How to work income tax in Bangladesh
Publcihed by Admin 6 months ago
In Bangladesh, income tax is governed by the Income Tax Ordinance, of 1984, and administered
by the National Board of Revenue (NBR). If you are an individual or a business entity earning
taxable income in Bangladesh, you are required to comply with the income tax regulations. Here's
a general overview of how income tax works in Bangladesh:
- Taxpayer Identification Number (TIN): The first step is to obtain a Taxpayer Identification Number (TIN) from the tax authorities. This unique number is used for all tax-related transactions and filings.
- Determine Taxable Income: Calculate your taxable income by subtracting allowable deductions and exemptions from your total income. This includes income from employment, business, property, capital gains, etc.
- Tax Slabs and Rates: Bangladesh has a progressive tax system with multiple tax slabs. The tax rates vary depending on the taxpayer's income level. The rates for individuals can be revised each year, so it's essential to refer to the latest tax schedule provided by the NBR.
- Filing Tax Returns: Individuals and businesses meeting certain income thresholds are required to file annual tax returns with the tax authorities. The tax year in Bangladesh runs from July 1st to June 30th. The deadline for filing tax returns is typically September 30th following the end of the tax year.
- Tax Payment: After filing the tax return, you will need to pay the calculated tax liability. This can be done through designated banks or online payment systems approved by the NBR. Payment of taxes should be made within the specified deadlines to avoid penalties or interest charges.
- Withholding Taxes: In Bangladesh, certain payments, such as salaries, professional fees, dividends, rent, and interest, are subject to withholding tax. The person making such payments is responsible for deducting the applicable tax and depositing it to the government on behalf of the recipient.
- Tax Audit and Compliance: The NBR conducts tax audits to ensure compliance with tax regulations. Taxpayers may be selected for an audit based on risk assessment or random selection. During an audit, the tax authorities review financial records, transactions, and other relevant documents.
- Tax Benefits and Incentives: The government of Bangladesh offers various tax incentives and exemptions to promote specific sectors or activities. These include tax holidays, reduced tax rates, and exemptions for investments in certain industries, export-oriented businesses, or special economic zones. Consult with a tax professional or refer to the tax laws for details on available benefits.
It's important to note that the information provided here is a general overview, and individual
circumstances may vary. It is recommended to consult with a qualified tax advisor or the NBR for
specific guidance and up-to-date information on income tax regulations in Bangladesh.