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Tax System of Bangladesh
Tax System of Bangladesh
Tax System of Bangladesh
A tax may be defined as the compulsory payment to the government by the citizens of a country without expecting
any direct benefit from the government in return. It is the major source of income for any government and almost
eighty percent of the total revenue of the government of Bangladesh being collected from this source. Income tax,
wealth tax, value added tax, turnover tax, import tax, corporate tax etc. constitute the tax basket of Bangladesh.
Type of Tax
From the viewpoint of the incidence of tax burden, tax may be of two types:
A) A direct tax: a tax imposed by the government the burden of which has to be borne by the person on whom it is
primarily imposed; income tax, for example.
B) An indirect tax: a tax imposed on one person primarily has to bear the burden by that person and thereafter that
burden can be shifted to another person; VAT, for example.
From the viewpoint of the rate of tax, tax may be of three types:
A. A progressive tax: a tax where the rate of tax increases with the rise in the people’s income and the rate of tax
falls with a fall in the people’s income.
B. A regressive tax: In regressive tax, the rate of tax decreases with the rise in people’s income and vice versa.
C. A proportionate tax: a tax where the rate of tax remains the same at all levels of people’s income.
Tax System
A country may follow any of the following tax system as per its convenience:
1. A progressive tax system
2. A regressive tax system
3. A proportionate tax system
Therefore, tax system of Bangladesh appears to be a Progressive tax system at a glance. But in true sense, it is a
combination of progressive and proportionate tax; since any level of individual income after TK. 16,50,000 the
rate of tax is @25% as the figure shows.
For women and senior citizens above 65 years of age, the highest amount of tax-free income stands TK.
4,00,000.
The minimum amount of tax an individual has to pay according to this FY budget is TK. 5,000.