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Questions - Fiscal Law

1. What are the items classified and computed under the head of income from
"salaries"? How is the Provident Fund computed for income from Salaries?

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Income from Salaries
Income classified under "salaries" generally includes the following types of

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payments and benefits received by an employee from their employer:
1. Basic Salary - The main monthly or annual payment made to an employee.
2. Allowances - This includes allowances like dearness, house rent,

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entertainment, and conveyance allowances.
3. Bonuses and Commissions - Any additional payments, such as performance
bonuses or commissions.
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4. Medical Allowance - Payments for medical expenses, often based on a
certain percentage of the basic salary.
5. Perquisites and Benefits - Perks such as rent-free accommodation, car
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facilities, or concessional interest loans.

6. Advance and Arrear Salary - Salary paid in advance or as arrears (for past
work not previously paid).
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7. Employee Share Schemes - The benefit of company shares issued to

employees at a concessional rate.
8. Employer’s Contributions to Recognized Funds - Employer contributions
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to funds such as the Provident Fund, if applicable, are included in taxable

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income​(59281. a) CA PL- Tax P…)​(59281. a) CA PL- Tax P…).

Provident Fund Treatment
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The Provident Fund (PF) is a retirement savings plan where both the employee and
employer contribute. Different types of provident funds are treated differently for
tax purposes:
1. General Provident Fund (GPF) - This is primarily for government
employees. Only the employee contributes, and contributions are not part of
taxable income.
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2. Recognized Provident Fund (RPF) - Both the employee and employer

contribute to this fund. Only the employer's contribution to the RPF is
considered part of the employee's taxable salary income, while the
employee's contribution may qualify as an investment allowance.
3. Unrecognized Provident Fund (UPF) - Contributions to this fund are not
approved by the tax authorities. The employer’s contribution and the interest

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on it are not taxable until the time of retirement when only the accumulated
balance, excluding employee contributions, is added to taxable income.
4. Statutory Provident Fund (SPF) - For employees in statutory organizations,

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contributions to this fund are usually not taxable

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2. What are the income subject to deduction at source under the Income Tax
Ordinance, 1984? What is the consequence of failure for deduction of tax at
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source?
Income Subject to Deduction at Source
Under the Income Tax Ordinance, 1984, tax is required to be deducted at the source
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for various types of income, including:

1. Salaries - Tax is deducted according to the employee's salary amount.
2. Interest and Dividends - Includes tax on interest from savings accounts and
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fixed deposits.
3. Payments to Contractors or Suppliers - Tax applies to payments for
contracts, services, and supplies.
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4. Rent and Royalties - Deducted from rental income for properties or

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equipment.
5. Professional Fees - Tax is applied to fees for consulting, legal, or other
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professional services.
6. Commission and Brokerage - Deduction applies to agents, brokers, or
intermediaries.
7. Insurance Commissions - Deductions are required on commissions for
insurance agents.
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8. Payments to Non-Residents - Deducted from payments to foreign

consultants or contractors.
These deductions ensure that tax is collected directly at the point of payment,
simplifying tax compliance.
Consequences of Failure to Deduct Tax at Source
If someone responsible for deducting tax does not do so, the following can happen:

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1. Liability to Pay the Tax - They will be required to pay the tax amount that
should have been deducted.
2. Penalties - They may face a penalty, up to Tk. 10 lakh, for failing to deduct

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tax.
3. Interest on Unpaid Amounts - A 2% interest per month on unpaid tax can
be charged, up to a maximum of 24 months.

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4. Joint Responsibility - The person making the payment can be held jointly
responsible for the unpaid taxes, including any penalties.
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These rules ensure timely and accurate tax deductions, helping to prevent loss of
government revenue.
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3. Explain the provisions related to Tax Holiday Income under the Income Tax
Ordinance,1984. Distinguish between tax evasion and tax avoidance.
Tax Holiday Income under the Income Tax Ordinance, 1984
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Tax holidays are special tax breaks given to encourage the growth of certain
industries. The government offers these tax exemptions for a limited time to new
companies in specific sectors to boost investment and job creation.
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1. Who Gets Tax Holidays?

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Not all businesses qualify. Only certain industries like manufacturing,

agriculture, and export-oriented companies can enjoy tax holidays. These
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industries are chosen because they are essential for the country’s economic
growth.
2. How Long is the Tax Holiday?
The length of the tax holiday varies but generally lasts up to 10 years. The
exact duration depends on the type of business and the industry.
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3. Requirements for Tax Holiday

To keep tax holiday benefits, companies must follow certain rules:
○ Maintain accurate financial records.
○ Have a Tax Identification Number (TIN).
○ Follow all related laws and regulations.
4. If these rules aren’t followed, the tax holiday benefit can be taken away.

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5. Calculating Tax-Free Income
The income from a tax-holiday business is calculated just like any other
business income, but it’s exempt from taxes during the holiday period.

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However, if the company has losses during this period, they can’t use those
losses to reduce their taxable income from other sources.
6. Approval and Cancellation

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To receive a tax holiday, companies need approval from the National Board
of Revenue (NBR). If a company doesn’t follow the required rules, the NBR
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can cancel its tax holiday, meaning it will have to pay regular taxes.
Difference Between Tax Evasion and Tax Avoidance
● Tax Evasion
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Tax evasion is illegal. It happens when a person or business tries to avoid

paying taxes by hiding income or making false claims. For example,
underreporting income or creating fake expenses to reduce taxes. Tax evasion
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is against the law, and those caught can face fines or even jail time.
● Tax Avoidance
Tax avoidance is legal and involves reducing tax payments by using lawful
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methods, like deductions or credits allowed by tax laws. For example,

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investing in government savings bonds to get a tax break. Tax avoidance

follows the law and does not involve hiding information from the tax
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authorities.
In short, tax avoidance uses lawful methods to reduce taxes, while tax evasion
breaks the law to avoid paying taxes.
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4. Define Set Off and Carry Forward. Explain the provisions of Set off of
losses under the Income Tax Ordinance,1984.
Definitions of Set-Off and Carry Forward
● Set-Off: Set-off means using a loss in one area to reduce the tax on your
other income in the same year. For example, if your business loses money but
you earn from rent, you can use the business loss to pay less tax on the total

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income.
● Carry Forward: Carry forward means saving a loss that you can’t use this
year to lower your taxes in future years. If you don’t make enough income

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this year to use up the loss, you can keep it to reduce taxes in the years to
come.
Simple Rules for Set-Off of Losses under the Income Tax Ordinance, 1984

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1. Using Losses Between Different Income Types
○ If you have more than one type of income, like income from a business
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and from renting out property, you might be able to use a loss in one
area to lower taxes on another. For example, if one business loses
money, it can sometimes help reduce the tax on profits from another
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business.
○ But there are limits. For example, losses from selling assets or from
certain businesses (like tobacco) can only be used to lower taxes on the
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same type of income and not on other sources.

2. Saving Losses for Future Years
○ If you can’t use a loss this year, you can carry it forward to use in the
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future, usually up to six years. This way, if your income is higher in

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future years, you can use that past loss to pay less tax.
○ An exception is for depreciation (the loss in value of assets over time).
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Unused depreciation can be carried forward without a time limit, so

you can keep using it year after year until it’s all used up.
3. Limits on Using and Saving Losses
○ If you make tax-free income or income taxed at a fixed low rate, you
usually cannot set off or carry forward losses from these sources.
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○ Also, a loss from one kind of income can only be used on the same type
of income in the future. For example, a business loss can’t be used to
lower tax on salary or rental income.
These rules help people and businesses by letting them use losses to lower taxes,
making it easier to handle times when income is lower than expected.

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5. Describe the scope of income from House Property. Write down the
admissible expenses from income from House Property.
Income from House Property – Scope and Deductions

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Scope of Income from House Property
Income from house property means any money you earn by renting out a building
or land attached to it, like a garage or garden. This includes both residential

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properties (homes) and commercial properties (shops or offices). If you provide
extra things with the rental, like furniture or other services, that income is also
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counted.
For tax purposes, the "annual value" is calculated for the property. This annual
value is either:
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● The actual rent you receive, or

● The expected rent the tax authority thinks is reasonable for that property.
The higher of these two amounts is considered your income from house property.
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Deductions Allowed from Income from House Property

When calculating the tax on your rental income, you can reduce it by certain
allowable expenses. Here are the main deductions:
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1. Repair and Maintenance Costs

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○ For a residential property (like a house or apartment): You can deduct

25% of the rent.
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○ For a commercial property (like a shop or office): You can deduct

30% of the rent.
○ These deductions are meant to cover any maintenance or repairs you
need to keep the property in good condition.
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2. Insurance Premiums
○ If you pay for insurance to protect the property from damage (like fire
or flood insurance), you can deduct the insurance premiums from your
rental income.
3. Interest on Home Loans
○ If you took a loan to buy, build, or improve the rental property, the

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interest you pay on that loan is deductible.
○ For example, if you borrowed money to construct the property before
renting it out, you can spread the interest deduction over three years.

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4. Property Taxes and Utility Charges
○ Municipal taxes (like property tax) and utility charges (such as water
and sewage fees) can be deducted, as long as they are paid annually and

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not one-time payments for improvements.
5. Vacancy Allowance
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○ If your property was vacant (empty) for some time during the year and
you didn’t earn rent, you can claim a vacancy allowance. This reduces
the taxable amount based on the time the property was not rented out.
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These deductions help reduce the taxable income from renting out property, making
it easier for property owners to manage expenses related to upkeep and financing of
the property.
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6. Elucidate the scope and classes of income from Agriculture. What are the
nonassessable agricultural income under the Income Tax Ordinance, 1984?
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Agricultural Income – Scope and Types

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Scope of Agricultural Income

Agricultural income is any money earned from farming activities or using land for
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growing and producing natural goods. This includes:

1. Growing Crops and Plants: Income from growing grains, fruits, vegetables,
flowers, or even timber on land.
2. Raising Animals: Earnings from raising livestock, such as cows, goats,
chickens, or fish farming.
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3. Other Farming Activities: Money earned from other related activities, like
running a nursery (growing and selling young plants), dairy farming
(producing milk), or beekeeping.
Some activities, like tea, coffee, and rubber production, are only partly considered
agricultural. This means, for example, that 60% of income from these is treated as
agricultural income, while the other 40% is considered business income.

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Types of Agricultural Income
1. Fully Agricultural Income: This is income entirely from farming, such as
growing and selling crops or vegetables.

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2. Partly Agricultural Income: Some activities, like tea or rubber production,
have mixed income classifications. For example, 60% of income from tea
production is considered agricultural, and the remaining 40% is classified as

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business income.
Non-Taxable Agricultural Income
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Certain types of agricultural income are not taxed. This is known as
"non-assessable" income, meaning it does not count for tax purposes. Here are
examples:
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1. Small Farmers' Income: If a small farmer only earns from agriculture and
their income is below Tk. 200,000, they do not have to pay tax on this
income.
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2. Special Types of Farming: Some income from specific types of farming,

such as fish farming, poultry farming, or dairy farming, may also be tax-free
if they meet certain conditions.
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These rules aim to help farmers by reducing taxes on smaller or purely agricultural
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income, encouraging growth in the agriculture sector and providing relief to small
farmers.
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1. What does the term 'Total Income' and 'Total World Income' mean? What
are the sources of income of an individual? Summarize the changes brought by
Bangladesh National Budget for FY 2021-22
Total Income: This is the full amount of money a person or business earns from all
sources in one year. It includes money from jobs, businesses, investments, property,
and any other source that brings income.
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Total World Income: This is the total income someone earns from both inside their
country and from other countries. If someone is taxed on worldwide income, they
pay taxes on all earnings, no matter where they made it.
Sources of Income for Individuals:
● Job Income: Salary, wages, bonuses, and other payments from employment.
● Business Income: Money made from owning a business or self-employment.

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● Capital Gains: Profit from selling things like property or stocks.
● Rental Income: Earnings from renting out property or other assets.
● Investment Income: Interest from savings, dividends from stocks, and other

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returns on investments.
● Other Income: Any additional earnings like royalties or special fees.
Bangladesh National Budget Changes for FY 2021-22:

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● Tax Changes: Adjusted personal and business tax rates to help boost tax
payments and raise more funds.
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● Support for IT and Exports: Tax breaks and special benefits for IT services
and export businesses to help them grow.
● Better Tax Collection: Improved ways to collect VAT (Value Added Tax)
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and reduce tax avoidance.

● Funding for Public Services: More money for projects like roads, bridges,
and social welfare programs to support development across the country.
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2. Draw out a flow chart on the income tax authorities in Bangladesh? Briefly
discuss the powers and adjudication process of disputes on income taxation
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matters in the Income Tax Appellate Tribunal. Mention relevant provisions of

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the ITO,1984.
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National Board of Revenue (NBR)

|
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| | | |
Commissioner Deputy Assistant Inspectors
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of Taxes Commissioner Commissioner of Taxes

1. Income Tax Authorities in Bangladesh

The structure of income tax authorities in Bangladesh looks like this:
1. National Board of Revenue (NBR): The top tax authority in Bangladesh
that oversees tax policies and administration.

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2. Commissioner of Taxes: Manages tax assessments and supervises tax
operations.
3. Deputy Commissioner: Handles tax assessments, audits, and some

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investigations.
4. Assistant Commissioner & Tax Inspectors: Help in assessing, collecting,
and monitoring tax compliance.

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2. Income Tax Appellate Tribunal: Role and Process
The Income Tax Appellate Tribunal is the main body that resolves disputes over
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income tax assessments. It has specific powers and a set process to handle cases
fairly:
● Powers:
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1. The Tribunal can call people to appear and provide documents.

2. It has the authority to examine witnesses under oath and gather
necessary evidence.
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● Process:
1. Filing an Appeal: If a taxpayer disagrees with a tax assessment, they
can appeal to the Tribunal within 60 days.
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2. Hearing: Cases are usually heard by two members. If they disagree,

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another member may join to make a majority decision.

3. Decision: The Tribunal makes a decision after the hearing, which can
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either uphold or change the original tax assessment.

● Further Appeals: If someone disagrees with the Tribunal’s decision, they
can appeal to the High Court on questions of law.
This process helps ensure that taxpayers have a fair chance to resolve any issues
with their tax assessments.
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3. Define the term 'Annual Value'. Identify the main attributes and scope of
'Gift Tax' in Bangladesh. Identify the exceptional situations where someone
will be exempted from the liability to pay gift tax. Answer with examples.
1. What is "Annual Value"?
The term Annual Value refers to the potential yearly income that a property, like a
house or building, could bring if it was rented out. This value helps decide how

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much tax the property owner should pay.
In Bangladesh, the Annual Value of a property is usually the higher amount
between:

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● The reasonable rent, which is the amount of rent the government or local
authority believes the property could earn each year, or
● The actual rent received if it’s higher than the expected reasonable rent.

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Example: Imagine the government sets the reasonable rent of a property at Tk.
1,200,000 per year, but the actual rent the owner receives is Tk. 1,500,000. In this
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case, the annual value would be Tk. 1,500,000 because it’s the higher amount.
2. What is "Gift Tax"?
Gift Tax is a tax that applies when someone gives money or property to another
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person without expecting anything in return. It’s a way for the government to tax
large gifts. The Gift Tax Act, 1990 sets rules for how this tax works in Bangladesh.
Some key points about Gift Tax:
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● This tax is charged on gifts made within a year.

● Larger gifts are taxed at higher rates, so if someone gives a very valuable gift,
the tax is higher.
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● The person giving the gift is usually the one who pays the tax, not the person
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receiving it.
3. Situations Where Gift Tax Doesn’t Apply (Exemptions)
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There are certain situations where gift tax doesn’t have to be paid. Here are some
cases where a gift is exempt from gift tax in Bangladesh:
● Gifts Outside Bangladesh: If a gift involves property that is located outside
Bangladesh, no gift tax needs to be paid on it.
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● Gifts to Government or Charitable Groups: When someone gives a gift to

the government, a local authority, or a charity that’s approved by the
government, the gift is tax-free.
● Small Gifts for Family Events: Gifts up to Tk. 20,000 given for a close
family member’s wedding or other important event are exempt from gift tax.
● Gifts to Immediate Family Members: Gifts given to close family members,

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like a spouse, children, or parents, do not require gift tax payment.
Examples of Exemptions from Gift Tax
● Example 1: If a mother gives Tk. 15,000 to her son for his wedding, she

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won’t have to pay gift tax because it’s below Tk. 20,000.
● Example 2: If someone donates money to a government-approved charity,
this donation is tax-free.

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● Example 3: A father gives Tk. 25,000 to his daughter for her college fees.
This gift is tax-free because it’s to an immediate family member.
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These exemptions are meant to make sure that regular family gifts, donations to
help others, or small contributions don’t lead to extra taxes. Only larger or unusual
gifts outside these cases are generally subject to gift tax.
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4. Define Tax. What are the characteristics of Tax? Make a difference between
Direct and Indirect tax.
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1. What is a Tax?
A tax is money that people, businesses, or other organizations must pay to the
government. Paying taxes is required by law, and the government uses this money
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to provide public services like schools, roads, hospitals, and police. Taxes are a way
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for everyone to contribute to the needs of society.

2. Characteristics of Tax
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Some key features of taxes include:

● Required by Law: Taxes aren’t optional; people must pay them if they meet
certain conditions, like earning a salary or owning property.
● No Direct Benefit: When you pay a tax, you don’t get a direct benefit or
product in return. The benefit is indirect, like having good roads or
healthcare.
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● Funds Public Services: Taxes help pay for things everyone needs, such as
education, defense, and healthcare.
● Based on Ability to Pay: Some taxes, like income tax, are higher for people
with higher incomes. This helps ensure fairness, as those who earn more pay
more.
● Only Collected by Government: Only the government has the right to

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collect taxes.
3. Difference Between Direct Tax and Indirect Tax
Here’s a simple breakdown of how Direct and Indirect taxes differ:

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Direct Tax Indirect Tax
Paid directly to the government: Collected by businesses and passed to

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People or businesses pay this tax the government: When you buy things,
straight to the government. the business adds tax and then sends it
to the government.
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Paid by the person responsible: The Passed on to others: Businesses can
person who owes the tax pays it pass the tax cost to customers by raising
themselves. prices.
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Based on income or assets: Direct Based on purchases: Indirect taxes are

taxes are often based on things like applied to goods and services that
your earnings or what you own. people buy.
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Examples: Income tax, property tax. Examples: Sales tax, VAT (Value
Added Tax), customs duty.
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Examples to Clarify:
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● Direct Tax Example: If you earn a salary, you pay income tax directly to the
government based on what you earn.
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● Indirect Tax Example: When you buy a book, you pay VAT as part of the
price. The store collects this tax and then sends it to the government.
In short, direct taxes are paid directly by the person or business earning money,
while indirect taxes are included in the price of things we buy.
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5. What does the term ADR in taxation matter? What provisions are relevant
to the application of ADR on Income tax and customs matters? Answer
referring to the relevant sections of laws.
Alternative Dispute Resolution, or ADR, is a way for taxpayers and tax authorities
to settle disagreements without going to court. It’s designed to make resolving
issues faster, simpler, and less formal than the traditional legal process.

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How ADR Works in Income Tax Matters
ADR for income tax is covered in Section 297 of the Income Tax Act, 2023.
Here’s a simple breakdown of how it works:

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1. Eligibility for ADR
○ Taxpayers who disagree with a decision made by an income tax
authority or who have an ongoing dispute in an appeal court can apply

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for ADR.
○ If a case is already in court or at the Taxes Appellate Tribunal, the
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taxpayer needs written permission from the relevant authority to move
forward with ADR.
2. How to Apply for ADR
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○ To start ADR, a taxpayer must fill out an application form and pay a fee
(usually 500 Taka for each year the dispute relates to).
○ Once the ADR process begins, any ongoing legal proceedings about the
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dispute are put on hold.

3. The Role of the Facilitator
○ The National Board of Revenue (NBR) assigns a “facilitator” to
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manage the ADR process. This person acts like a mediator, helping
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both sides—taxpayer and tax authorities—discuss their issues and work

toward an agreement.
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○ The facilitator does not make decisions but guides the conversation to
help both sides understand each other and find a solution.
4. What Happens if Both Sides Agree?
○ If the taxpayer and the tax authorities reach an agreement through
ADR, the outcome is binding, meaning both sides must follow it. This
agreement cannot be appealed or challenged in any court or tribunal.
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5. If No Agreement is Reached
○ If ADR doesn’t result in an agreement, the taxpayer can continue with
their original appeal in court or at the Taxes Appellate Tribunal as if the
ADR process had never taken place.
ADR in Customs Matters
While the manual doesn’t detail ADR for customs specifically, similar ADR

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processes are available. These help resolve issues like disagreements over the value
of imported goods, customs duties, and classifications. ADR for customs aims to
reduce time and costs by resolving issues directly between the taxpayer and

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customs authorities, again with the guidance of a facilitator.
Summary of ADR Benefits
ADR provides a quicker, less formal option for taxpayers to resolve disputes. It’s a

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cooperative process where both sides can openly discuss and, hopefully, resolve the
issue without needing lengthy court battles.
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ADR is a helpful tool for avoiding legal expenses and lengthy waits, making it
easier for taxpayers to settle their issues in a fair and timely way.
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6. Define custom duties. What are their scope and attributes? Which goods
have fallen as prohibited in line with the customs statute? Briefly discuss the
various types of duties as per the Customs Act, 1969.
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Understanding Customs Duties

Customs duties are taxes that the government collects on goods when they are
brought into or sent out of a country. These taxes play an important role in
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regulating trade, helping local businesses, and generating income for public
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services. The Customs Act, 1969, is the main law governing customs duties in
Bangladesh.
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Scope and Purpose of Customs Duties

Customs duties cover a wide range of imported and exported goods and have
several purposes:
1. Regulating Imports and Exports: Customs duties ensure that goods
entering or leaving Bangladesh meet national standards and guidelines.
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2. Protecting Local Industries: Higher duties on certain imported items make

foreign goods more expensive, helping local businesses compete fairly.
3. Generating Revenue: Customs duties are a significant source of government
income, which funds infrastructure, public services, and national projects.
4. Encouraging Economic Growth: By carefully managing imports and
exports through customs duties, the government can support balanced

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economic growth and sustainable trade practices.
Types of Goods Prohibited Under Customs Law
Certain goods are banned from being imported or exported. These prohibited items

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are outlined in the Customs Act to ensure national security, protect public health,
and align with international agreements. Examples of prohibited goods include:
● Weapons, explosives, and other items posing security risks.

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● Counterfeit goods or pirated products.
● Hazardous or toxic substances harmful to health and the environment.
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● Goods restricted under trade agreements or international sanctions.
The Customs Act lists these goods to safeguard the interests of the nation, ensure
public safety, and maintain ethical trade practices.
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Types of Duties Under the Customs Act, 1969

The Customs Act specifies different types of duties, each with a specific purpose:
1. Basic Customs Duty (BCD)
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The standard tax on imported goods, intended to raise revenue and protect
domestic industries.
2. Additional Duty
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An extra charge applied in certain cases to increase government revenue or

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shield local industries from foreign competition.

3. Regulatory Duty
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A temporary measure to manage import levels. For example, regulatory duty

might be applied if imports of a particular product surge and disrupt the local
market.
4. Anti-Dumping Duty
This duty is charged on foreign goods sold in Bangladesh at prices lower than
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their normal value, which could harm local industries. It’s designed to
prevent unfair pricing.
5. Safeguard Duty
Imposed when a sudden rise in imports threatens local producers, safeguard
duty is intended to temporarily protect domestic businesses until they can
adjust to the competition.

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6. Countervailing Duty
Countervailing duty is added to imports if the exporting country provides
subsidies to its producers, making the goods artificially cheap. This levels the

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playing field for Bangladeshi producers.
Each type of duty serves a unique purpose, helping to balance trade, protect
industries, and support government programs. Through these duties, Bangladesh

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can effectively regulate its imports and exports, ensuring a fair trade environment
that supports the nation’s economic growth and stability.
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7. Describe the powers and functions of a Tax Commissioner.
Customs Duties: Meaning and Importance
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Customs duties are taxes on goods brought into or taken out of a country. These
taxes are collected by the government and help regulate trade, protect local
businesses, and generate money to fund public services. The Customs Act, 1969,
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provides the rules and guidelines for customs duties in Bangladesh.

Scope and Role of Customs Duties
Customs duties apply to many types of goods, and their purposes are:
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1. Regulating Imports and Exports

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Customs duties make sure goods brought into or sent out of Bangladesh
follow national laws and guidelines. They help control the types and amounts
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of goods traded, ensuring that only approved items enter or leave the country.
2. Protecting Local Businesses
By adding duties to imported goods, foreign products may become more
expensive, which helps local businesses compete fairly. For instance, higher
duties on imported items that are also made in Bangladesh can make local
products more attractive to buyers.
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3. Raising Government Revenue

Customs duties are an important source of government income. The money
collected is used for public services like healthcare, education, infrastructure,
and security.
4. Supporting Economic Growth
Customs duties allow the government to manage the balance between imports

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and exports, which helps support economic stability and growth. This
balanced approach helps reduce dependence on imported goods and
encourages local production.

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Goods That Are Not Allowed (Prohibited Goods)
Under customs law, certain items cannot be brought into or taken out of the
country. These goods are listed as "prohibited" to protect national security, health,

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and public safety. Some examples of prohibited items are:
● Dangerous items like explosives, firearms, and toxic chemicals that can harm
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people or the environment.
● Counterfeit (fake) goods or pirated materials that violate intellectual property
rights.
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● Items banned by international agreements or national policies, such as

specific wildlife products.
These prohibitions help maintain safety, security, and ethical trade practices.
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Types of Customs Duties Under the Customs Act, 1969

The Customs Act outlines different types of customs duties, each with its own
purpose:
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1. Basic Customs Duty (BCD)

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This is the main tax on imported goods. It applies to almost all items brought
into Bangladesh and is used to raise government revenue and protect local
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businesses.
2. Additional Duty
An extra tax applied in specific cases to increase revenue or help local
industries compete with foreign products.
3. Regulatory Duty
This is a temporary tax on imported items, applied to manage trade levels.
 19

For instance, if imports of a particular item suddenly increase, the

government may add a regulatory duty to control the flow and support local
markets.
4. Anti-Dumping Duty
This tax applies when foreign companies sell goods in Bangladesh at a price
lower than they would in their own country, which can hurt local industries.

IN
The anti-dumping duty ensures fair pricing and protects local businesses from
unfair competition.
5. Safeguard Duty

AH
This duty is imposed when there is a sudden rise in imports that could harm
local producers. It is a protective measure for domestic industries, applied
until they can adjust to the new level of competition.

M
6. Countervailing Duty
This duty is charged on imports that benefit from subsidies in their home
AL
country. Such subsidies make foreign goods cheaper, so the countervailing
duty balances the price to protect Bangladeshi industries.
AH

Summary
Customs duties are essential for managing trade and supporting local industries.
They help the government control what goods enter or leave the country, raise
LL

funds for public services, and protect local businesses. Through different types of
duties, Bangladesh can create a balanced and fair trade environment that
encourages local production and supports the country's economic growth.
U
D

8. Professor Ms. Tasmi Zaman Khan has the following sources of income for
AB

the year ended

30" June 2021.
8.1 Income from salary:
a) Basic salary Tk 60,000.00 (per month)
b) Two bonuses are equivalent to Two months' basic salary.
c) Dearness Allowance @ 25% on basic salary
 20

d) House rent allowance Tk 35000.00 per month

e) Entertainment allowance Tk 3500.00 per month
t) Medical allowance@ Tk 6,000.00 per month
She contributes 10% of her basic salary to a recognized provident fund and
the same amount contributed by her employer (university) too. She has paid
25000 to the deposit pension scheme.

IN
8.2 Income from house property:
She has a house at Uttara, Dhaka; the said house was let out at Tk 45,000.00
per month.

AH
Moreover, the municipal value of the house is Tk 5,00,000.00(Yearly). She
spends the following amounts on the house for the income year 2020-2021,
which ended on 30.06.2021.

M
a) Whitewash Tk 25,000.00
b) Rent Collection costs Tk 2,500.00
AL
c) City Corporation Tax Tk 7,300.00
d) Land revenue paid Tk 2,300.00
8.3 Income from the agricultural property:
AH

Her agricultural income for the year was 3,00,000.00. She could not produce
proper books of account showing detailed expenses. She has paid local
municipal tax of 2,000.00 and crops insurance premium Tk 1,500.00
LL

8.4 Income from other sources:

a) She has received a dividend from a listed company Tk 40,000.00
b) Interest credited on saving bank account is Tk 17,500.00
U

c) She won a lottery of 1,00,000.00

D

d) She has received a birthday gift of Tk. 5,000.00

8.5 Additional Information:
AB

a) She paid a total Tk. 30,000.00 as insurance premium

b) She invested 50,000.00 in Government securities
c) She contributes 50,000.00 to the Zakat fund
Professor Ms. Tasmi Zaman Khan is a Bangladeshi citizen and compute her
total taxable income, tax credit income, and net tax payable based on the
up-to-date assessment laws.
 21

Professor Ms. Tasmi Zaman Khan’s taxable income, tax credits, and net tax payable
in simpler steps.
Step 1: Calculate Income from Salary
● Basic Salary: Tk. 60,000 per month × 12 months = Tk. 7,20,000
● Two Bonuses (equivalent to two months' basic salary): Tk. 60,000 × 2 = Tk.

IN
1,20,000
● Dearness Allowance (25% of Basic): Tk. 7,20,000 × 25% = Tk. 1,80,000
● House Rent Allowance: Tk. 35,000 per month × 12 months = Tk. 4,20,000

AH
● Entertainment Allowance: Tk. 3,500 per month × 12 months = Tk. 42,000
● Medical Allowance: Tk. 6,000 per month × 12 months = Tk. 72,000
Total Salary Income: Tk. 7,20,000 + Tk. 1,20,000 + Tk. 1,80,000 + Tk. 4,20,000

M
+ Tk. 42,000 + Tk. 72,000 = Tk. 15,54,000
Exemption Allowed: Minimum of 1/3 of total income or Tk. 4,50,000
AL
● Exemption = Tk. 4,50,000 (since 1/3 of Tk. 15,54,000 is higher)
Taxable Salary: Tk. 15,54,000 - Tk. 4,50,000 = Tk. 11,04,000
Step 2: Income from House Property
AH

● Rental Income: Tk. 45,000 per month × 12 months = Tk. 5,40,000

● Expenses Allowed:
○ Whitewash: Tk. 25,000
LL

○ Rent Collection: Tk. 2,500

○ City Tax: Tk. 7,300
○ Land Revenue: Tk. 2,300
U

Total Expenses: Tk. 25,000 + Tk. 2,500 + Tk. 7,300 + Tk. 2,300 = Tk. 37,100
D

Taxable House Property Income: Tk. 5,40,000 - Tk. 37,100 = Tk. 5,02,900
Step 3: Income from Agriculture
AB

● Agricultural Income: Tk. 3,00,000

● Expenses Allowed:
○ Local Tax: Tk. 2,000
○ Crop Insurance: Tk. 1,500
Taxable Agricultural Income: Tk. 3,00,000 - Tk. 3,500 = Tk. 2,96,500
Step 4: Income from Other Sources
 22

● Dividend from Listed Company: Tk. 40,000

● Bank Interest: Tk. 17,500
● Lottery Win: Tk. 1,00,000 (taxed separately)
● Gift Received: Tk. 5,000 (exempt from tax)
Taxable Other Income: Tk. 40,000 + Tk. 17,500 + Tk. 1,00,000 = Tk. 1,57,500
Step 5: Total Taxable Income

IN
● Salary: Tk. 11,04,000
● House Property: Tk. 5,02,900
● Agriculture: Tk. 2,96,500

AH
● Other Sources: Tk. 1,57,500
Total Taxable Income = Tk. 11,04,000 + Tk. 5,02,900 + Tk. 2,96,500 + Tk.
57,500 = Tk. 20,61,200

M
Step 6: Calculate Tax
Using tax rates in Bangladesh:
AL
● Up to Tk. 3,50,000: No tax
● Next Tk. 1,00,000 @ 5%: Tk. 5,000
● Next Tk. 3,00,000 @ 10%: Tk. 30,000
AH

● Next Tk. 4,00,000 @ 15%: Tk. 60,000

● Next Tk. 5,00,000 @ 20%: Tk. 1,00,000
● Remaining Tk. 4,11,200 @ 25%: Tk. 1,02,800
LL

Tax on Lottery Income (20%): Tk. 1,00,000 × 20% = Tk. 20,000

Total Tax = Tk. 5,000 + Tk. 30,000 + Tk. 60,000 + Tk. 1,00,000 + Tk. 1,02,800 +
Tk. 20,000 = Tk. 3,17,800
U

Step 7: Investment Allowance (Tax Credit)

D

● Provident Fund (10% of Basic): Tk. 7,20,000 × 2 = Tk. 1,44,000

● Deposit Pension Scheme: Tk. 25,000
AB

● Insurance Premium: Tk. 30,000

● Government Securities: Tk. 50,000
● Zakat Fund Contribution: Tk. 50,000
Total Investments = Tk. 1,44,000 + Tk. 25,000 + Tk. 30,000 + Tk. 50,000 + Tk.
50,000 = Tk. 2,99,000
 23

Maximum Allowable Rebate (15% of total taxable income or Tk. 1,00,000): Tk.
1,00,000
Tax Credit: Tk. 1,00,000 × 15% = Tk. 15,000
Step 8: Net Tax Payable
● Net Tax Payable = Total Tax - Tax Credit = Tk. 3,17,800 - Tk. 15,000 = Tk.
3,02,800

IN
Summary
● Total Taxable Income: Tk. 20,61,200

AH
● Total Tax: Tk. 3,17,800
● Tax Credit: Tk. 15,000
● Net Tax Payable: Tk. 3,02,800

M
●
1. Define Income year and Assessment year. Explain how to determine income
AL
year under different 10 circumstances stated in section 2 (35) of the ITO, 1984.

Explanation of Income Year and Assessment Year (Based on ITO, 1984)

AH

1. Income Year: This is the year when income is actually earned. It typically
goes from July 1 to June 30. For example, if income is earned from July 2020
to June 2021, this period is the income year.
LL

2. Assessment Year: This is the year immediately following the income year.
During this year, the tax authorities assess and calculate taxes on the income
earned in the previous income year. For example, if the income year is
U

2020-21, the assessment year would be 2021-22.

D

Different Scenarios for Determining Income Year (According to Section 2(35)

of ITO, 1984)
AB

The income year can vary based on different situations. Here’s how it is determined
under specific circumstances:
1. New Business: If a business starts in the middle of a financial year, the
income year will start from the setup date and end on June 30 following that
date.
 24

2. New Source of Income: When a new income source (e.g., a rental property)
is added, the income year begins from the date this source starts generating
income and ends on the next June 30.
3. Business Closure: If a business closes during the financial year, the income
year covers the period from the start of the financial year (July 1) to the date
of closure.

IN
4. Retirement or Death in Unincorporated Businesses: For businesses
without legal incorporation, the income year covers the period from July 1 to
the date when a participant retires or passes away.

AH
5. Successive Deaths or Retirements in Unincorporated Businesses: If there
are multiple retirements or deaths in succession, the income year continues
from the next day of the first event until the next retirement or death or until

M
June 30.
6. Banks and Financial Institutions: For banks, insurance companies, and
AL
financial institutions, the income year follows the calendar year, from January
1 to December 31.
7. Subsidiaries of Foreign Companies: A subsidiary of a foreign company can
AH

align its income year with the parent company’s financial year, if allowed, to
consolidate its accounts.
These rules allow flexibility to adapt to different types of income sources and
LL

events within a financial year.

2. Define Tax. Discuss different classes of Tax. State the differences between
U

direct and indirect tax.

D

What is Tax?
A tax is a compulsory payment we make to the government, which it uses to fund
AB

public services like schools, hospitals, and infrastructure. It can include extra
charges or penalties if we don't pay on time.
Types of Taxes
In Bangladesh, taxes are split into two main types: direct taxes and indirect taxes.
1. Direct Taxes:
 25

○ Direct taxes are paid straight to the government by individuals or

organizations.
○ The person who pays this tax also carries the full responsibility for it,
meaning they can’t pass it on to someone else.
○ Examples of direct taxes include income tax, which is a tax on your
earnings, and property tax, which is a tax on what you own.

IN
2. Indirect Taxes:
○ Indirect taxes are different because the person who pays the tax can
pass the cost to others, usually to consumers.

AH
○ For example, when a business pays VAT (Value-Added Tax) on
products, they add that cost to the price of the product. So, when we
buy the product, we end up covering that tax as part of the price.

M
○ Other examples of indirect taxes are customs duties (tax on imported
goods) and excise duties (tax on specific goods like tobacco).
AL
Differences Between Direct and Indirect Taxes
Here’s a simpler breakdown of the main differences:
● Who Pays the Tax?
AH

○ With direct taxes, you pay the government directly. No one else helps
cover this cost, and you can’t pass it on to anyone else. For example,
when you pay income tax, you pay it based on what you earned.
LL

○ With indirect taxes, the business pays the tax to the government but
adds this tax amount to the price of goods or services. So, the customer
actually covers this tax when they buy the product.
U

● What is Being Taxed?

D

○ Direct taxes are on what people or companies earn or own. Examples

include taxes on salaries or property.
AB

○ Indirect taxes are on things people buy, like goods and services. So,
when you pay extra on a purchase because of VAT, you’re paying an
indirect tax.
These two tax types affect people differently. Direct taxes are usually based on
ability to pay (higher income often means more tax), while indirect taxes affect
everyone who buys goods and services.
 26

3. Do you agree with the statement that "nature of income or expenditures

needs to be understood to apply income tax law against an assessee"? Explain.
Yes, it’s very important to understand what type of income and expenses a person
or business has before applying income tax laws. This understanding helps in
knowing how much tax should be paid and what deductions can be made. Here’s
why it matters:

IN
1. Different Types of Income:
○ Income tax laws treat each type of income differently. There are
different rules for income from a job, income from renting property,

AH
farming income, and business profits.
○ For example, some kinds of income might not be taxed at all, while
others might qualify for certain tax deductions or reductions. Knowing

M
the type of income helps in applying the right tax rules.
2. Different Types of Expenses:
AL
○ Expenses also need to be understood clearly. Tax law separates
expenses into two main types: revenue expenses and capital expenses.
○ Revenue expenses are the regular, day-to-day costs of running a
AH

business, like paying salaries or rent. These can usually be deducted

from income, which lowers the amount of income that is taxed.
○ Capital expenses are usually bigger, one-time costs that improve the
LL

business, like buying a machine or building. These are handled

differently for tax purposes and are often spread out over time.
3. Deductions and Exemptions:
U

○ Some expenses are allowed as deductions, which means they can

D

reduce taxable income. For example, if a business spends on employee

salaries or office rent, these costs can often be subtracted from its total
AB

income, which lowers the tax it owes.

○ But not all expenses can be deducted. Personal expenses, or costs that
aren’t related to the business, usually can’t be taken off the income. If
these expenses are not classified correctly, it can lead to wrong tax
amounts being paid.
 27

In simple terms, understanding the kind of income and expenses is essential to

correctly calculate how much tax should be paid. This helps avoid errors and
ensures that only the right amount of tax is applied.

4. What is the meaning of Agricultural Income? Define classification of

Agricultural Income. Discuss in brief the allowances from agricultural income.

IN
What is Agricultural Income?
Agricultural income is the money earned from farming activities. This can come
from growing crops, raising animals, fish farming, or other farm-related work done

AH
on land used specifically for agriculture.
Types of Agricultural Income
Agricultural income can be grouped into three types:

M
1. Pure Agricultural Income: This is income earned directly from farming,
such as growing and selling crops on your own land.
AL
2. Partly Agricultural, Partly Business Income: Some activities are partly
farming and partly business. For example, in tea or rubber plantations, 60%
of the income is considered agricultural, and the other 40% is treated as
AH

business income.
3. Non-Agricultural Income: This includes income from land that isn’t directly
related to farming. For instance, renting out farmland for other purposes or
LL

income from plants that grow naturally without farming efforts.

Allowances (Deductions) from Agricultural Income
Certain expenses can be subtracted from agricultural income, which helps reduce
U

the taxable amount. These include:

D

1. Land Tax and Rent: Any taxes or rent paid for agricultural land can be
deducted.
AB

2. Loan Interest: Interest paid on loans taken for farming purposes can be
deducted.
3. Insurance: Insurance premiums paid to cover agricultural activities or
equipment can be deducted.
4. Maintenance Costs: Costs for repairs and upkeep of farm equipment or
machinery can be subtracted.
 28

5. Disaster Protection: Money spent to protect crops or livestock from natural

disasters can be deducted.
6. Depreciation: The decrease in value (wear and tear) of farm equipment, like
tractors, can be deducted over time.
These deductions help farmers lower their taxable income by allowing them to
subtract necessary costs from their total agricultural earnings.

IN
5. Which offices constitute 'income tax authorities'? How appointments to
these offices are made? Briefly discuss the jurisdiction of the income tax

AH
authorities according to the Income Tax Ordinance 1984.

Who Are the Income Tax Authorities?

M
The main offices that make up the income tax authorities are:
1. National Board of Revenue (NBR): This is the top office for income tax in
AL
the country. It manages and oversees all income tax matters.
2. Commissioners of Taxes: These are senior officials who handle income tax
in specific regions or tax zones.
AH

3. Deputy Commissioners, Assistant Commissioners, and Extra Assistant

Commissioners of Taxes: These officers work under the Commissioners and
handle tasks like calculating tax amounts and making sure tax laws are
LL

followed.
4. Inspectors of Taxes: They are entry-level officials who help with initial
checks and assist in enforcing tax rules.
U

How Are Income Tax Officials Appointed?

D

The National Board of Revenue (NBR) appoints these officials. Appointments

follow specific laws and rules to make sure the right people are chosen for the job.
AB

The NBR assigns people based on the needs of the tax department.
What Do Income Tax Authorities Do?
Each level of income tax authority has specific tasks:
1. National Board of Revenue (NBR): The NBR makes income tax policies,
manages the overall tax system, and gives authority to other officials to carry
out their duties.
 29

2. Director-General of Inspection: This office checks tax cases to make sure

everything is correct. They also suggest changes to improve tax policies.
3. Director-General of Central Intelligence Cell: This group focuses on
finding and stopping tax evasion (avoiding tax). They collect information and
investigate cases where people might be hiding income.
4. Commissioners of Taxes: Commissioners calculate taxes in their assigned

IN
regions and handle appeals if taxpayers disagree with their tax assessments.
5. Field-Level Officials (like Deputy Commissioners and Inspectors): They
work on everyday tasks, like reviewing tax returns, conducting audits, and

AH
making sure people are following tax rules.
These roles help ensure taxes are collected properly and fairly across the country.

M
6. What do you understand by 'income from house property'? Write down the
allowances and deductions which shall be made while computing the income
AL
under the head income from house property, under the Income Tax Ordinance
1984.
Under the Income Tax Ordinance 1984, "income from house property" is the
AH

money earned from renting out a property, whether it’s a house, apartment, or
commercial space. This income is calculated based on the property’s "annual
value," which is usually the rent received or a fair rent value set by the tax
LL

authority.
Allowed Deductions and Allowances
When calculating the taxable income from house property, certain expenses are
U

allowed to be deducted. This helps ensure that only the net income, or profit after
D

expenses, is taxed. Here are the key deductions and allowances:

1. Repair and Maintenance:
AB

○ If the property is used for living (residential), you can deduct 25% of
the rent value for repairs.
○ If the property is used for business (commercial), you can deduct 30%
of the rent value for maintenance.
 30

2. Interest on Loan:
○ If you took a loan to buy, build, or improve the property, the interest
paid on that loan can be deducted.
○ If the loan was taken before renting the property, the interest paid can
be spread out and deducted over three years.
3. Insurance Premium:

IN
○ Any amount paid for insurance to protect the property (like against fire
or damage) can be deducted.
4. Municipal Taxes and Fees:

AH
○ Taxes or charges paid to the city or local authorities, such as property
tax, water, and sewer charges, can be deducted.
5. Vacancy Allowance:

M
○ If the property was empty for some time and couldn’t be rented, you
can get a deduction for that vacant period.
AL
6. Uncollectible Rent Allowance:
○ If rent from a tenant cannot be collected, despite making efforts (like
legal action), you may claim a deduction for this lost rent.
AH

These deductions reduce the amount of income from the property that is subject to
tax. So, you only pay tax on the actual profit made from renting the property after
subtracting necessary expenses.
LL

7. Define 'agricultural income'. Mention the allowances and deductions which

shall be 10 made while computing income under the head, agricultural income,
U

under the Income Tax Ordinance 1984.

D

Under the Income Tax Ordinance 1984, "agricultural income" is the money earned
from farming activities on land in Bangladesh. This includes income from growing
AB

crops, raising animals, or any other work done on farmland.

Allowed Deductions for Agricultural Income
When calculating the taxable income from agriculture, several expenses can be
deducted. These deductions help lower the amount that is taxed, so only the real
profit after expenses is considered. Here are the key deductions:
1. Land Taxes:
 31

○ If you pay taxes for the farmland, like land development or local taxes,
you can deduct these from your income.
2. Rent and Cultivation Costs:
○ Any rent paid for using the farmland, and costs for growing crops or
raising animals, can be deducted.
3. Interest on Loans:

IN
○ If you took a loan specifically for farming (like buying seeds or
animals), the interest paid on that loan can be deducted.
4. Equipment Maintenance:

AH
○ Costs for repairing or maintaining machines used for farming (like
tractors) are deductible.
5. Insurance Premiums:

M
○ Money paid for insurance to protect crops, animals, or farm equipment
is also deductible.
AL
6. Natural Disaster Expenses:
○ If you spend money to protect your farm from natural disasters, you can
deduct these expenses.
AH

7. Depreciation:
○ The value of buildings or equipment used on the farm reduces over
time. You can deduct this “wear and tear” from your income.
LL

8. Loss on Farm Animals:

○ If a farm animal dies or becomes useless for work, you can deduct the
loss from your income.
U

9. Training and Research:

D

○ If you spend money on training or research to improve your farming

methods, this is also deductible.
AB

These deductions help ensure that only the actual income, after covering necessary
farming costs, is taxed. This way, you only pay tax on the real earnings from your
agricultural activities
 32

8. Expound the meaning of' gift under the Gift Tax Act 1990. Point the gifts
which are not 10 taxable under this Act. How is the value of the subject-matter
of a gift other than money determined? Answer with reference to law.
Under the Gift Tax Act of 1990, a "gift" is when someone gives movable or
immovable property, like money, land, or valuable items, to another person without
receiving anything in return.

IN
Gifts That Are Not Taxable
Some types of gifts are not subject to tax under this law. These include:
1. Gifts of Property Outside Bangladesh:

AH
○ If the gift is property located outside Bangladesh, it is not taxable.
2. Gifts to the Government or Local Authorities:
○ Any gift made to the Government or local authorities is tax-free.

M
3. Gifts for Charitable Purposes:
○ Donations to certain charitable organizations or causes are tax-free.
AL
This includes:
■ Donations to schools, colleges, or universities approved by the
Government.
AH

■ Gifts to recognized hospitals or disaster relief funds.

■ Donations to approved religious or charity institutions, but only
up to a certain amount.
LL

4. Gifts for a Family Member’s Marriage:

○ Gifts given for the wedding of a close family member, like a child or
sibling, up to a specific limit, are exempt from tax.
U

5. Gifts in a Will or for a Dying Person:

D

○ Gifts made in a will or by someone who is close to death are exempt

from tax.
AB

6. Gifts to Immediate Family Members:

○ Gifts to close family members, such as your children, spouse, parents,
or siblings, are not taxable.
How to Determine the Value of a Gift
If the gift is not cash, the law requires estimating its value based on what it would
sell for in an open market. This is called the "fair market value," which is the price
 33

it would get if sold on the day the gift was given. If the market value is hard to
determine, specific rules in the tax law are used to estimate the value more
accurately.
This approach ensures the gift's value is fair and close to its actual worth, even if
it's not money.

IN
1.Define Tax. Discuss different classes of Tax. State the differences between
direct and indirect Tax.
A tax is a payment that people, businesses, or organizations must pay to the

AH
government. This money helps the government pay for things like schools,
hospitals, roads, and other public services.
Types of Taxes

M
There are two main types of taxes in Bangladesh: direct taxes and indirect taxes.
1. Direct Taxes:
AL
○ These are taxes paid directly to the government by the person or
business that owes them. They are based on income or assets.
○ Examples of direct taxes:
AH

■ Income Tax: This is charged on the income people or businesses

earn.
■ Gift Tax: This tax is paid when a person gives property or money
LL

as a gift.
■ Land Development Tax: Landowners pay this tax based on the
value of their land.
U

2. Indirect Taxes:
D

○ These are taxes on goods and services. The person or business selling
the product adds the tax to the price, and the customer ends up paying
AB

it.
○ Examples of indirect taxes:
■ Value Added Tax (VAT): This is added at each stage of
production and sale of goods and services.
■ Customs Duty: This tax is charged on goods when they are
imported or exported.
 34

■ Excise Duty: This is added to certain goods, like tobacco and

alcohol.
Differences Between Direct and Indirect Taxes
1. Who Pays the Tax:
○ Direct Taxes: The person or business earning the income pays the tax
directly to the government and cannot pass this cost to anyone else.

IN
○ Indirect Taxes: Businesses pay the tax to the government but include
the tax in the price of the goods or services, so customers actually pay
it.

AH
2. How the Tax is Collected:
○ Direct Taxes: The government collects direct taxes based on each
person or business’s income or assets, usually once a year.

M
○ Indirect Taxes: The government collects indirect taxes through
businesses whenever goods or services are sold to customers.
AL
3. Effect on People’s Income:
○ Direct Taxes: These taxes directly reduce the person or business's
income.
AH

○ Indirect Taxes: These taxes increase the price of goods and services,
which can change people’s spending habits since items become more
expensive.
LL

Understanding these differences helps us see how taxes are collected and how they
impact us. Direct taxes come from people or businesses’ earnings, while indirect
taxes affect the prices of the goods and services we buy.
U
D

2.Elucidate the concepts of 'assessee', 'assessment year', 'income year', 'fair

market value', and 'dividend' in accordance with Income Tax Ordinance,
AB

1984. How can tax be classified? State the advantages and disadvantages of
levying income tax.

Here's a more detailed and simplified breakdown based on the Income Tax
Ordinance, 1984 and relevant sections from the attached file:
 35

Key Tax Concepts:

1. Assessee:
○ An assessee is any person or entity who is required to pay tax or has tax
obligations under the law.
○ This includes anyone earning taxable income, individuals responsible
for filing returns, and persons or organizations undergoing assessments.

IN
○ The term can apply to both individuals and entities like companies or
trusts​
2. Assessment Year:

AH
○ The assessment year is a 12-month period that begins on July 1 and
ends on June 30 of the following year.
○ This is the year in which income earned in the previous year (the

M
income year) is assessed and taxed.
○ For example, if income is earned from July 1, 2023, to June 30, 2024
AL
(income year), it will be assessed and taxed in the assessment year
2024-2025​(59281. a) CA PL- Tax P…).
3. Income Year:
AH

○ The income year, also called the financial year, is the year in which
income is earned.
○ This period immediately precedes the assessment year.
LL

○ For businesses or individuals, it may vary if their income source or

accounting period does not align with the typical financial year, but
generally it runs from July 1 to June 30.
U

4. Fair Market Value:

D

○ Fair market value represents the estimated value of an asset or property

if it were sold in an open market.
AB

○ For tax purposes, this value is used when the asset's declared price
seems significantly lower than its actual worth.
○ Tax authorities use fair market value to prevent undervaluation of
assets, especially when calculating capital gains or property transfers​
 36

5. Dividend:
○ Dividends are payments made by a company to its shareholders,
usually derived from its profits.
○ They can take various forms, such as cash payouts or additional stock,
and are generally distributed as a way to reward shareholders.
○ For tax purposes, dividends are considered income and are subject to

IN
tax at specific rates as outlined by the tax ordinance​(59281. a) CA PL-
Tax P…).
Classification of Taxes:

AH
Taxes are classified based on the method of assessment and income types. Major
categories include:
● Provisional Assessment: A temporary assessment based on initial income

M
estimates before the final calculation.
● Self-Assessment: Where taxpayers calculate and report their own tax
AL
liabilities, which is then checked by the tax authorities.
● Spot Assessment: Conducted at a specific point, often during an inspection
or audit, for an immediate estimate.
AH

● Special Assessments: Used for unique cases, such as business closures or

specific industries​(59281. a) CA PL- Tax P…).
Advantages and Disadvantages of Income Tax:
LL

Advantages:
● Government Revenue: Income tax provides funds for essential public
services like healthcare, education, and infrastructure.
U

● Promotes Fairness: With a progressive tax rate, people with higher incomes
D

pay more, aiming to reduce income inequality.

● Encourages Accountability: Businesses and individuals need to maintain
AB

accurate financial records, improving transparency.

Disadvantages:
● Complexity and Compliance Costs: Tax laws and filing requirements can
be confusing, especially for individuals or small businesses, which may lead
to additional costs for professional help.
 37

● Tax Evasion Risks: Loopholes or lack of enforcement may lead some

taxpayers to underreport income.
● Economic Impact: High tax rates may discourage investment and spending,
potentially slowing down economic growth​(59281. a) CA PL- Tax P…).

3.Define 'agricultural income'. Mention the allowances and deductions which

IN
shall be made while computing income under the head 'agricultural income'
under the Income Tax Ordinance, 1984.
explanation of agricultural income and the deductions allowed under the Income

AH
Tax Ordinance, 1984,
Agricultural Income
Agricultural income is any income earned from land used for farming or related

M
agricultural activities. This includes money made from growing crops, rearing
animals, poultry farming, and fish farming. It also covers income from growing
AL
trees, fruits, flowers, or collecting honey, as long as people are involved in the work
or care of the land. For income to qualify as agricultural, the land must be in
Bangladesh and actively used for these types of activities​(59281. a) CA PL- Tax
AH

P…).
Allowances and Deductions for Agricultural Income
The Income Tax Ordinance allows several types of expenses to be deducted when
LL

calculating agricultural income. These deductions are meant to reduce the taxable
income by accounting for the actual costs of running agricultural operations.
1. Land Taxes:
U

○ Taxes paid specifically for agricultural land, like land development tax
D

or khajana, can be deducted from the agricultural income​(59281. a) CA

PL- Tax P…).
AB

2. Rent and Land Development:

○ If the farmer rents the land, the rent paid can be deducted. Any costs
spent on improving, maintaining, or preparing the land for agriculture
are also deductible.
 38

3. Interest on Agricultural Loans:

○ If a loan is taken out for agricultural purposes (like buying seeds or
farming equipment), the interest paid on that loan can be deducted from
the income.
4. Repair and Maintenance of Equipment:
○ Money spent on repairing and maintaining equipment, like tractors or

IN
other machinery used in farming, can be deducted. This also includes
costs for transport and for taking care of livestock.
5. Insurance Premiums:

AH
○ Insurance premiums that protect against risks related to agriculture can
also be deducted. For instance, if a farmer insures crops against natural
disasters, the cost of that insurance can be deducted​(59281. a) CA PL-

M
Tax P…).
6. Expenses for Natural Disasters:
AL
○ If money is spent to protect agricultural property from natural disasters,
these costs can be deducted.
7. Depreciation of Equipment and Buildings:
AH

○ If a farmer uses machinery, buildings, or other assets for agriculture, a

certain amount of the cost (called depreciation) can be deducted each
year, following a schedule provided in the tax ordinance.
LL

8. Loss from Selling Agricultural Assets:

○ If an animal or a piece of equipment used for farming is sold at a loss,
the loss (difference between purchase cost and sale amount) can be
U

deducted from agricultural income.

D

9. Expenses for Training or Delegations:

○ If the government sends farmers or experts to learn about agriculture
AB

from other countries, or if a farmer sends someone for training to

improve agricultural practices, these expenses can be deducted if
approved by tax authorities​(59281. a) CA PL- Tax P…).
10. Scientific Research Costs:
○ Money spent on research to improve agricultural production in
Bangladesh is also deductible​(59281. a) CA PL- Tax P…).
 39

These deductions help farmers by reducing the amount of taxable income, making
it easier to run profitable farming operations. Each deduction aims to cover a real
expense that a farmer might face, ensuring they only pay tax on net income
(income after costs).

4.Explain the meaning of 'salaries'. Masum is a service holder. He draws a

IN
monthly basic salary of taka 30,000/00, gets two Eid festivals equal to the
amount of two month's basic salary. He gets 28,000/00 taka as monthly house
rent and 2000/00 taka as medical allowance.

AH
He purchased a 4,00,000/00 taka Sanchaypatra. Calculate his income tax for
the Assessment year 2022-2023.
Based on the Income Tax Ordinance, 1984 and the attached file, here is a clearer

M
breakdown of Masum’s income tax calculation:
Meaning of 'Salaries' under Income Tax Ordinance, 1984
AL
Under the Income Tax Ordinance, "salaries" refer to any payment made by an
employer to an employee for services rendered. This includes:
● Basic Salary: The fixed amount received regularly.
AH

● Allowances: Additional payments such as house rent and medical

allowances.
● Bonuses: Special payments such as Eid bonuses.
LL

● Perquisites: Benefits such as free accommodation or vehicle provided by the

employer.
● Retirement Benefits: Payments like pensions or gratuities​(59281. a) CA PL-
U

Tax P…).
D

Masum’s Income Details

Based on the provided details:
AB

1. Basic Salary: Tk. 30,000 per month

2. Festival Bonuses: Equivalent to two months of basic salary annually
3. House Rent Allowance: Tk. 28,000 per month
4. Medical Allowance: Tk. 2,000 per month
5. Investment in Sanchaypatra: Tk. 400,000
Step-by-Step Calculation of Masum’s Income Tax
 40

Step 1: Calculate Total Annual Salary Income

1. Basic Salary: Tk. 30,000 x 12 months = Tk. 360,000
2. Festival Bonus: Tk. 30,000 x 2 (for two festivals) = Tk. 60,000
3. House Rent Allowance: Tk. 28,000 x 12 months = Tk. 336,000
4. Medical Allowance: Tk. 2,000 x 12 months = Tk. 24,000
Total Annual Salary Income = Tk. 360,000 + Tk. 60,000 + Tk. 336,000 + Tk.

IN
24,000 = Tk. 780,000
Step 2: Determine Taxable Income
All components of Masum’s salary are taxable as per the ordinance, so his total

AH
taxable income is Tk. 780,000.
Step 3: Apply Tax Rates for Assessment Year 2022-2023
The tax slabs for individuals in the assessment year 2022-2023 are:

M
● First Tk. 300,000: No tax
● Next Tk. 100,000: 5% tax
AL
● Next Tk. 300,000: 10% tax
● Remaining Tk. 80,000: 15% tax
Calculating Tax:
AH

1. First Tk. 300,000: No tax = Tk. 0

2. Next Tk. 100,000: Tk. 100,000 x 5% = Tk. 5,000
3. Next Tk. 300,000: Tk. 300,000 x 10% = Tk. 30,000
LL

4. Remaining Tk. 80,000: Tk. 80,000 x 15% = Tk. 12,000

Total Tax Before Investment Rebate = Tk. 5,000 + Tk. 30,000 + Tk. 12,000 = Tk.
47,000
U

Step 4: Calculate Investment Rebate on Sanchaypatra

D

Masum’s investment in Sanchaypatra qualifies for a tax rebate. The rebate amount
is the lowest of:
AB

1. 15% of Taxable Income: Tk. 780,000 x 15% = Tk. 117,000

2. Actual Investment: Tk. 400,000
3. Maximum Limit: Tk. 100,000
Here, 15% of Actual Investment (i.e., Tk. 400,000 x 15%) is considered:
● Rebate Amount = Tk. 60,000
Step 5: Apply Investment Rebate
 41

The final tax payable is calculated after applying the rebate: Total Tax After
Rebate = Tk. 47,000 - Tk. 60,000 = Tk. 23,600

5.What do you understand by "income from house property"? Write down the
allowances and deductions which shall be made while computing the income
under the head 'income from house property under the Income Tax

IN
Ordinance, 1984.
Based on the Income Tax Ordinance, 1984, here is a clearer and more detailed
breakdown of "income from house property" and the deductions available for it:

AH
Income from House Property
"Income from house property" is the money a property owner earns from renting
out a building or land connected to that building. This income is earned from

M
properties used for either residential or commercial purposes. For tax purposes, this
includes the actual rent received or an estimated rental value determined by the tax
AL
authority. If the property is not rented but could have been, the tax authority might
assess a fair rental value to calculate income from it.
Allowable Deductions for Income from House Property
AH

When calculating taxable income from house property, certain expenses can be
deducted. These deductions help reduce the amount of income that is taxable by
accounting for the costs involved in managing and maintaining the property.
LL

1. Insurance Premium:
○ If the property owner pays for insurance to protect the property from
damage (like fire or natural disasters), they can deduct the insurance
U

premium from the taxable income.

D

2. Interest on Loans:
○ If the property was bought, built, or improved using a loan, the interest
AB

paid on this loan can be deducted. This applies to all properties,

whether they are used for living purposes or commercial purposes.
3. Municipal and Property Taxes:
○ Any local taxes or property charges paid annually (like municipal
taxes) can be deducted. These are recurring expenses that help maintain
services like water supply or sewage.
 42

4. Repairs and Maintenance:

○ For Commercial Properties: Property owners can deduct 30% of the
total rental income to cover repair and maintenance costs.
○ For Residential Properties: A 25% deduction of the total rental
income is allowed for repair and maintenance.
5. Vacancy Allowance:

IN
○ If the property was vacant (empty) for part of the year, the owner can
deduct the rent that would have been received during that vacant
period. This means if a property was not rented for three months, the

AH
rent for those three months can be subtracted from the taxable income.
6. Allowance for Uncollectible Rent:
○ If a tenant does not pay their rent and the amount cannot be recovered,

M
the unpaid rent amount can be deducted. This means only rent that was
actually received will be taxed.
AL
These deductions help ensure that property owners pay tax only on the actual profit
they earn from their property after covering the essential expenses related to the
property's upkeep and management.
AH

6.How would you explain the definition of 'universal self-assessment'? State

the manner through which the Deputy Commissioner of Taxes shall process
LL

the return filed under section 82 BB of the Income Tax Ordinance, 1984.
Here’s a clearer and more detailed explanation of Universal Self-Assessment and
how the Deputy Commissioner of Taxes (DCT) processes returns filed under
U

Section 82BB, based on the Income Tax Ordinance, 1984 and the attached file.
D

Universal Self-Assessment (Section 82BB)

Universal Self-Assessment allows taxpayers to calculate their own taxes and file
AB

their returns independently. This means that, if a taxpayer meets all the filing
requirements, the return is considered assessed without the need for immediate
review or approval from tax officers. The goal of this system is to simplify the tax
process, encouraging compliance by making it easier for taxpayers to file
accurately and on time.
 43

With Universal Self-Assessment:

● The taxpayer’s declared income and tax amount are accepted as reported, as
long as they comply with the rules.
● The return is treated as final, provided there are no major discrepancies or
indications of tax evasion.
● This approach reduces taxpayer interaction with tax authorities, making the

IN
process quicker and more efficient​(59281. a) CA PL- Tax P…).
Processing by the Deputy Commissioner of Taxes for Returns Filed under
Section 82BB

AH
When a taxpayer files a return under Universal Self-Assessment, the DCT
processes it in the following steps:
1. Initial Acceptance:

M
○ The DCT generally accepts the return as final if it meets all
requirements, including filing completeness, accuracy, and timely tax
AL
payment. If everything checks out, the taxpayer’s calculations are
accepted without adjustment​(59281. a) CA PL- Tax P…).
2. Verification of Compliance:
AH

○ Although the return is considered final, the DCT may conduct a

preliminary review to ensure that all the information provided aligns
with the requirements of the Income Tax Ordinance.
LL

○ The DCT checks for any errors, such as missing documents,

arithmetical mistakes, or discrepancies in tax calculations.
3. Selective Audit:
U

○ Not all returns are audited. However, the DCT has the authority to
D

select certain returns for a more detailed examination.

○ If selected for an audit, the taxpayer may be asked to provide additional
AB

documentation or evidence to verify their reported income and

deductions.
4. Correction of Errors:
○ The DCT is authorized to correct any simple arithmetical or clerical
errors in the return. For instance, if a calculation error is found, the
 44

DCT may adjust the total taxable income or tax due accordingly​(59281.
a) CA PL- Tax P…).
5. Finalization without Objections:
○ If no issues are found or the audit is completed satisfactorily, the DCT
finalizes the return. The income and tax calculated by the taxpayer are
then accepted as the official tax liability for that assessment year,

IN
without further intervention from the tax authorities.
Through these steps, Universal Self-Assessment makes tax filing simpler and
faster, reducing the need for direct oversight while still allowing the DCT to

AH
maintain accuracy and enforce compliance through audits when necessary.

7.Expound the meaning of *gift under the Gift Tax Act, 1990. Point the gifts

M
which are not taxable under this Act. How is the value of the subject-matter of
a gift other than money determined? - answer with references to law.
AL
Under the Gift Tax Act, 1990, a "gift" refers to the transfer of any property (like
land, jewelry, or money) from one person to another without any payment or
exchange. This law became effective on July 1, 1990, and applies to gifts given
AH

within a single financial year. The law specifies that gifts above a certain value are
subject to tax, depending on the type of gift and the relationship between the giver
and receiver.
LL

Gifts Not Taxed

Certain types of gifts are not taxed under the Gift Tax Act, 1990. These include:
1. Property outside Bangladesh: Any gift of property located in another
U

country is not subject to tax under this Act.

D

2. Gifts to the Government or Local Authorities: If someone gives a gift to

the government or a local authority, it is exempt from tax.
AB

3. Charitable Donations: Gifts to certain recognized educational institutions,

hospitals, disaster relief funds, and approved religious or charitable
organizations are tax-free. However, there may be limits on how much can be
gifted tax-free to these organizations.
4. Wedding Gifts: Gifts up to Tk. 20,000 given for the marriage of a dependent
family member (like a daughter or son) are exempt from tax.
 45

5. Insurance Gifts: If someone gifts money to cover an insurance policy for a

dependent family member (other than a spouse), up to Tk. 20,000 is not
taxed.
6. Gifts by Will or Inheritance: Gifts that are given through a will or are part
of an inheritance are not taxed.
7. Gifts to Close Family Members: Gifts to immediate family members—like

IN
children, parents, spouse, and siblings—are exempt from tax.
8. Small Gifts: Gifts that are small in amount, not exceeding Tk. 20,000 within
a year are also exempt. In some cases, other small gifts may be exempted by

AH
the government.
Determining the Value of Gifts Other Than Money
When a gift is something other than money (like a piece of land or jewelry), the

M
value is determined by what it would sell for in the open market on the day it was
gifted. If it’s hard to figure out the market value, specific rules are used to estimate
AL
the value, as set by the tax authorities.
These rules help ensure that non-monetary gifts are valued fairly for tax purposes,
according to the current market conditions.
AH

8.Who are the income tax authorities? Explain powers of different judicial
bodies relating to income tax.
LL

Income Tax Authorities

In Bangladesh, several authorities handle income tax matters under the Income Tax
Act. These authorities are part of a structured hierarchy and each has specific roles
U

and powers. Key income tax authorities include:

D

1. National Board of Revenue (NBR): The highest authority for tax matters,
responsible for making policies, overseeing the tax administration, and
AB

issuing instructions to lower officials.

2. Commissioner of Taxes: Commissioners manage tax zones, oversee tax
collection, and handle taxpayer issues within their jurisdiction. They have the
power to make assessments, revise decisions, and address appeals within
their area.
 46

3. Deputy Commissioner of Taxes (DCT): DCTs are responsible for assessing

individuals and businesses, collecting taxes, and enforcing compliance. They
can conduct inspections, audits, and surveys to ensure accurate tax reporting.
4. Inspecting Joint Commissioner of Taxes (IJCT): The IJCT supervises the
work of DCTs, reviewing their assessments and orders. If a DCT’s decision is
found to be incorrect or harmful to tax revenue, the IJCT can adjust it after

IN
allowing the taxpayer to respond.
5. Taxes Appellate Tribunal: This is a judicial body that hears appeals from
taxpayers who disagree with the Commissioner’s orders. A Bench usually has

AH
two members, and if they disagree, the case may go to additional members
for a final decision.
Powers of Different Judicial Bodies

M
1. National Board of Revenue (NBR):
○ Policy-making and Oversight: NBR sets policies, controls tax
AL
administration, and can transfer cases to ensure efficiency.
○ Guidance: It issues guidelines that lower authorities must follow,
although NBR does not interfere directly with judicial decisions in
AH

appeal cases.
2. Commissioner of Taxes:
○ Assessment and Review: Commissioners have the authority to assess
LL

taxes, check the accuracy of returns, and make necessary adjustments.

They can also correct errors and revise lower officials’ decisions.
○ Disciplinary Powers: Commissioners can take action against tax
U

professionals or representatives for misconduct, helping ensure fair

D

practice.
3. Deputy Commissioner of Taxes (DCT):
AB

○ Assessment: DCTs assess taxable income and collect taxes. They have
the authority to ask for documents, inspect records, and verify income
declarations to confirm that taxes are correct.
○ Information Gathering: DCTs can request information from taxpayers
and sometimes from banks, though certain permissions may be needed.
 47

4. Inspecting Joint Commissioner of Taxes (IJCT):

○ Supervision and Review: IJCTs review decisions made by DCTs,
ensuring that assessments are fair and accurate. They can modify or
cancel an assessment if it seems incorrect or harms tax collection, after
giving taxpayers a chance to respond.
5. Taxes Appellate Tribunal:

IN
○ Appeal Hearings: The Tribunal listens to appeals from taxpayers who
are dissatisfied with the Commissioner’s decisions. A panel of
members hears the case and makes decisions based on a majority vote.

AH
○ Final Decisions: In case of disagreement among members, the matter
may go to more members for a resolution.
These authorities work together to ensure taxes are assessed and collected fairly,

M
handle disputes, and oversee tax law enforcement.
AL
1. a) Define "Assessee", "Income", and "Income Year" according to the
income tax 2023.
Assessee
AH

An "assessee" is any person who is required to pay taxes or other amounts under
the Income Tax Act, 2023. This includes:
● Anyone whose income is being checked for tax purposes, either for
LL

themselves or on behalf of someone else.

● People who are required to file income tax returns.
● Anyone who submits their income details voluntarily to be assessed for tax
U

purposes.
D

In simple words, an assessee is someone responsible for taxes under the law,
whether they are paying for their own income or someone else’s.
AB

Income
"Income" is the money or financial gains a person receives from different sources.
This can include:
● Salary from a job,
● Profits from a business,
● Rent from property,
 48

● Earnings from investments, or

● Any other gains as described in the Act.
Income covers many types of earnings, whether from work, property, or
investments, and is calculated according to specific rules set out in the law.
Income Year
The "income year" is the financial year during which income is earned, usually

IN
running from July 1 to June 30. This is the year just before the "assessment year,"
when the income is reviewed for tax.
In certain cases, like a newly established business or a business closing down, the

AH
income year might cover a shorter period. For banks, insurance companies, and
some other organizations, the income year can start on January 1 with permission
from tax authorities.

M
In simple terms, the income year is the period in which money is earned, which is
then assessed for tax in the following year.
AL
b) Enumerate the role of income tax in the economic development of
Bangladesh.
AH

According to the Income Tax Act, 2023, income tax plays an important role in
helping Bangladesh develop economically in several ways:
1. Collecting Government Revenue
LL

Income tax provides a major part of the government’s revenue, around 35% of all
tax income. This money is used to fund projects that benefit the country, such as
building roads, hospitals, and schools.
U

2. Reducing Income Inequality

D

Income tax helps reduce the gap between the rich and the poor. People with higher
incomes pay more tax, while the government can use these funds to support people
AB

with lower incomes through social services and public programs.

3. Encouraging People to Save
The income tax system encourages people to save by offering tax benefits. For
example, when people invest in certain savings accounts, provident funds, or
insurance, they can get a tax rebate. This helps people build financial security and
encourages future investments.
 49

4. Supporting Investment and Industrial Growth

To help businesses grow, the government offers tax benefits such as tax holidays
(periods when no tax is owed), special allowances for buying equipment, and tax
credits. These benefits attract both local and foreign investors, create jobs, and
increase production. This growth helps industries expand, creating more job
opportunities and boosting economic activity.

IN
5. Funding Social Welfare Programs
The income tax collected also goes toward social programs like healthcare,
education, and poverty reduction. These programs improve the quality of life for

AH
citizens, which leads to a healthier and more skilled workforce, essential for a
strong economy.
6. Supporting GDP Growth

M
Income tax policies encourage investments that lead to higher productivity. When
the government invests in infrastructure and social programs, it creates a better
AL
environment for businesses to grow, which ultimately increases the country’s GDP.
In simple terms, income tax helps the government raise money to improve the lives
of people, promote fair income distribution, encourage savings and investments,
AH

and support a growing economy in Bangladesh.

2. a) Mention the applicable tax rates for individuals, partnership firms, and
LL

Hindu Undivided Families for the assessment year 2023-24.

For the assessment year 2023-24, here are the tax rates and exemptions for
individuals, partnership firms, and Hindu Undivided Families (HUFs) in
U

Bangladesh:
D

1. Individuals (including HUFs)

● Tax Rates:
AB

○ First Tk. 350,000 of income: No tax (0%)

○ Next Tk. 100,000: 5% tax
○ Next Tk. 300,000: 10% tax
○ Next Tk. 400,000: 15% tax
○ Next Tk. 500,000: 20% tax
○ Income above these amounts: 25% tax
 50

● Exemptions:
○ Women and senior citizens (age 65+) don’t pay tax on income up to Tk.
400,000.
○ Disabled persons and third-gender individuals don’t pay tax on income
up to Tk. 475,000.
○ Freedom fighters with certain war-related injuries don’t pay tax on

IN
income up to Tk. 500,000.
● Minimum Tax:
○ Even if exempted, there’s a minimum tax based on location (Tk. 5,000,

AH
Tk. 4,000, or Tk. 3,000) if income exceeds Tk. 350,000.
2. Partnership Firms
● Tax Rates (same as individuals):

M
○ First Tk. 350,000: 0%
○ Next Tk. 100,000: 5%
AL
○ Next Tk. 300,000: 10%
○ Next Tk. 400,000: 15%
○ Next Tk. 500,000: 20%
AH

○ Income above these amounts: 25%

● Minimum Tax Requirement:
○ Partnership firms earning more than Tk. 50,00,000 in revenue must pay
LL

at least 0.60% of their total income as tax.

3. Hindu Undivided Families (HUFs)
● Tax Rates: HUFs are taxed in the same way as individuals.
U

● Exemptions: HUFs can use the same exemptions as individuals if they meet
D

the qualifying criteria.

These rates aim to make tax payments fairer, with additional reliefs for women,
AB

elderly individuals, and those with disabilities.

b) Discuss the significant features of the Bangladesh tax system.

The tax system in Bangladesh, according to the document, has several important
characteristics:
 51

1. Different Types of Taxes: Bangladesh's tax system includes many types of

taxes. It has:
○ Income taxes: These are taxes on what people and companies earn. For
example, companies and individuals pay income tax on their profits.
○ Property and transfer taxes: These include taxes on gifts, land, and
certain fees for owning or transferring property.

IN
○ Goods and services taxes: These cover taxes like customs duties (on
imported and exported goods), VAT (Value Added Tax), excise duties
(on items like alcohol), and other smaller taxes like road taxes and

AH
electricity duties.
2. Tax Collection by the National Board of Revenue (NBR): The NBR is the
main organization responsible for collecting taxes in Bangladesh. It collects

M
around 85% of the country's revenue. The NBR tries to improve the system
regularly to make tax collection easier and more efficient.
AL
3. Low Tax Compliance and Avoidance: Many people and businesses do not
fully comply with tax rules. This means some try to avoid paying their fair
share, and there are not enough checks to catch this. The system allows some
AH

taxpayers to avoid paying all the tax they owe, so the burden often falls
heavily on a small group of people and companies.
4. Small Tax Base: Not many people pay income taxes in Bangladesh, and
LL

there are many exemptions. For example, most people in agriculture (around
60% of the population) pay little or no income tax. This small base makes it
hard to increase tax revenue for the country.
U

5. Reliance on Indirect Taxes: Bangladesh gets a lot of its tax revenue from
D

indirect taxes like VAT and customs duties, which are taxes added to the price
of goods and services. In many other countries, more of the tax revenue
AB

comes from direct taxes, like income tax, which is more balanced and fair.
The current reliance on indirect taxes can make it harder for Bangladesh to
have a fair and efficient tax system.
Overall, these characteristics show that Bangladesh's tax system is trying to raise
enough revenue for government expenses, but it faces challenges with tax
compliance, fair distribution of taxes, and a high reliance on indirect taxes​.
 52

3. a) Generally, income is taxed in the subsequent year to the income year. But,
in certain cases, to protect the interests of revenue, the income is taxed in the
year of earning itself. Explain the exceptions to the rule of the assessment year.

In Bangladesh, income is generally taxed the year after it is earned. This means that
income earned in one year is usually taxed in the following year. However, there

IN
are some special cases where income is taxed in the same year it is earned. This is
done to make sure the government collects the necessary tax revenue without delay.
Here are the main exceptions:

AH
1. When a Business Closes Down: If a business stops operating, any income it
earned up to the time it closed can be taxed in that same year. This rule
ensures the government collects taxes from businesses even if they stop

M
working and might not pay taxes later.
2. People Leaving Bangladesh: If someone is planning to leave Bangladesh
AL
and may not come back, their income up to their departure can be taxed
before they leave. This is to make sure taxes are paid before they exit the
country.
AH

3. Foreign Shipping and Airline Companies: When foreign shipping or airline

companies make income in Bangladesh but don’t have a local representative,
they must pay taxes on that income in the same year. This rule helps the
LL

government collect taxes from foreign businesses that may be hard to track
down later.
These special cases allow the government to secure tax revenue right away,
U

especially when there’s a chance that waiting until the next year might lead to
D

unpaid taxes.
b) Mr. Chowdhury provides the following particulars of his period of stay in
AB

Bangladesh over the last 6 years:

Year Days
2016-17 40
2017-18 55
 53

2018-19 182
2019-20 200
2020-21 94
2021-22 110

IN
1. Determine his residential status for the income year 2021-22.
2. What will happen if he stays for 85 days in the year 2021-22?

AH
3. What will happen if he stays for 80 days in the year 2019-20?
4. What will happen if he stays for 185 days in the year 2021-22 and a total of
360 days during the last four years?

M
Determining Mr. Chowdhury’s Residential Status (Simplified Version)
AL
To find out if Mr. Chowdhury is a resident or non-resident for tax purposes, we
use these two rules:
1. Rule 1: He is a resident if he stays in Bangladesh for 183 days or more in
the income year.
AH

2. Rule 2: He is also a resident if he stays for 90 days or more in the income

year and has stayed for at least 365 days in total over the last 4 years.
If neither rule applies, then he is a non-resident.
LL

Details of Mr. Chowdhury’s Stay

Here are the number of days Mr. Chowdhury stayed in Bangladesh over the last 6
U

years:
D

Year Days Stayed

AB

2016-17 40 days
2017-18 55 days
2018-19 182 days
2019-20 200 days
 54

2020-21 94 days
2021-22 110 days
1. Is He a Resident in 2021-22?
● In 2021-22, Mr. Chowdhury stayed for 110 days.
● Let’s check the rules:

IN
○ Rule 1: He did not stay 183 days, so this rule does not apply.
○ Rule 2:
■ He stayed 110 days in 2021-22 (more than 90 days).

AH
■ Total stay in the last 4 years (2017-18 to 2020-21):
■ 2017-18: 55 days
■ 2018-19: 182 days

M
■ 2019-20: 200 days
■ 2020-21: 94 days
AL
■ Total = 531 days.
■ Since he stayed more than 90 days in 2021-22 and over 365 days
in the last 4 years, he is a resident for 2021-22.
AH

2. What if He Stayed Only 85 Days in 2021-22?

● He would only stay 85 days, so let’s check the rules:
○ Rule 1: He did not stay for 183 days.
LL

○ Rule 2:
■ He did not meet the 90-day requirement in 2021-22.
■ Even though his total stay in the last 4 years is 531 days, failing
U

to meet the 90-day rule means he is a non-resident.

D

3. What if He Stayed Only 80 Days in 2019-20?

● Let’s see if he would be a resident in 2019-20 if he stayed only 80 days.
AB

○ Total stay in the 4 years before (2016-17 to 2019-20):

■ 2016-17: 40 days
■ 2017-18: 55 days
■ 2018-19: 182 days
■ 2019-20 (assuming 80 days): 80 days
■ Total = 357 days.
 55

○ Rule 1: He did not stay for 183 days.

○ Rule 2: He did not stay for 90 days in 2019-20, and his total stay in the
last 4 years is less than 365 days.
○ So, he will be a non-resident in 2019-20.
4. What if He Stayed for 185 Days in 2021-22?
● He stayed 185 days, so let’s check:

IN
○ Rule 1: He stayed more than 183 days, so he is a resident based on
this rule alone.
○ Rule 2: It doesn’t matter in this case because Rule 1 is already

AH
satisfied.
○ So, he is a resident for 2021-22.
Summary

M
Scenario Residential Status
AL
110 days in 2021-22 Resident
85 days in 2021-22 Non-resident
80 days in 2019-20 Non-resident
AH

185 days in 2021-22 Resident

In simple words:
LL

● If he stayed long enough in Bangladesh (based on the rules), he is a resident.

● If he did not stay long enough, he is a non-resident.
This approach follows the standard rules from the Income Tax guidelines​
U
D

4. Mr. Haider Ali is a service holder. Following are the particulars of his
income from salary for the year ended on 30th June 2022:
AB

i. Basic salary Tk. 25,000 per month.

ii. Dearness allowance - 10% of Basic salary
iii. Two festival bonuses - each equal to one month's basic salary
iv. He has been provided with a rent-free quarter, the annual value of which is
Tk.180,000.
 56

v. He has been provided with a car (2,000 CC) for both office and private use.
vi. Medical allowance - Tk. 250 per month.
vii. During the year he received Tk. 6,000 as a traveling allowance.
viii. He is given a servant allowance of Tk. 200 per month.
ix. He contributes 1% of his basic salary to the Group Insurance Scheme.
x. He deposited Tk. 500 per month on a Deposit Pension Scheme.

IN
Calculate total income for salary and the tax liability.
Here’s a breakdown of Mr. Haider Ali's total income and tax calculation in simple

AH
terms:
1. Income from Salary
● Basic Salary: Mr. Haider earns Tk. 25,000 each month as his basic salary.

M
Over a year (12 months), this adds up to:
○ Tk. 25,000 x 12 = Tk. 300,000
AL
● Dearness Allowance: He receives an extra amount, called a dearness
allowance, which is 10% of his basic salary:
○ 10% of Tk. 300,000 = Tk. 30,000
AH

● Festival Bonuses: He gets two bonuses during the year, each equal to one
month’s basic salary:
○ Tk. 25,000 x 2 = Tk. 50,000
LL

● Rent-Free Accommodation: He lives in a rent-free home provided by his

employer, valued at Tk. 180,000 for the year.
● Car Benefit: His employer provides him with a 2,000 CC car for both work
U

and private use. The taxable value of this benefit is:

D

○ Tk. 120,000
● Medical Allowance: He receives Tk. 250 per month as a medical allowance.
AB

Over the year, this adds up to:

○ Tk. 250 x 12 = Tk. 3,000
● Traveling Allowance: He received a one-time amount of Tk. 6,000 for travel
expenses.
● Servant Allowance: He gets Tk. 200 per month as a servant allowance.
Annually, this totals:
 57

○ Tk. 200 x 12 = Tk. 2,400

● Group Insurance Contribution: He contributes 1% of his basic salary to a
Group Insurance Scheme, which comes to:
○ 1% of Tk. 300,000 = Tk. 3,000
● Deposit Pension Scheme (DPS): He also saves Tk. 500 each month in a
Deposit Pension Scheme, totaling:

IN
○ Tk. 500 x 12 = Tk. 6,000
2. Calculating Total Income from Salary
Now, we add up all these amounts to get his total income from salary for the year:

AH
● Basic Salary: Tk. 300,000
● Dearness Allowance: Tk. 30,000
● Festival Bonuses: Tk. 50,000

M
● Rent-Free Accommodation: Tk. 180,000
● Car Benefit: Tk. 120,000
AL
● Medical Allowance: Tk. 3,000
● Traveling Allowance: Tk. 6,000
● Servant Allowance: Tk. 2,400
AH

Total Income from Salary = Tk. 691,400

3. Exemptions from Total Income
The tax law allows Mr. Haider to subtract a certain amount as an exemption from
LL

his income. He can take the lower of these two amounts:

● One-third of his total income: Tk. 691,400 ÷ 3 = Tk. 230,467
● Maximum exemption allowed: Tk. 450,000
U

So, Mr. Haider’s exemption will be the lower amount: Tk. 230,467
D

Now, we subtract this exemption from his total income to get his taxable income:
● Taxable Income = Tk. 691,400 - Tk. 230,467 = Tk. 460,933
AB

4. Calculating Investment Rebate

The tax law also gives a rebate (a discount on taxes) for certain types of savings,
like his contributions to the Group Insurance and DPS:
● Group Insurance: Tk. 3,000
● DPS: Tk. 6,000
 58

Total Investment for Rebate = Tk. 3,000 + Tk. 6,000 = Tk. 9,000
To calculate his rebate, we apply 15% on this investment:
● Rebate = 15% of Tk. 9,000 = Tk. 1,350
5. Tax Calculation
Using the tax rates, we calculate the tax on his taxable income:
● The first Tk. 350,000 is tax-free.

IN
● On the next Tk. 100,000, tax is 5%: 5% of 100,000 = Tk. 5,000
● On the remaining Tk. 10,933, tax is 10%: 10% of 10,933 = Tk. 1,093
Total Tax before Rebate = Tk. 5,000 + Tk. 1,093 = Tk. 6,093

AH
6. Final Tax Payable after Rebate
Finally, we subtract the rebate amount from his total tax:
● Final Tax Payable = Tk. 6,093 - Tk. 1,350 = Tk. 4,743

M
Summary
● Total Income: Tk. 691,400
AL
● Taxable Income after Exemption: Tk. 460,933
● Total Tax before Rebate: Tk. 6,093
● Investment Rebate: Tk. 1,350
AH

● Final Tax Payable: Tk. 4,743

Mr. Haider Ali’s total tax payable for the year is Tk. 4,743.
LL

5. a) Define Value Added Tax (VAT). When is VAT registration required?

Definition of Value Added Tax (VAT):
According to the document, VAT is a type of tax charged on the value that is added
U

to goods or services at each stage of production or distribution. This means that as a

D

product is created and sold, each business involved in making or selling it adds a
small amount of tax based on the "added value" they contribute. However, this tax
AB

is ultimately paid by the final consumer who buys the finished product.
Businesses collect VAT when they sell products or services, but they can also get
refunds or credits for the VAT they pay on business purchases. This process ensures
that VAT isn’t charged multiple times on the same value as the product moves from
one business to another.
 59

When VAT Registration is Required:

A business must register for VAT if it earns more than a certain amount set by the
tax authorities. Registration means that the business will collect VAT on its sales
and can claim credits for VAT it pays on purchases.
For businesses with multiple locations, such as branches, there may be a need for
separate registrations for each branch. The process includes filling out forms,

IN
applying for a VAT number, and following specific VAT rules. Businesses are also
required to regularly file VAT returns and meet other compliance rules.

AH
b) Delta Company owns 2 factories, 1 central depot, 3 regional depots, and 6
sales depots.Factory-1 manufactures mobile phones and laptops of different
models and prices. Factory-2 also manufactures TVs, fridges, and some other

M
kinds of electronic items. The products manufactured by the two factories are
first transferred to the central depot, which is then stored in regional depots.
AL
Finally, these products are sold to distributors via the sales depots. All books
of accounts and records are maintained centrally in an automated system
through software.
AH

Will the Company be applicable for central registration?

Based on the document’s guidelines, Delta Company can apply for central VAT
LL

registration.
Here’s why:
1. Delta Company has many locations: They have 2 factories, 1 central depot,
U

3 regional depots, and 6 sales depots. This setup means they have several
D

places where products are made, stored, and sold.

2. Central accounting and record-keeping: All of Delta’s accounts and
AB

records are kept together in one main system. This is an important condition
for central registration because it shows that the company tracks all financial
records in one place.
3. Ease of managing VAT: With central registration, Delta Company would
register just once for VAT. This makes it easier to handle VAT filings and
 60

payments for all locations together instead of separately for each factory or
depot.
In simple terms, Delta Companies setup—having many branches but keeping one
set of records—meets the rules for central VAT registration. This option will allow
them to manage their VAT responsibilities from a single place, which is efficient for
a company of their size and structure.

IN
c) Bengal Company Ltd (BCL) is an enterprise registered with Dhaka-North
and engaged in shoe manufacturing. They imported raw materials from Japan

AH
paying VAT of Tk 300,000 and Advance Tax of Tk. 60,000. They have
purchased raw materials from ABC Ltd. For Tk 2,500,000. BCL purchased
another type of raw materials from a registered proprietorship firm MS

M
Hasan Traders (HT) having a value of Tk 200,000 and payment is done
through an account payee cheque. AB Legal submitted an invoice of Tk
AL
200,000 without issuing Form Mushak-6.3.
They sold goods with 100 invoices aggregating to Tk 7,000,000 to their
customers. Out of 100 customers, 3 of them refunded some goods worth Tk
AH

300,000. All these transactions took place in July 2023. Calculate net VAT for
this tax period.
LL

Let’s break down the calculation of Bengal Company Ltd’s (BCL) VAT for July
2023 using simple terms and steps, based on the information in the file:
1. Calculate the VAT on Sales (Output VAT)
U

● Total Sales: BCL sold goods worth Tk 7,000,000.

D

● Goods Returned: Out of this, goods worth Tk 300,000 were returned by

customers.
AB

So, the net sales amount after subtracting the returned goods is:
7,000,000−300,000=6,700,0007,000,000 - 300,000 =
6,700,0007,000,000−300,000=6,700,000
Since the standard VAT rate is 15%, we calculate the VAT BCL needs to charge on
these net sales:
 61

6,700,000×0.15=1,005,0006,700,000 \times 0.15 =

1,005,0006,700,000×0.15=1,005,000
This amount, Tk 1,005,000, is called the Output VAT. It represents the VAT
collected on sales.
2. Calculate the VAT Paid on Purchases (Input VAT)
BCL can claim back VAT they’ve already paid on business purchases, which is

IN
called Input VAT. Here’s how we calculate it based on the purchases made:
● Imported Raw Materials from Japan:
○ VAT Paid: Tk 300,000.

AH
○ Advance Tax (AT) Paid: Tk 60,000 (This AT amount is not eligible for
Input VAT credit under standard rules, so it’s excluded here).
○ Input VAT from Imports = Tk 300,000.

M
● Local Purchase from ABC Ltd.:
○ Purchase Amount: Tk 2,500,000.
AL
○ VAT Rate (15%):
● 2,500,000×0.15=375,0002,500,000 \times 0.15 =
375,0002,500,000×0.15=375,000
AH

○ Input VAT from ABC Ltd. = Tk 375,000.

● Purchase from MS Hasan Traders (HT):
○ Purchase Amount: Tk 200,000 (purchased from a registered vendor,
LL

HT, and paid by cheque).

○ VAT Rate (15%):
● 200,000×0.15=30,000200,000 \times 0.15 = 30,000200,000×0.15=30,000
U

○ Input VAT from HT = Tk 30,000.

D

● Service Invoice from AB Legal:

○ Service Charge: Tk 200,000.
AB

○ However, since AB Legal did not issue the required VAT document
(Form Mushak-6.3), BCL cannot claim VAT credit on this service
payment.
Total Input VAT
Adding up all eligible input VAT amounts:
 62

300,000+375,000+30,000=705,000300,000 + 375,000 + 30,000 =

705,000300,000+375,000+30,000=705,000
This Tk 705,000 is the total Input VAT BCL can claim for July 2023.
3. Calculate Net VAT Payable
To find out how much VAT BCL needs to pay, we subtract the Input VAT from the
Output VAT:

IN
1,005,000−705,000=300,0001,005,000 - 705,000 =
300,0001,005,000−705,000=300,000
So, BCL’s net VAT payable for July 2023 is Tk 300,000. This is the amount they

AH
need to pay to the tax authorities after accounting for the VAT they already paid on
purchases.

M
6. What is NBR? Discuss the Composition, Power and Function of NBR by
referring to the Income Tax Act 2023.
AL
The National Board of Revenue (NBR) is the main government authority
responsible for managing taxes in Bangladesh. It oversees the administration and
enforcement of tax laws, including the Income Tax Act of 2023. This means that
AH

NBR handles all activities related to collecting income tax, VAT (Value Added
Tax), customs duties, and other taxes to support the country’s financial needs.
Composition of NBR:
LL

● The NBR is set up by the government and consists of a board of members,

each responsible for different areas of tax.
● There are members who focus specifically on different types of taxes, such as
U

income tax, VAT, and customs.

D

● These members work together to make sure that tax policies and rules are
applied correctly across the country and in line with national goals.
AB

Powers of NBR:
The NBR has a number of important powers that help it manage and enforce tax
laws:
1. Making Rules and Policies: NBR can create rules and issue guidelines about
how taxes should be collected and managed. This helps taxpayers understand
what is required of them and provides clear directions for tax officers.
 63

2. Delegating Authority: The NBR can give certain powers to its tax officers,
which allows them to perform specific tasks or make decisions directly.
3. Supervising Tax Offices: NBR oversees all tax offices and ensures that tax
collection is consistent and fair across all regions of Bangladesh.
4. Issuing Orders: NBR can issue specific orders to explain or change how
taxes should be applied, such as how much tax should be withheld on certain

IN
payments or who qualifies for tax exemptions.
Functions of NBR:
The main jobs of the NBR include:

AH
1. Collecting Taxes: NBR’s primary job is to collect taxes from individuals and
businesses. This revenue funds essential government projects like
infrastructure, health, and education.

M
2. Helping Taxpayers Follow Tax Rules: NBR provides information,
guidance, and resources to help taxpayers understand their responsibilities.
AL
This includes publishing forms, instructions, and other materials.
3. Setting Tax Policies: NBR plays a role in developing tax policies that
support the country’s economic growth and meet budgetary needs.
AH

4. Monitoring Tax Conduct: NBR enforces rules for tax professionals to

ensure that taxes are collected and managed ethically.
5. Offering Tax Incentives: NBR can offer special tax breaks or exemptions to
LL

encourage businesses in key industries, such as manufacturing or technology,

to grow and invest in the country.
In simple terms, NBR is the organization that makes sure taxes are collected fairly
U

and in a way that supports Bangladesh’s growth. It creates the rules, manages the
D

processes, and assists taxpayers so that tax laws are followed correctly and
effectively.
AB

7. What is Gift tax? What are the procedures for determining the value of gift
under the Gift Tax Act, 1990.
Definition of Gift Tax under the Gift Tax Act, 1990
Gift Tax is a tax imposed on any transfer of property, whether movable or
immovable, from one person to another without receiving anything in return or
 64

consideration. Under the Gift Tax Act, 1990, such transfers are considered “gifts,”
and they attract tax liability if certain conditions apply. The purpose of this tax is to
prevent people from transferring assets without consideration to avoid other taxes
or obligations​(59281. a) CA PL- Tax P…)​(59281. a) CA PL- Tax P…).
Determining the Value of a Gift
Under the Gift Tax Act, 1990, the value of a gift is assessed based on the "fair

IN
market value" on the date of the gift. Fair market value means the price that would
be received if the property were sold in an open market setting on that date. This
valuation process ensures that the gift tax reflects the actual worth of the gifted

AH
item.
If a property’s market value cannot be determined through a straightforward market
sale, the value is then assessed according to special rules laid out by the tax

M
authorities, designed to approximate the gift's value as accurately as
possible​(59281. a) CA PL- Tax P…).
AL
Gift Tax Submission and Payment
Any person who makes a taxable gift must submit a gift tax return to the Deputy
Commissioner of Taxes (DCT) by September 15 of the assessment year following
AH

the year of the gift. Alongside the return, the applicable tax based on the gift’s
value must be paid​(59281. a) CA PL- Tax P…).
This framework is set to ensure that all gifts, which may have significant financial
LL

value, are appropriately taxed to prevent tax evasion and maintain equity in tax
contributions.
U

8. Write short notes

D

i. Tax Day
Tax Day Overview
AB

"Tax Day" is the deadline by which taxpayers must file their income tax returns.
Under the Gift Tax Act, 1990, the specific date for filing taxes can differ based on
the type of taxpayer:
1. For Individuals (Non-Corporate Taxpayers): November 30 is the tax filing
deadline.
 65

2. For Companies: The due date is the 15th day of the 7th month after the end
of the income year. However, if this falls before September 15, the deadline
shifts to September 15.
3. For New Individual Filers: If someone has never filed a tax return before,
their deadline is June 30 following the end of the income year.
4. For Individuals Residing Abroad: Individuals returning to Bangladesh for

IN
employment or higher education have 90 days from the date of return to file.
If Tax Day falls on a holiday, the deadline is extended to the next working day​

AH
ii. Tiers of Wealth Surcharge
Tiers of Wealth Surcharge
Under the Wealth Surcharge system, individuals with significant net wealth must

M
pay an extra charge on their taxes. This surcharge depends on the total amount of
wealth they report. Here’s how it works:
AL
1. 10% Surcharge: If a person’s net wealth is over Tk. 4 crore (40 million) but
does not exceed Tk. 10 crore, they pay a 10% surcharge on their tax. This
also applies to individuals with more than one car or those who own large
AH

properties totaling over 8,000 square feet.

2. 20% Surcharge: If their wealth is between Tk. 10 crore and Tk. 20 crore,
they pay a 20% surcharge on their tax.
LL

3. 30% Surcharge: If net wealth exceeds Tk. 20 crore but is not more than Tk.
50 crore, the surcharge rate goes up to 30%.
4. 35% Surcharge: For wealth exceeding Tk. 50 crore, a 35% surcharge
U

applies.
D

This structure encourages equitable tax contributions, particularly from high-wealth

individuals, by increasing the surcharge rate as wealth levels rise
AB

iii. Bond Washing Transaction

Bond Washing Transaction
A bond washing transaction is a strategy used to avoid paying taxes on interest
income. It involves selling bonds or securities right before the interest payment date
and then buying them back immediately after. Here’s how it typically works:
 66

1. Selling with Interest: The original owner sells the security "cum-interest"
(meaning with interest included) to someone else.
2. Buying Back without Interest: After the interest is paid to the new owner,
the original owner buys back the security "ex-interest" (without interest).
The new owner, often someone with little or no taxable income, receives the
interest and may not need to pay taxes on it if their income is below the taxable

IN
threshold. Meanwhile, the original owner reclaims the security but avoids paying
tax on the interest.
To curb this kind of tax avoidance, regulations are in place. For example, under

AH
section 242 of the Income Tax Act, 2023, the interest income from such a
transaction may be treated as the seller’s income, not the buyer’s, which removes
the tax benefit from these transactions​

M
iv. Provision for withholding VAT
Provision for Withholding VAT (Value Added Tax)
AL
Withholding VAT is a process where specific entities, like government agencies and
certain businesses, must withhold VAT from payments made to suppliers or
contractors. This ensures VAT is collected at the source before the payment is made
AH

to the service provider or seller. Here’s how it works in simple steps:

1. Who Withholds VAT: Certain organizations, especially large businesses and
government entities, are required to withhold VAT when they pay for services
LL

or goods from suppliers.

2. How it’s Calculated: The amount of VAT to withhold depends on the VAT
rate for that type of service or good. This amount is taken from the total
U

payment and sent directly to the tax authorities.

D

3. Reporting and Remitting: After withholding VAT, the organization must

submit a report to the VAT authority, detailing the withheld amount. They
AB

then remit the VAT to the government.

4. Supplier’s Role: The supplier gets the payment minus the VAT withheld.
However, they don’t need to pay the VAT again, as it has already been taken
care of by the buyer.
This process ensures that VAT collection is streamlined and helps reduce the risk of
non-compliance with VAT obligations
 67

v. Tax Holiday
Tax Holiday - Easy Explanation
A Tax Holiday is a time when certain new businesses don’t have to pay income
taxes for a few years. The government offers this to help businesses grow and to
encourage investment in important industries.

IN
Key Points about Tax Holidays:
1. Purpose: The goal is to help new businesses get started and support the
country’s economic growth by attracting investment.

AH
2. Who Qualifies: Only specific types of businesses, like factories, hospitals,
and renewable energy companies, can get a tax holiday.
3. Length of Exemption: A tax holiday can last up to 10 years. For example, a

M
business might not have to pay taxes for the first few years, and then only
part of the tax in later years.
AL
4. Requirements: Businesses need to be newly set up and meet certain rules. If
they don’t follow these rules, they can lose the tax holiday benefit.
Tax holidays help businesses save money in the early years, making it easier for
AH

them to grow and create jobs.

LL
U
D

ABDULLAH AL MAHIN
AB

23111033
LL.B-05
Bangladesh Maritime University
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