Chapter 2

BANGLADESH INCOME TAX

Income Tax
Income Tax is the tax which is levied on the taxable income of a person or entity as per the
provisions of income tax ordinance 1984. It is calculated and computed with reference to the
total income of an assessee for a particular period (normally on an annually basis)
Role of income tax in economic
Development of Bangladesh.
1) Tax Holiday scheme: According to ITO 1984, an individual enterprise established within
prescribed time limit in the prescribed area shall be exempted from tax for certain period.(five to
ten years) This is known as tax holiday scheme.
2) Investment Allowance: Investment allowance is given on the investment in new machineries
@ 20% if they are established in NBR specified areas it is @ 25%.
3) Accelerated depreciation allowance: Depreciation allowance is allowed on the new
machineries used in various industries at a specified rate(100% in first year for specified areas
and 80% in first and 20% in the second year for industries established in other areas)
Role of income tax in economic development of
Bangladesh….. (CONT’D)
4) Tax incentives for encouraging savings: The government encourages savings providing tax
credit facilities on certain types of investment expenditure. Such as: DPS, Savings certificate etc.
5) Tax exemptions in certain expenditures: Expenditures such as: Government Zakat Fund,
contributions to president relief fund etc. will get tax exemptions
6) Tax incentives for remittance to Bangladesh: A significant number of Bangladeshi people
work abroad and to encourage them, remittances through banking channel has been declared tax
exempted.
Points to remember:
The minimum non-assessable limit will be tk 2,50,000 for men and tk 3,00,000 for women and
elderly citizens being more than 65 years of age.
The minimum tax would be tk 5,000 for Dhaka-North and south and Chittagong city
corporation area. Tk 4,000 for other city corporations area. And Tk 3,000 for the areas other than
city corporation.
While assessing residential status is to be seen. Persons who are residents in Bangladesh are
required to pay tax on their incomes earned. Through received any where of the world. Whereas,
persons who are non-residents would pay tax only in respect of incomes earned and received in
Bangladesh.
Assessee and Assessment Year :
Assessee: Assessee means a person by whom any tax or the sum of money is payable under ITO
1984.

Assessment Year: Assessment year means the period of 12 months commencing on the 1 st day of
July and ending 30th day of June every year.
Income Year: conditions:
1) The period beginning with the date of setting up of a business and ending with the 30 th day
of June following the date of setting up of such business.

Income year Sept 9, 2015 - 30th June,2016

Assessment year July 1, 2016 - 30th June,2017

2) The period beginning with the 1st day of July and ending up with the 30th June.

Income year July 1, 2016 - 30th June,2017

Assessment year July 1, 2017 - 30th June,2018
Income Year: conditions……
(CONT’D)
3) The period beginning with the 1st day of July and ending with the date discontinuance of the
business.
Income year 1st July, 2016 - 31st August, 2017
2016-2017
Assessment Year 1st July, 2017 - 30th june, 2018
2017-2018
Or, Income year: 01.07.15 – 31.12.15

2015-2016
Assessment year: 2016-2017
Income Year: conditions……
(CONT’D)
4) If there is a possibility of two always choose the latest one.

01.01.14 - 31.12.14

Income Year July 1, 2014 - 30th June, 2015

Assessment year 2015 - 2016