loss

Foreign Exchange Loss

(Paripatra Example-15)
Forex Gain

Foreign Exchange Gain

(Paripatra Example-14)
 Deduction Not Admissible
Allowable
Section 55 Particulars Criteria
Rate
৫৫(ক) Any Payment If TDS is not deducted
Interest, Salary, Commission, Remuneration by
৫৫(খ) If Paid to the Partners or Member of the firm
firm or , association of person
৫৫(গ) Commission or Discount Made to its shareholder director by a company
৫৫(ঘ) Perquisites at defined by u/s 32 of ITA 2023 If exceeds 10,00,000 for normal employees
Royalty, Technical Service fee, Technical
৫৫(ঙ) On Net Income from business shown in FS 10.00%
Knowhow
৫৫(চ) Intra Group Expense On Net Income from business shown in FS 10.00%
Exceeding .5% of Disclosed Turnover, Can ben availed more if
৫৫(ছ) Overseas Travelling
incurred for business purpose
Income, Profit and Gains for 1st 10,00,000 of Total income before
4.00%
৫৫(জ) Entertainment Expense Entertainment Expense
Balance on Total income before Entertainment Expense 2.00%
Distribution of free Samples
Turnover or Receipts upto 5,00,00,000 2.00%
Pharmaceuticals Industry Turnover from 5,00,00,000 to 10,00,00,000 1.00%
Turnover in Excess of 10,00,00,000 0.50%
Turnover or Receipts up to 5,00,00,000 1.00%
৫৫(ঝ)
Food, Cosmetics and Toiletries Turnover from 5,00,00,000 to 10,00,00,000 0.50%
Turnover in Excess of 10,00,00,000 0.25%
Turnover or Receipts up to 5,00,00,000 0.50%
Other Industry Turnover from 5,00,00,000 to 10,00,00,000 0.25%
Turnover in Excess of 10,00,00,000 0.10%
 Deduction Not Admissible

Allowable
Section 55 Particulars Criteria
Rate
৫৫(ঞ) Promotional Expenses Exceeding .5% of Disclosed Turnover
৫৫(ট) Salary or Remuneration Made otherwise than Bank Transfer
৫৫(ঠ) Rent Payment Made other than by Crossed Check or Bank Transfer
৫৫(ড) Payment for Raw Materials in Cash Up to BDT 5,00,000 without banking channel
Payment by a person exceeding taka If not Payment for Salary or Rent or Purchase of Raw
৫৫(ঢ)
50,000 Other than Bank Transfer Materials
Any Payment made to a person who U/S 264(3)(25),U/S 264(3)(26),U/S 264(3)(28),U/S 264(3)(29),
৫৫(ণ)
doesn’t have PSR U/S 264(3)(36),U/S 264(3)(37),U/S 264(3)(42),U/S 264(3)(43)
৫৫(ত) Any expenditure Capital expenditure in nature or Personal Expenditure
৫৫(থ) Any Provision Any liabilities not stated explicitly
৫৫(দ) Any expenditure Not Related to the business
Any depreciation and interest claimed against ROU asset,
৫৫(ধ) Right of Use Asset
Actual rental payment will be allowable
৫৫ (ন) Impairment Loss of intangible asset
৫৫ (প) Any payment To any fund not approved by the Board
Without any proof and not maintained in a prescribed
৫৫ (ফ) Any expenses
manner.
 Disallowance of Expenditure for Lack of PSR

Payer Deducts tax and deposit to the Now a company will be required to
Govt. Exchequer collect PSR from eight categories of
supplier and service providers failing
to which expenses will be disallowed
for the lack of PSR. It will be a double
Payer Submit withholding return blow for a company

Payer need to collect PSR. TDS will

increase due to lack of PSR
 Inadmissible Income
New list of Inadmissible Expense
Particulars
Any expense Capital in nature
Provision for expense
ROU-Interest & Depreciation
Impairment Loss
Transfer to Unrecognized Fund
Example
Low Value asset reported as expense
Warranty Provision
Lease interest expense
Depreciation of ROU Asset
Impairment of PPE
Payment to unapproved PF and GF
ROU-Interest & Depreciation

Let’s assume ABC Limited booked depreciation expenses – for RoU of Tk 120,000
and interest expenses for RoU of Tk 20,000. Actual lease payment is Tk. 90,000.

Particulars ITA 2023

Net Income Before Tax 1,000,000

Add: Disallowance as per section 55 (RoU Depreciation + Interest) 140,000
Less: Admissible expense- Lease Payment (90,000)
Net Taxable Income 1,050,000
Tax rate 27.50%
Tax Payable 288,750
Effective Tax Rate 28.88%
Provision for expense

Let’s assume ABC Limited made a provision of expected credit loss of Tk 100,000.

Particulars ITA 2023

Net Income Before Tax 1,000,000

Add: Disallowance as per section 55 100,000
Net Taxable Income 1,100,000
Tax rate 27.50%
Tax Payable 302,500
Effective Tax Rate 30.25%
Impairment Loss

Let’s assume ABC Limited booked an impairment loss expense of Tk 100,000 for PPE.

Particulars ITA 2023

Net Income Before Tax 1,000,000

Add: Disallowance as per section 55 100,000
Net Taxable Income 1,100,000
Tax rate 27.50%
Tax Payable 302,500
Effective Tax Rate 30.25%
 Incentive Bonus as Perquisite

Particulars ITO 1984 ITA 2023

Net Income Before Tax 1,000,000 1,000,000

Incentive Inadmissible Income 100,000 100,000
Incentive Bonus 50,000 50,000
regarded as
Net Taxable Income 1,100,000 1,150,000
Perquisite Tax rate 27.50% 27.50%
Tax Payable 302,500 316,250
Effective Tax Rate 30.25% 31.63%

30 (j) of ITO 1984 provision

withdrawn from new ITA 2023
(j) any expenditure by way of incentive
bonus exceeding ten per cent of the net
profit disclosed in the statement of accounts
 Widened Cap on Expense Limit

Particulars ITO 1984 ITA 2023

10% of Income from business for 1st
Royalty, License Fee, technical Service fees, 3 Years
technical Knowhow fees, fees for using Intangible
asset 8% of Income from business in
subsequent years
Foreign Travel Expense 0.5% of turnover
25 Lacs
Depreciation Limit on Motor Vehicle cost
Depreciation rate 20%
10% on Income from business
from the 1st years to foreseeable
future
0.5% of turnover
Or more if the expenses are
commercially viable
30 Lacs
Depreciation Rate 10%

Taxpayer will get ➢ Simplification on cap

extra 5 lakh taka ➢ Leverage on foreign travel
depreciation benefit expense
Net Business Income

Net Business Income

(Note-1, Paripatra Example-20)
Amortization of software and R&D Expense

ITO 1984 ITA 2023

Bangladeshi made computer software 50% 20%

Research and Development expenditure 10%

Amortization separated from Depreciation

It will take time to amortize

Amortization of Disallowed Capex
Amortization on Expense
Disallowed as CAPEX

Can I get my 10%

Amortization?

Taxpayers will get tax

allowable amortization benefit
if it is considered as capex at
the time of assessment.
 Long Term (EPC) Contract

X Construction Ltd. is a company engaged in the construction business. The

company has signed a contract with the Government of Bangladesh as a
contractor for a construction and installation project worth Tk 100 crore. The
contract price is the base price subject to deduction of tax at source under section
89 of the Income Tax Act, 2023 and applicable rules at the rate of 7%.
Information on money received, cumulative work completed, and profit before
tax (PBT) are as follows:
Year Cash Cumulative Work PBT
. Received Completed (crore)
(crore) What will the amount of adjustable tax
1 10 0% 0 and advance tax of X Construction Ltd.
2 20 20% 5
for the next 4 years?
3 30 60% 9
4 40 100% 15
 Long Term (EPC) Contract

Crore BDT
1 2 3= 4 5 6 7= 8= 9= 10 =
(2*7%) (6*27.5%) (5*7%) (7-8) (3+4-8)
Proportionate Net tax
Previous year’s AIT adjustable
Money Turnover Taxable Regular adjustable payable
Year TDS unadjusted with next year’s
Received (U/S 74) Income Tax TDS from after
TDS
The amount of adjustable tax and advance tax of X year’s Income
Current adjustment
Construction Ltd. for the next 4 years is to be
1 10 0.7 0 0 0 0 0 0 0.7
determined
2 30 2.1 0.7 20 5 1.375 1.4 *0 1.4

3 40 2.8 1.4 40 9 2.475 2.8 **0 1.4

4 20 1.4 1.4 40 15 4.125 2.8 1.325 ++

* Deduction of 1.4 crore BDT U/S 89 is the minimum tax U/S 163

** Deduction of 2.8 crore BDT U/S 89 is the minimum tax U/S 163

++ No adjustable tax payable for the next year

 Adjustment of AIT as TDS on Trading Goods

M Company Ltd. is engaged in the business of imported goods. From July 1, 2022, to
June 30, 2023, the company imported 1,000 refrigerators. The import price of each fridge
is BDT 40,000. BDT 20,00,000 tax was collected at source from the said company against
the import price during importation. The company sold 900 refrigerators out of these
1,000 refrigerators imported in the financial year 2022-2023. The selling price of each
fridge was Tk 60,000. The company has 100 refrigerators unsold in the said financial
year. Against the said sale, the company's operating expenses were BDT 50,00,000 and
the amount of interest expenses was BDT 30,00,000.

Determine the tax liability for the tax year 2023-2024.

 Adjustment of AIT as TDS on Trading Goods

Particulars BDT
Sales (900*60000) 54,000,000
Less COGS (900*40000) 36,000,000
Gross Profit 18,000,000
Less Operating Expense 5,000,000
Operating Profit 13,000,000
Less Interest Expense 3,000,000
Net Profit Before Tax 10,000,000
(a) Regular Tax Payable (30%) 3,000,000
(b) Minimum Tax U/S 163(2) (2,000,000*900/1000) 1,800,000
Total Tax Payable (Max of (a) and (b)) 3,000,000
Less TDS 1,800,000
Net Tax Payable 1,200,000

M Company Ltd. can adjust (20,00,000/1000 × 100) Tk paid on

its unsold products or Tk 2,00,000 against the income tax
payable on the sale of said product in the next year.
 Adjustment of AIT as TDS on Trading Goods

The following year M Company Ltd. imported 2,000 refrigerators. Each import price is BDT 50,000. BDT
50,00,000 tax at source is collected from the company against import price during importation. The
company sold a total of 1700 refrigerators including 100 refrigerators from the previous year and 1600
refrigerators out of these 2,000 refrigerators imported in the financial year 2023-2024.
Particulars BDT
Sales (1700*60000) 102,000,000
Less COGS (100*40000+1600*50000) 84,000,000 M Company Ltd. can adjust the
Gross Profit 18,000,000 (50,00,000/2000 × 400) Tk paid on its unsold
Less Operating Expense 7,000,000 products or Tk 10,00,000 with the income
Operating Profit 11,000,000 tax payable on the sale of said product in
Less Interest Expense 5,000,000 the next year.
Net Profit Before Tax 6,000,000
(a) Regular Tax Payable (30%) 1,800,000
(b) Minimum Tax U/S 163(2) It may be noted here that the source or
4,200,000 sources of income to which minimum tax
(2,000,000*100/1000+5,000,000*1600/2000)
Total Tax Payable (Max of (a) and (b)) 4,200,000 is applicable as per Section 163(2) shall be
Less TDS of Current Year's AIT (5,000,000*1600/2000) 4,000,000 regularly accounted for in accordance with
Less TDS of Previous Year's AIT (2,000,000*100/1000) 200,000 the provisions of Section 72.
Net Tax Payable -
 Restrictions on Setting-off Losses

Particulars ITO 1984 ITA 2023

Business Loss Set-off against Income from business (500,000) (500,000)
only business income Other Income 700,000 700,000
Taxable Income 200,000 700,000
Net Tax Payable @ 27.5% 55,000 192,500
Additional tax payment in current
137,500
Year

Carry forward business loss (500,000)

-

Increasing tax burden of loss

making companies Business loss should be set-
ie: loss-making companies will
still have to pay taxes on interest of with other income
income, dividend income, etc
 Comparison of Tax Depreciation

Class of Assets. ITO 1984 ITA 2023

(1) Buildings (general) 5 5
(2) Factory buildings 10 10
Furniture and fittings 10 10
Office equipment———— 10 10
Machinery and plant:
(1) General rate ———— 20 10
(2) Special rates–
(a) Ships:
(i) Ocean-going ships (new) 12 5
(ii) Ocean-going ships (second hand), age at the time of purchase–
(a) less than 10 years- 12 10
(b) 10 years or more — 24 20
(iii) Inland ships including steamers, motor vessels, sails, tug-boats
iron or steel flats for cargo, wooden cargo-boats, motor launches and 24
speed boats.
(b)X-Ray and electrotherapeutic apparatus and accessories thereto; —– 20 20
Apparatus run with Battery, recharegable battery 20 30
(ii) Machinery used in the production and exhibition of cinema graphic
20 20
films.
(iii) motor vehicles all sorts not plying for hire;…… 20 10
 Comparison of Tax Depreciation

Class of Assets. ITO 1984 ITA 2023

(iv) motor vehicles all sorts plying for hire... 24 20
[(v) computer and computer equipments… 30 25
(c)(i) professional and reference books… 30 25
(ii) Aircraft, aeroengines and aerial photographic apparatus…. 30 30
(iii) Moulds used in the manufacture of glass or plastic goods or
30 30
concrete pipe….
(d) Mineral oil concerns-
(i) Below ground installations. 100 100
(ii) Above ground installations, _ that is to say, portable boilers,
30 25
drilling tools, well-head tanks and rigs.
[(e) physical infrastructure –
(i)Bridge (ii)Road (iii)Fly over 2 2
(iv) Pavement runway, taxiway…. 2.5 2.5
(v) Apron, tarmac 2.5 2.5
(vi) Boarding bridge 10 10
(vii) Communication, Navigation aid and other equipments----- 5 5
Not mentioned above 10
Mandatory Audit for Firm, AoP and Funds

Firm

Association Having turnover over 3 Crore

of Person

Fund

More Compliances with Audited FS

 Thin Capitalization

Interest payment on loan from related party

allowable up to BDT 15 lac But not applicable
in case of the loan taken from bank and FI

Details Company A Company B Rules are yet to be

Loan from Related Party 15,000,000 20,000,000 published on
9% 9%
admissibility of the
Interest Rate
interest over 15 lacs
Interest expense 1,350,000 1,800,000

Profit Before Tax 500,000 500,000

Add: inadmissible Interest Expense 300,000

-
Taxable Income 500,000 800,000 Control on repatriation
137,500 220,000
of funds to related
Income Tax Liability @ 27.5%
parties through interest
Increased tax liability in Interest 82,500
 General Anti-avoidance Rule (GAAR)

Anticipated by Commissioner

Misuse Actions
Obtained Tax benefit by The DCT can take the following actions
misusing Tax arrangement 1. Income estimation
2. Revised Tax demand
3. Tax refund adjustment
4. Tax rebate or benefit adjustment
5. Any other means
Assessing officers arbitrary
power might increase
 Demerger

Tax On Transfer of Capital Assets

Shareholder Of Demerged Company holding
more than 75% shares, shall become
shareholder Of Resulting Company
“Demerger”
Consideration through shares
Consideration through other than shares

1. Accumulated
Loss
Newly resulting company
will adjust loss and
Depreciation of Demerged
2. Unabsorbed
What will happen to the Companies
Depreciation
shareholders holding less
than 75% shares??
 Alignment with Accounting Standards

IFRS vs TAX - New Inclusions

IAS 21 – Realized and unrealized gains IFRS 2 – Share Based Payment

IAS 36 – Impairment of Asset IFRS 9 – Financial instruments

IAS 37 – Provisional and actual expenses IFRS 15 – Long term Contract

IAS 40 – Investment property IFRS 16 – Lease expense recognition

Minimum Tax on Carbonated Beverage (Other
than Manufacturer )
Particulars Tax Rate
Carbonated Beverage Manufacturer 3%
Other than the Manufacturer Carbonated Beverage 0.60%

3% Minimum Tax is only for the

manufacturer of the carbonated beverage
This will be applied retrospectively

SRO 259/Law/Income Tax-

08/2023
Dated: 29 August 2023
Paripatra Page - 12
 Example Transaction by Tax Exempt Entity

“Taxable ltd” has brought 50 units of LED TV for BDT 150,000 from
“TaxExempt Ltd” of which fair value is BDT 120,000 per unit

Transaction price with Income from other

Fair market value
tax exempt entity source

50*150,000 50*120,000 1,500,000

Will be taxed at regular

rate of the purchaser
 Change in Final Settlement

Particulars ITO 1984 ITA 2023

TDS on Compensation Against Acquisition of Property 6% or 3% 6% or 3%
Final Tax only for
Individual Taxpayer
TDS on Interest on Saving Instruments 10% 10%
Final Tax
TDS on Export Cash Subsidy 10% 10%
Final Tax only for assessee
TDS on Interest on saving deposit 10% or 5% 10% or 5%, exempted to submit tax
return U/S 166(2)
TDS on Transfer of Property 4% 10% Final Tax only for
Individual Taxpayer
TDS on Real estate developer to land owner 15% 15%

Minimum Tax
Final Tax
or Final tax
Change in Final Settlement

Dated: 23 August 2023

Change in Final Settlement

TDS on Transfer of Property Final

Tax only for Individual Taxpayers

SRO 286/Law/Income Tax-

16/2023
Dated: 11 October 2023
 Income from Financial Assets

Any interest, Profit or Discount from Government approved securities

Any interest, Profit or Discount from debenture or securities issued by local authorities

Interest from FDR kept in Bank or Financial Institutions

Dividend Income
Income from Financial Assets

Paripatra Example- 24
Exemption on Income of SPVs

ITO, 1984 ITA, 2023

Alternative Investment Fund Alternative Investment Fund

Issuer of Mutual Fund Mutual Fund

Real Estate Investment Trust

Broadened investment area

Exchange Traded Fund
 Simplification for Return Submission

Return to be submitted under Universal Self-assessment

Return Filing Universal Self-assessment EXCEPTION

➢ Any company except for OPC,
Bank, Insurance or Financial
Amended return can be filed even for reduction of tax liability. Institute, and
U/S 180 (2) ➢ Person leaving Bangladesh
NBR Clarification
regarding Return
submission
Startup Sandbox

Startup Business

Now Big Cap companies

can avail the benefit by
acquiring startups
Audit & Assessment
Automation & Reduction of Arbitrary Power

Tribunal
Appeal

Automation
E-TIN

Assessment
Return Filing
Online System of NBR
https://etaxnbr.gov.bd/#/landing-page
 Audit SOP (Example)

Preliminary audit by
Return for the AY 22- Appointment of 12th September
Notice to Assessee
23 selected for audit Inquiry Team within 2023+11th November Conduct audit
within 14th July 2023
on 30th June 2023 7th July 2023 2023 with time
extension by DCT

Sharing the report Audit Curator

Decision by CT by 22 recommend to CT Submission of audit by
with assessee by 29 Draft audit report
July 2024 with anomalies within 8th July 2024
July 2024
15th July 2024

Sharing letter of
Notify to submit acceptance of revised
revised return return

Total 13 Months
Assessment beyond 6 years

If an assessee conceals any assets acquired before 6 years,

the assessing officer will deem the asset to be acquired in
the Past 6th year and will deem income accordingly
Penalties & Fines increased
 Additional Tax for delay filing

ITO 1984 ITA 2023

Particulars
Delay Interest Delay Interest + Additional Tax
For filing the amended
2% interest rate on shortfall 5% interest rate on the shortfall
return
4% interest rate up to 24 months
In case of a fractional day, entire month will
be considered.
Interest for not filing 15% simple interest will be imposed on
2% interest rate up to 12
return on or before the shortfall of advance income tax
months
Tax Day
Full amount of tax on exempt income,
Full amount of tax on reduced rate income
and
Tax rebate will be dis-entitled
Penalties & Fines Increased
Penalties & Fines Increased- Amended Return

Let’s assume a company submitted original return on January 15, 2023 and
submitted amended return on March 30, 2023 by paying additional tax of Taka
2,360,000.

Particulars ITO 1984 ITA 2023

Additional Tax Paid with
2,360,000 2,360,000
amended return
Interest Rate 2% 5%
Month 2.5 2.5
Interest payable 118,000 295,000
Delay Interest and Additional Tax

Assuming that a company failed to submit its return at tax day on January 15,
2023, but eventually submitted it on March 30, 2023, and Gross amount of tax
was Tk. 5,000,000 and TDS for the AY was Tk. 1,433,000 paid a tax amount of
Taka 3,567,000 under section 74 of the Income Tax Ordinance (ITO) 1984.

ITO 1984 ITA 2023

Gross Tax 5,000,000 5,000,000
Less: TDS (1,433,000) (1,433,000)
Tax payable with return 3,567,000 3,567,000
Interest rate 2% 4%
Delay Month 2.50 3.00
Interest payable 178,350 600,000
Net Interest and Tax Payable 3,745,350 4,167,000
Delay Filing & Interest on AIT Shortfall

A company paid Tk 350,000 as AIT. Assuming that a company failed to submit

its return at tax day on January 15, 2023, but eventually submitted it on March
30, 2023, and paid a tax amount of Taka 3,567,000 under section 74 of the
Income Tax Ordinance (ITO) 1984 and u/s 173 of ITA 2023

Particulars BDT
Tax paid with return 3,567,000
AIT paid 350,000
Gross Tax 3,917,000
Interest rate 4%
Delay Month 3.00
Delay Interest payable 470,040
75% of AIT 2,675,250
Shortfall of 75% AIT 2,325,250
Interest for Shortfall of AIT (15%/12*9) 261,591
Total Interest 731,631
Delay Filing- Exempt Income Taxable

Assuming that a company failed to submit its return at tax day on January 15,
2023, but eventually submitted it on March 30, 2023, with tax payable of Taka
3,567,000. In addition to that, the company had business income from ITES of
BDT 50,000,000 which is tax exempt as per ITA 2023.

Particulars BDT
Regular Tax on ITES @ 30% 15,000,000
Tax payable 3,567,000
Interest rate 4%
Delay month 3
Delay Interest payable 2,228,040
Total Tax and Interest 20,795,040
Delay Filing- Reduced rated income taxable

Assuming that a 100% export oriented RMG company failed to submit its
return at tax day on January 15, 2023, but eventually submitted it on March 30,
2023, and the income from business from export of RMG was 50,000,000.

Particulars BDT
Reducted rated tax on RMG export income @12% 6,000,000
Regular Tax on RMG Export income @ 30% 15,000,000
Interest rate 4%
Delay month 3
Delay Interest payable 1,800,000
Total Tax and Interest 16,800,000
Deregistration of e-TIN

Person leaving
Winding up
Bangladesh

e-TIN Deregistration

Closure of
Deceased person
Branch/Liaison office
 Refund Guidelines

Return Filing Return Process Refund Refund Failed

Universal Processed Refund by Assessee can

Self by DCT Electronic claim refund if
Assessment transfer 60 the authority
days fails

Refund process will

be easier
Withholding Tax
 Decrease of Excessive WHT Return

Number of
ITO 1984 ITA 2023
Return
Statement of Tax deducted & Collected u/r 18 Monthly 12
Statement of Salary Tax deducted u/r 21 Monthly 12
Statement of
Statement of WHT tax u/s 75A Half Yearly 2 WHT tax u/s 177
Monthly
Statement of TDS from Salary u/s 108 Yearly 1 (Monthly)

Statement of Interest Payment u/s 109 Yearly 1

Statement of Dividend Payment u/s 110 Yearly 1
Total 29 12

29 Statements 12 Statements
 Specified Person – withholding entity

Any company, firm, association, trust or fund;

Public-private partnership

Any foreign contractor, foreign enterprise or any association or a body established outside
Bangladesh

Any Hospital, Clinic or Diagnostic Centre

Any e-commerce platform with an annual turnover of more than BDT 1 crore, other than any
specified person, by whatever name called

Hotel, community center, and transport agency having annual turnover exceeding 1 crore.

A person (other than farmer) who is engaged in the production and supply of tobacco leaves,
cigarettes, bidis, jorda, gul and other tobacco products.
 Proof of Return Submission while Payment

Proof of 50%
Return Higher TDS
Submission

ITO 1984 ITA 2023

Increasing burden
As per old law for Now applicable for
on withholding Sections: all TDS sections
entity! 52, 52AA, 53F
 Grossing up Mechanism in Payment

TDS has to be paid by grossing up the invoice

where the payment is made without TDS

Enhance tax compliance, increase

tax collection, and promote a fair
Allowable Expenditure and transparent tax system
(Paripatra Example -35)
 Grossing up without PSR & Cash Payment

Company A purchased goods worth BDT 6,000 from

Company Z
TDS
Company A paid applicable
BDT @ 3%
6,000, with no TDS deduction
Company Z did not provide Proof of Return
Submission Company A and paid through cash

Calculated amount for deduction: Calculated amount for deduction:

A = (B x Applicable tax rate) / C , A = (B x Applicable tax rate) / C ,

Where Where
• No TDS
A = Amount of tax collected A = (6,000 x 6%) / 100% – 6% deduction
B = Payment amount exclusive of tax A = 383 • No PSR
C = 100% – Applicable Tax Rate • Cash
payment
 To be noted!

Particulars Status
Payments above Tk. 500,000 through non-banking channel will
be inadmissible, with the exception of purchase of raw Unchanged
materials
Previously more
Salaries through non-banking channel will be inadmissible
than 20,000
Any payment for rent of property must be made through
Unchanged
banking channel
Any payment exceeding 50,000 other than bank transfer will be
Unchanged
disallowed
Section 104 -TDS on Intercompany Loan
Interest

.
10% tax on interest paid for loans,
excluding banks and financial
institutions
Is it not permitting
banking business for
non-bankers

Increased tax liabilities for

lenders
Taxation on the Rise: Exploring the
Increased TDS Rates

Payment for Payment for

WPPF Surveyors’ fees

5% 10% Increased tax

charge
 Section 92 - Advertisement

Payment to newspaper or magazine or

private TV channel or private radio 5%
station or any website for advertisement,
tax should be deducted

From 4%
Remember Media
Buying!
 TDS On Govt. Approved Foreign Loan
Interest

Interest payable by:

Govt or Local Authority

Industrial Undertaking in Bangladesh
Financial Institutions for the advancement of loans to Industrial Undertaking

Exemption Omitted
Increased Tax Burden for foreign Loan
specially loan already utilized
 TCS on Share Transfer
Mr. X, a shareholder of ABC company which is non-listed, sold his 1000 shares to the foreign
company Fine & Co. for BDT 500. X's share was bought at BDT 100 per share. At the time of the
transfer of shares, the registrar asked to submit a professional valuation report, according to
the report, the price per share is BDT 550. How much tax will have to be deducted at source for
the transfer of shares by Mr. X?

Price as per Purchase * Number * 15%

TCS Valuation Report Price Of Shares

550 100 * 1000 * 15%

67,500

To be deducted as TCS
Personal Income Tax (PIT)
 Increase of Tax-free Income

Tax-free Income
Person
Then Now Increased
Person including
individual, Hindu 300,000 350,000 50,000
Undivided Family

Female & assessee aged

350,000 400,000 50,000
more than 65 years

Third Gender 350,000 475,000 125,000

Disabled Person 450,000 475,000 25,000
Gazetted wounded
Freedom Fighter
475,000 500,000 25,000 Some relief from
tax for the mid-
level taxpayers
 Income from Employment- Perquisites

Determination of monetary value of perquisites, allowances and benefits. The monetary value of
perquisites, allowances and benefits other than perquisites, allowances and benefits payable at
monetary value shall be determined as per the table below, namely: -

a) The annual cost of accommodation, if the accommodation rent is fully paid by

Accommodation the employer or if the accommodation is provided by the employer;
benefits b) In respect of accommodation obtained at reduced rent, the difference between
the rent determined under clause (a) and the rent paid
a) 10,000 (ten thousand) taka monthly for vehicles up to 2500 cc
Benefits for each b) 25,000 (twenty-five thousand) taka monthly in case of vehicles above 2500 cc.
motor vehicle [However, pick-and-drop facilities will not considered as motor vehicle benefits]
(Paripatra example-5)
Any other
perquisites,
a) Monetary value or fair market value of perquisites, allowances or benefits.
allowances or
benefits
Income from Employment- Perquisites
Example on Share Based Payment

A Share based payment of 500 unit has been offered to Abir

at BDT 200 who is an employee of a listed company of B Ltd
At Exercise date the fair value of the Share would be BDT 350

Income from Fair Value at Cost of Acquiring

Employment Exercise Date the Shares

500 * 350 500 * 200

75,000

To be added as Income from

Employment
Income from Employment

One-thirds of the total income or

BDT 450,000 whichever is less

Exemption as Exemptions as Taxable

Salary Structure BDT
per ITO 1984 per ITA 2023 Income
Basic Salary 1,200,000 -
HR( lower of 25k /m or 50% of basic) 500,000 300,000
Medical(10% of basic or 120,000) 200,000 120,000 450,000 1,750,000
Conveyance( 30,000) 100,000 30,000
Festival Bonus 200,000 -
Total 2,200,000 450,000 450,000 1,750,000
 Income from Rental Property

Rental Income from : Income from Any Rental Property

Rental Property Includes:

(i) House property, Land, Furniture, Fixture, Factory building, Business Premises,
Equipment, Personal Vehicles, Any asset of capital in nature which are rented

House Property Includes:

House Property Excludes:
(i) Furniture, Fixtures, Fittings which are integral
part of that house property (i) Any factory Building
(ii) Land on which that house property is situated
 Total Income from Rental Property

A=(B+C+D)-E-F

A= Total Renal value

B= The amount of rent received from the said property, or the annual value of the property,
whichever is higher

C= The amount of advance rent received from the said property in the said income year
(Non-adjustable security deposit is excluded, Paripatra Example-11)

D= Any other amount received from the said property or the value of any benefit in the said income
year, which is in excess of the amount mentioned in ‘B' or ‘C’

E= Any advanced received in earlier income year which has been included in total income on that
year, and that amount has been adjusted with rental income this year

F= Vacancy Allowance
 Deductions admissible from Income from Rental
Property

➢ Insurance premium
➢ House loan interest
➢ Any Charge paid not capital in nature
➢ Repair & maintenance Repair and Maintenance
▪ House property used for Commercial purpose- 30% expense will not be
▪ House property used for Residential purpose- 25% admissible if tenant
▪ Other rental property- 10% bears the Service charge

➢ Any interest expense incurred at the time of construction of the

building will be dividend equally in 1st 3 years after income
generated
 Example- Rental Income

Mr. Landlord has a building of 2 stories of which he uses one story and the other one is rented for
25,000 per month. In addition to the rental expense, the tenant carries service charge of BDT 5,000
per month. Mr. Landlord has paid BDT 12,000 as municipal tax.
In addition to that, he also has a car which he rented out in Uber and earns BDT 2,500 per day

Particulars BDT BDT

Income from House property 300,000
Less: Allowance deductions:
Repair and Maintenance (not allowable as service
0
charge was carried by tenant)
Municipal tax (12,000) 288,000

Income from Car Rental 912,500

Less: Allowance deductions:
Repair and Maintenance (10%) (91,250) 821,250

Total Taxable Income 1,109,250

 Example- Rental Income (Vacancy Allowance)

Mr. Landlord has a building of 2 stories of which he uses one story and the other one is rented for
25,000 per month. The rented flat was vacant for 2 months during the year

Particulars: ITO 1984 ITA 2023

Yearly rental income (25,000 x 12) 300,000 300,000

Vacancy allowance (25,000 x 2) 0 (50,000)

Net rental income 300,000 250,000

Deduction of vacancy allowance directly
Less: Admissible allowances from rental income will increase the
Repair & Maintenance @ 25% (75,000) (62,500) taxable income, due to the fact that
lower deductions will be available
Vacancy allowance(25,000 x 2) (50,000) 0
against repair and maintenance
Taxable Rental Income 175,000 187,500
Investment Tax Rebate
 Changes in Investment Tax Rebate

ITO 1984 ITA 2023

Allowable rebate on Allowable rebate on

taxable income taxable income
3% 3%
Maximum amount of Maximum amount of ➢ High income people will get
tax rebate tax rebate less rebate!
1,500,000 1,000,000 ➢ No impact if monthly income
is less than BDT 2,800,000
 Investment Rebate on Certain Securities

ITO 1984 Limit ITA 2023 Limit

Included in Govt.
Saving Certificate Full
Securities
Unit Certificate, Mutual
Unit Certificate, Mutual
Full Fund(open-end), ETF Up to 500,000
Fund
Joint Investment Scheme
Government Securities Full Government Securities Up to 500,000

DPS Up to 60,000 DPS Up to 120,000

✓ Discouraged investment in BSP

✓ Encouraged investment in DPS
 Increase of Surcharge Free Limit

No Surcharge
for having
the net wealth upto Tk. 4 Crore

Surcharge Rate Current Net Asset Value Proposed Net Asset Value

0% up to 3 crores up to 4 crores
● Only the person having
3 crores to 10 crores/ More than 4 crores to 10 crores/ More than
the net wealth upto 4
10% one car in own name/ House one car in own name/ House Crore got the benefit
Property more than 8,000 SFT Property more than 8,000 SFT ● No impact for them who
20% 10 crores to 20 crores 10 crores to 20 crores have net wealth more
30% 20 crores to 50 crores 20 crores to 50 crores than 4 Crore
35% More than 50 crores More than 50 crores
Surcharge Rate Current Net Asset Value Proposed Net Asset Value

Surcharge will be applicable on final tax also

 Return Submission for Non-government
Recognized Funds

Exclusion
Bangladesh Bank
Local Govt.

Inclusion
Private Recognized Provident Fund
Tax Day for Funds-
Private Approved Gratuity Fund 30th November
Private Approved Superannuation Fund
 Provident/Gratuity Fund Taxable Entity

• Net Income of
Now Taxable individuals will
substantially reduced
for PF.
Particulars ITO 1984 ITA 2023 • Company cost will
substantially increase
Income 10,000,000 10,000,000
for GF
TDS (say 10%) 1,000,000 1,000,000
Tax Liability @27.5% 1,000,000 2,750,000
Extra Tax Burden - 1,750,000
Net Income for
9,000,000 7,250,000
distribution
 LFA for Exemption

When Monthly Gross is When Monthly Gross is

BDT 82,500 BDT 162,500
Salary Components Amount Amount
Basic salary: 600,000 1,200,000
House rent allowance: 300,000 600,000
Conveyance allowance: 30,000 30,000
Medical allowance 60,000 120,000
LFA 60,000 120,000
Festival Bonus 82,500 162,500
Total 1,132,500 2,232,500
ITO 1984 ITA 2023 ITO 1984 ITA 2023
House rent allowance: 300,000 300,000
Conveyance allowance: 30,000 30,000
450,000 450,000
Medical allowance 60,000 120,000
LFA 60,000 120,000
Exemption 450,000 450,000 570,000 450,000
Taxable Income 682,500 682,500 1,662,500 1,782,500

Tax Burden will increase for Higher Salaried

Employees who are entitled to LFA
 Withdrawal of Exemption

Particulars ITO, 1984 ITA, 2023

Exempted Up to
Income from WPPF Omitted
50,000
Income From Mutual Fund By
Exempted Up to 25,000 Omitted
An Individual
Income From Dividend By An
Exempted Up to 50,000 Omitted
Individual

Increased tax
burden to the
assessee
Disclaimer!

No part of this presentation may be reproduced, stored in a

retrieval system or transmitted in any form by any means-
electronic, mechanical, photocopying, recording or
otherwise- without prior permission from the presenter.

This presentation is intended to provide information but is

not a substitute of legal or accounting advice.
 Presenters’ Contact Details

Snehasish Barua,
FCA (ICAB), ACA (ICAEW)
Partner
Snehasish Mahmud & Co
snehasish@smac-bd.com