Fundamentals of Taxation

Definition Salary Section 21(1) & 21(2)

Sec. 21(1) of the Ordinance
The following income of an assessee shall be classified and computed under
the head “Salaries” namely
(a). any salary due from an employer to the assessee in the income year,
whether paid or not;
(b). any salary paid or allowed to him in the income year, by or on behalf of
an employer though not due or before it became due to him; and
©. any arrears of salary paid or allowed or alowed to him in the income
year by or on behalf of an employer , if not charged to income tax for
any earlier income year.
Sec. 21(2) of the Ordinance
Where any amount of salary of an assessee is once included in his tota
income of an income year on the basis that it had become due or that it
had been paid in advance in that year , the amount shall not again be
included in his income of any other year.
Fundamentals of Taxation
Definition Salary Section 21(1) & 21(2)
“Salary is the remuneration or compensation for
the services rendered, paid or to be paid to an
employee at regular intervals in terms of such
employment. Such remuneration or compensation
has been specifically stated to include dearness,
gain, compensation or cost of living allowance and
bonus and commission which are payable to an
employee as remuneration or compensation for
services rendered.” (Commissioner of Taxes v.
Telephone Shilpa Sangstha Ltd. 46 DLR 696)
Fundamentals of Taxation
Definition Perquisite Sec. 2(45)
Perquisite means any payment made to an employee by an
employer in the form of cash or in any other form excluding
basic salary, festival bonus, incentive bonus not exceeding
ten percent of the disclosed profit of relevant income year,
arrear salary, advance salary, leave encashment or leave
fare assistance and over time, and
Any benefit, whether convertible into money or not,
provided to an employee by the employer, called by
whatever name, other than contribution to a recognised
provident fund, approved superannuation fund.
Fundamentals of Taxation
Definition Perquisite Sec. 2(45)
Perquisite includes
1. the value of rent free accommodation;
2. the value of any concession in the matter of rent
respecting any accommodation;
3. any sum payable by the employer, whether directly or
indirectly, to effect an insurance on the life of, or to
effect a contract for an annuity for the benefit of, the
assessee or his spouse or any of his dependent child;
4. the value of any benefit provided free of cost or at a
concessionary rate ; and
5. any sum paid by an employer in respect of any
obligation of an employee.
Fundamentals of Taxation
Computation of Income From Salary
Heads Amount of Tax Net Taxable Income
Exempted Income
Basic Salary Nil Total Amount Received

Special Salary Nil Total Amount Received

Arrear Salary (Not considered Nil Total Amount Received
before with Taxable Income)
Dearness Allowance Nil Total Amount Received

House Rent Allowance 50% of Basic Salary Amount Received in

or Excess of Tax Exempted
Tk. 25,000 P.M. Income.
whichever is Less

Medical Allowance 10% of Basic Salary Amount Received in

or Tk. 1,20,000.00 Excess of Tax Exempted
per Annum.(Incase of Income.
Disabled Individuals
Tk. 10,00,000) which
ever is less
Fundamentals of Taxation
Computation of Income From Salary
Heads Amount of Tax Net Taxable
Exempted Income Income
Amount Received for Heart, Total Amount so Nil
Kidney, Eye, Liver & Cancer Received
Surgery
Conveyance Allowance Tk. 30,000.00 Per Amount Received in
Annum Excess of Tax Exempted
Income.
Festival Allowance Nil Total Amount Received

Servant Allowance Nil Total Amount Received

Leave Pay/ Leave Allowance Nil Total Amount Received

Honorarium/ Reward/Fee Nil Total Amount Received

Overtime Allowance Nil Total Amount Received

Fundamentals of Taxation
Computation of Income From Salary
Heads Amount of Tax Net Taxable Income
Exempted Income
Bonous / Exgratia Nil Total Amount Received

Employer’s Contribution to Nil Total Amount Received

Recognized Provident Fund
Interest on recognized 1/3 of (Basic Salary+ Amount Received in Excess of
provident fund Dearness Allowance) or Tax Exempted Income.
14.50% of the Balance,
which ever is Less.
Deemed income from If the Assessee is provided with 25% of Basic Salary
Free/Subsidized Rent Free Furnished /
Accommodation Unfurnished Accommodation

If the Assessee is provided with

furnished/unfurnished
accommodation at concessional
rate
25% of Basic Salary minus the
Amount Recovered from the
Assessee by the Employer.
Fundamentals of Taxation
Computation of Income From Salary
Heads Amount of exempted
income
Deemed income for If the Assessee is provided with a
transport facility Car for Personal use
Others, if any If the Assessee is provided with
Watchman for Residence, Gardener,
Cook, Caretaker, Servant, Driver or
any other Facilities.
Net taxable
income
5.0% of Basic Salary or
Tk. 60,000 per year,
whichever is Higher
Monetary value of the
Services rendered by
the Employer

Leave Encashment Nil Total Amount Received

Gratuity Amount received upto Amount received in

Tk. 2.5 Crore excess of Tk. 2.5
Crore.
Worker’s Participation Upto to Tk. 50,000.00 received by Amount Received in
Fund an Individual Assessee from Excess of Tax
Workers’ Participation Fund Exempted Income.
Established under Bangladesh
Labour Law 2006 (Act 42 of 2006)
Fundamentals of Taxation
Recognized Provident Fund Definition
As defined by Sec,1(g), Part B of 1st Schedule to
be read with Sec.2(52) of Income Tax Ordinance,
1984,Recognized Provident Fund is a fund with
continuous reorganization by the Commissioner of
Taxes in accordance with the provisions of 1st
Schedule of Income Tax Mannual, Part-1 of the
Ordinance.
Fundamentals of Taxation
Recognized Provident Fund
Conditions for Recognition
1. All Employees(Members) shall be employed in Bangladesh
or shall be employed by an employer having principal place
of business in Bangladesh.
2. The contributions of an employee in any year shall be a
definite proportion of his salary for that year, and shall be
ducted by the employer from the employee’s salary in that
proportion at each periodical payments of such salary in
that year and credited to the employee’s individual account
in the fund.
3. The contributions of an employer to the individual account
of an employee in any year shall not exceed the amount of
the contributions of the employee in that year and shall be
credited to the employee’s individual account at intervals
not exceeding one year.
Fundamentals of Taxation
Recognized Provident Fund
Conditions for Recognition
4. The fund shall consist of contribution as above specified and donations, if any,
received by the trustees, of accumulations thereof, and of interest, credited in
respect of such contributions , donations and accumulations, and of securities
purchased therewith and of any capital gains arising from sale, exchange or transfer
of capital assets of the fund, and of no other sums.
5. The fund shall be vested in two or more trustees or in the official trustee under a trust
which shall not be revocable save with the consent of all the beneficiaries.
Fundamentals of Taxation
Recognized Provident Fund
Conditions for Recognition

6. The employer shall not be entitled to recover any sum

whatsoever from the fund, save in cases where the employee
is dismissed for misconduct or voluntarily leaves his
employment otherwise than on account of ill health or other
unavoidable cause before expiration of the term of service
specified in this behalf in the regulations of the fund
7. The accumulated balance due to an employee shall be payable
on the day he ceases to be an employee of the employer
maintaining the fund.
8. Save as provided in 7 above, or in accordance with such
conditions and restrictions as the Board may prescribe, no
portion of the balance to the credit of an employee shall be
payable to him.