1
Changes in Income Tax brought by the Finance Act 2017
September 2017
2
Personal Income: Individual/Firm Tax Rates
For Bangladeshi
individuals, resident
foreigners, and firms
First Tk. 250,000
Next Tk. 400,000
Next Tk. 500,000
Next Tk. 600,000
Next Tk. 3,000,000
On Balance
Nil
10%
15%
20%
25%
30%
Income Tax Rate
For non-resident foreigner, flat tax rate of 30% will remain unchanged
3
Personal Income: Nil Tax Limit
General – Individuals & Firms
Women and senior citizens
(65+)
Physically challenged persons
War-wounded gazetted freedom
fighters
Tk. 250,000
Tk. 300,000
Tk. 375,000
Tk. 425,000
Type of Individual Tax payerFY 16/17
Income
For parents or legal guardians of physically challenged persons the
Nil Tax Limit will be increased by Tk 25,000.
Tk. 250,000
Tk. 300,000
Tk. 400,000
Tk. 425,000
FY 17/18
Income
4
Personal Income: Perquisites and allowance
• Lower of 50% of basic salary; or
• Tk. 25,000 per month will be
exempted
Higher of 5% of basic salary or Tk.
60,000 per year would be added to
the income
House rent allowance
Conveyance provided for
personal or private use
5
Personal Income: Perquisites and allowance
Medical expenses
General Individual
Mentally Retarded Person
Lower of 10% of BS
and Tk. 120,000
Tk. 1,000,000
6
Personal Income: Surcharge on Tax LiabilityWealth Rate
Tk. 20 Crore
Tk. 15 Crore
Tk. 10 Crore
Tk. 5 Crore
Tk. 2.25 Crore
30%
25%
20%
15%
10%
7
Statement of assets, liabilities and life style
BDT 20 Lakh BDT 25 Lakh
Statement of assets,
liabilities and life style
return need to be
submitted
FY 2016/17
LimitFY 17/18
Limit
If gross wealth exceeds
8
Personal Tax: Minimum Tax AmountMinimum Tax Amount at Tax Return Level
Location FY 2016/17
Dhaka and Chittagong City Corporation Tk. 5,000
Other City Corporations Tk. 4,000
Other areas Tk. 3,000
9
Personal Income: Investment Rebate
15%of Allowable Investment (Eligible Amount)
TK. 15,000,000 Actual Investments
Whichever is lower of:
25% of Total Income
10
Corporate Tax: Rates (1)
Non listed companies including branch companies
Listed Companies
Banks, insurance and other FIs – Listed
Banks, insurance and other FIs – Non- listed
Merchant Banks – Listed and Non listed
Cigarette manufacturer – Listed and Non-listed
Mobile phone operators – Listed
Mobile phone operators – Non-listed
Companies
Co-operative Society
25%
35%
42.5%
40%
37.5%
40%
45%
45%
Rate of Tax
15%
11
Corporate Tax: Rates (2)
Companies
Rate of Tax
Ready-Made Garments 20%
FY 2016/17 FY 2017/18
12%
20% 10%Ready-Made Garments with
internationally recognised green
building certification
12
Corporate Tax: Rates (3)
Cigarette, bidi, zarda, chewing tobacco/gul, or any other
tobacco products manufacturers
Rate of Tax 45%
Rate of Surcharge2.5% on
income
45%
FY 2016/17
Rate
FY 2017/18
Rate
0%
13
Clarification in Definition of Income Year
July to JuneJanuary to December
Other FIs
Subsidiaries of FI
Insurance Company
OthersBanks
Multinational companies are
allowed to follow parent companies'
accounting year
Branch and liaison offices are also allowed to follow it’s head office
accounting year
14
Corporate Tax: DisallowancesSection 30(aaaa)
Employers are required to ensure that the tax
returns of their employees were submitted who are
required to submit return on or before the Tax Day
i.e. 30 November (of employees) or as extended
1
Failure to ensure this requirement will result in
related salary expenses disallowance2
15
Corporate Tax: Allowable Perquisites
Generally
Section 30(e)
Tk. 475,000
*For a person
with disabilityTk. 2,500,000
“an individual registered as person with disability under sec 31 of
Protection of the Rights of the Persons with Disabilities Act, 2013”
16
Corporate Tax: Allowable Overseas Travel
Up to 1.25%
of the
disclosed
turnover are
allowed
Section 30(k)
Not applicable for an assesse engaged in
providing any service to the Government where overseas traveling is a key requirement of that
service.
17
Corporate Tax: Disallowance
Payment made to following persons without TIN will result in disallowance:• Agency or distributorship of a company• Commission, fee or other sum for money transfer• Advisory, consultancy etc. by a resident company
Section 30(o)
18
Unexplained investments deemed to be Income
Fiscal year 2016/17
Section 19(31)
Additional income subjecting to tax exemption or reduced
tax rates shown in the revised returns under sections 78 or
93 will be considered as Income from Other Sources
Fiscal year 2017/18
Includes revised or amended return under section 82BB
19
Unexplained investments deemed to be Income
Fiscal year 2016/17
Section 19(28)
Loans or gifts received for amount(s) over Tk. 500,000 other
than through Crossed cheque or Bank transfer, will be
treated as Income
Fiscal year 2017/18
Will not be income if such amount is received from spouse or
parents as long as banking or formal channel is involved in
process
20
Tax DAYAn assessee is required to file income tax
return on or before the Tax Day
Company
Others
15th day of
seventh month
following the end
of income year
30th November
Or
*In case of a holiday, the next working day following the Tax Day!
15th September following the end of the income year where said 15th day falls before the
15th September
21
Return of Income: Who will File?
If the total income exceed Nil Tax Amount
Those whose income are exempted from tax or subject at lower tax other than a charitable
institution or fund,
Mentions few persons
specifically
If the person full-fills any of the specified
conditions
Few changes to the conditions
specified*
If he has assessed in one of 3 years
preceding the income year
Includes employee holding executive or management
position
22
Electronic filing and system generated notice, etc.
Production of accounts: Now onwards, the DCT may
request for information in electronic forms1
System or computer generated notice, order,
requisition, certificate, communication, letter or an
acknowledgment of receipt may be served2
Return, statement, application or documents may be
filed in electronic form and manner as may be
specified by NBR3
23
82BB: Universal Self Assessment
Mentions 12-digit E-TIN in
the return
Assessee
Issues acknowledgement
DCT
Submits return on time Acknowledgement acts as
Assessment Order
Pays tax while submitting
tax return
No notice shall be served
after 12 months from the
date of return submission
24
82BB: Universal Self AssessmentI made a
mistake, can
I amend my
return?
If the DCT
finds out the
mistake, will I
be allowed to
amend my
return?
Shall I still
be assessed
under
section
82BB?
25
82BB: Universal Self AssessmentCan voluntarily file amended return after paying unpaid
taxes and interest thereon
If errors identified by DCT, he will give opportunity to
defend and file amended return paying unpaid amount
Assessment will still be under section 82BB
If the return shows 15% more income, it would not be
picked for audit subject to meeting certain conditions
No notice will be served after 12 months of (amended)
return submission
26
82BB: At a Glance
• DCT will check for arithmetic accuracy of the return submitted.
• DCT will serve notice to the assessee communicating any
difference.
• DCT will give the assessee an opportunity to defend him/her
self and file amended return.
• DCT will issue a letter of acceptance of amended return given
the differences are resolved duly within 60 days of such
submission.
• If the assessee does not respond within the required deadline,
DCT will serve demand notice within 6 months of serving the
original notice.
27
82BB: At a Glance (cont…)
• Assessee can file amended return if s/he voluntarily finds out
any mistake.
• A written statement explaining the nature and reason for the
mistake needs to be attached with the return.
• Balance tax has to be paid duly along with 2% monthly
interest on the unpaid amount.
• Amended return needs to be submitted within 180 days of
filing the original return and before start of audit.
• No notice can be served after 12 months of submitting return
or amended return unlike previously which is 12 months from
the end of the financial year in which the return is submitted.
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82BB: At a Glance (cont…)
• NBR may select a number of returns for audit. However,
returns fulfilling certain conditions will not be picked for audit.
• Except for 15% income increase, all other conditions remain
same. In calculating 15% income increase, like for like income
between two years will be considered.
• If any anomaly is found, then DCT will serve a notice requiring
the assessee to file an amended return.
• If the DCT is satisfied with the amended return, he will issue a
letter of acceptance.
• If the DCT is not satisfied, then s/he will proceed to make
assessment under section 83 or 84, whichever is applicable.
29
82BB: At a Glance (cont…)
• No question of the initial capital will be asked if at least 20% of
such is shown as income, which is lower than the previous
threshold of 25%.
• Initial capital will have to be kept for the next subsequent
income years. If it gets reduced, then the shortfall amount will
be considered as income in the income year in which it falls
short.
30
93: Tax, etc. escaping payment
Other than the following, the section remains the same
• DCT may issue a notice asking to submit return and pay the
sum that escaped payment. Letter of Acceptance will be
issued upon fulfilling certain conditions.
• Will proceed to make assessment under section 83 or 84 if the
conditions are not fulfilled.
• IJCT’s approval will only be required in case of completed
assessment or for returns filed in compliance with section
82BB.
31
93: Tax, etc. escaping payment
No return is filed, No
assessment was made
Conditions
No return is filed, assessment
completed
All other cases
At any time
Notice to be
issued
Within 6 years from
the end of AY
Within 5 years from
the end of AY
Commissioner may extend the time up to 6 years if the escape of
payment was due to failure in making full disclosure by the
assessee
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Specification of escaped paymentIncome escaped
assessmentConcealment or
misrepresentation of any income,
asset or expenditure
Excessive relief or loss or
deduction or allowance
Lower tax computed or paid because of lower base
Application of tax rate lower than
the due rate
Understated Income
33
Corporate Tax: limitation of assessment
Fiscal year 2016/17
• 82BB - 2 years
• 107C - 3 years
• In other case- 6 months
from the end of
assessment year
Fiscal year 2017/18
• 82BB – 2 years
• 107C – 3 years
• In other case- 6 months
from the end of assessment
year
Section 94
• 93(3)(a) & (b)– 2 years
• 93(3)(c) – 1 years• 93 - within 2 years.
34
Corporate Tax: Computation of Depreciation
FY 2017/18
• An inconsistency has been resolved by updating the
cross referencing as in the proviso. In case of motor
vehicle, 25 lac will be maximum limit.
• It also states that nothing of this clause will apply for
bus and minibus used for transportation of students,
teachers, employees of business organization and
profession.
3rd Schedule
35
Requirements of 12-digit TIN replaced entirely
Board can exempt from having twelve-digit TIN;
The responsible person need to ensure that the required person has twelve-digit TIN.
New items added, namely:
i. Agency distributorship of a company;
ii. Commission, fee or other sum in relation to money transfer through mobile banking or other electronic means;
iii. Advisory or consultancy services, catering service, event management service, supply of man power or providing security service;
iv. Bill of entry for import or export.
The entire section has been replaced and mainly
enhancement of service area has been done.
36
Previously
Failure to ensure the authenticity of twelve-digit TIN of the required person by the responsible person.
Penalty will be not more than BDT 50,000.
New inclusion
Failure to ensure of having twelve-digit TIN of the required person by the responsible person.
Penalty will be not more than BDT 200,000.
The entire section has been replaced and mainly
enhancement of penalty has been done.
Enhancement of penalty for failure to verify TIN
37
Inclusion of “Revision of penalty based on the revised amount of income”
DCT shall revise penalty at the time of revising the income
The affected parties has been given a reasonable opportunity of
hearing
Affected parties can apply for revision of penalty to DCT if not
revised after revision of assessment order. If no order is made within
180 days, penalty amount is deemed revised
New Section 133A added
38
Changes in TDS Sections (1)Deduction from payment to contractors, etc.
Section-52
0% to 7%
FY 2016/17
3% to 5%
FY 2017/18
2% to 7%
Execution of contract
Manufacture, process or
conversion; or
printing, packaging or
binding
39
Changes in TDS Sections (2)Deduction from payment to contractors, etc.
Section-52
Supply of goods 2% to 7%
No deduction required for purchase of direct
materials as part of cost of sales or cost of goods
sold
For supply of imported goods, tax deduction
would be reduced by AIT paid at import stage
Risk of disclosing business
secret/margin
40
Changes in TDS Sections (3)Deduction or collection at source from (commission, discount or
fees)- Section-53E
10% of
payment
FY 2016/17
10% of
payments
FY 2017/18
10% of
payment/
benefits
1.5% of
payments
Payment of commission
discount, fees, incentives,
performance bonus/related
incentives or similar benefits
for distribution or marketing
Payment for promotional
activities
41
Changes in TDS Sections (4)Deduction or collection at source from (commission, discount or
fees)- Section-53E
Fiscal year 2016/17
Fiscal year 2017/18
5% x 6% x
selling price
5% x 5% x
selling price
Sells to distributor at lower
than retail price
42
Changes in TDS Sections (5)Section 52BB and 52BBBB – withholding tax on export
Fiscal year 2016/17
Fiscal year 2017/18
In tax law 1% which
subsequently
reduced to 0.7%
through SRO
effective up to 30
June 2017
In tax law 1%
which
subsequently
reduced to 0.7%
through SRO
effective up to 30
June 2018
Withholding tax on
export
(except Jute
products)
No change in substance
43
Changes in TDS Sections (6)Section 52AA : Creative media service, Public relations
service, organization and management service and any
other service of similar nature
Withholding Tax Rates on Based
Amount
Base amount
up to
Tk. 25 Lakh
Base amount
exceeds
Tk. 25 Lakh
(b) On gross receipts
(a) On commission 10%
1.5%
12%
2%
44
Changes in TDS Sections (7)
Section 52AA : Media buying agency service
Withholding Tax Rates on Based
Amount
Base amount
up to
Tk. 25 Lakh
Base amount
exceeds
Tk. 25 Lakh
(b) On gross receipts
(a) On commission 10%
0.5%
12%
0.65%
45
Changes in TDS Sections (8)
10%
Withholding Tax Rates
on Base Amount
12%
Section 52AA:
Advisory or consultancy service, Professional service,
Technical service fee, or Technical assistance fee, Meeting fees,
training fees or honorarium, Credit rating agency,
Stevedoring/berth operation commission
Base Amount less than
Tk. 25 Lakh
Base Amount exceeding
Tk. 25 Lakh
46
Changes in TDS Sections (9)Section 52AA:
Mobile network operator, technical support service provider or
service delivery agents engaged in mobile banking operations
10%
Withholding Tax Rates
on Base Amount
12%
Base Amount less than
Tk. 25 Lakh
Base Amount exceeding
Tk. 25 Lakh
47
Changes in TDS Sections (10)
10%
Withholding Tax Rates on Based
Amount
12%
Section 52AA:
Any other service which is not mentioned in Chapter VII
of this Ordinance and is not a service provided by any
bank, insurance or financial institutions
Base Amount less than
Tk. 25 Lakh
Base Amount exceeding
Tk. 25 Lakh
48
Changes in TDS Sections (11)
6%
Withholding Tax Rates on Based
Amount
8%
Section 52AA:
Indenting commission, Private container port or dock
yard service, Motor garage or workshop, Shipping
agency commission
Base Amount less than
Tk. 25 Lakh
Base Amount exceeding
Tk. 25 Lakh
49
Changes in TDS Sections (12)
3%
Withholding Tax Rates on Based
Amount
4%
Section 52AA:Transport service, car rental
Base Amount less than
Tk. 25 Lakh
Base Amount exceeding
Tk. 25 Lakh
50
Changes in TDS Sections (13)
(b) On gross receipts
Withholding Tax Rate on Based
Amount
Up to
Tk. 25 Lakh
Exceeding
Tk. 25 Lakh
Section 52AA:
Catering service, cleaning service, collection and recovery
agency, event management, supply of manpower, and private
security service provider-
(a) On commission 10%
1.5%
12%
2%
51
Changes in TDS Sections (14)Section 52AA:
Where both commission/fee and gross bill
amount mentioned
Withholding Tax shall be higher of
Tax on commission or
fee applying relevant rate
Gross
bill
3.5% for Media
buying agency
and
10% for Others
Rate of tax
on
commission
or fee
52
Tax liability for shipping business of non-resident: Sec 102
8% on income on
account of carriage of
passengers, livestock,
mail or goods
8% on existing scope
Demurrage charge or
handling charge or any other
amount of similar nature
Fiscal year 2016/17 Fiscal year 2017/18
Supplementary return shall be submitted for demurrage income
within 30 days from the end of month in which the income accrued.
54
New VAT Act 2012
The New VAT Act 2012 implementation has
been delayed
It is now expected to be enforced from 1 July
2019
55
VAT Alerts
Price Declaration is present
Current Account needs to be maintained
Current Account needs to be maintained
Advance trade VAT will remain at 4%
Full deduction of withholding VAT
Truncated VAT, tariff VAT, package VAT are present
56
VAT Registration Businesses who are centrally registered under VAT Act 1991 will need
to obtain 9 digit e-BIN online
All VAT obligations under the VAT Act 1991 will be performed with this
9 digit e-BIN
All unit VAT registration will also need to be converted to 9 digit e-BIN
separately online
All VAT obligations performed currently with the respective VAT
circles will continue to be performed with the same VAT circles
VAT return is required to be filed with the respective regional
commissioner by the Unit VAT Registered person mentioning the 9
digit e BIN
9 digit e-BIN should be obtained by 31 Dec 2017. In the transition time
11 digit VAT registration will be effective
57
VAT Registration
All 9 digit e BIN central registration taken after 31 March 2017 by
businesses which previously had unit registrations will be
invalid as long as VAT Act 1991 is effective
Business will need to obtain unit registration for each unit of
operation
If they wish to obtain central registration, then they will have to
apply for central registration under the VAT Act 1991
58
Extension of VAT exemption facility
Local manufacturers of
Refrigerator and freezer
Extension time limit
30 June 2019
To promote the growth of domestic heavy
industry
Air conditioner
Palm oil & soya bean oil
61
Export Duty
H.S.Code included products on which Export Duty has been imposed
Sl. No. H.S. Code DescriptionProposed
Rate (%)
1. 2402.10.00Cigars, cheroots and cigarillos, containing
tobacco25
2. 2402.20.00 Cigarettes containing tobacco 25
3. 2402.90.00Other Cigars, cheroots, of tobacco
substitutes25
4. 2403.11.00 Water pipe tobacco 25
5. 2403.19.00 Other Smoking tobacco 25
6. 2403.91.00 "Homogenised" or "reconstituted" Tobacco 25
7. 2403.99.00 Other tobacco extracts 25
63
Excise DutyService
Code
Description of Services Rate of Duty
E032.00 Services Rendered by Bank or Financial Institute-
(a) In cases where the balance, whether credit or debit, does not
exceed BDT 100,000 at any time during a year
Nil
(b) In cases where the balance, whether credit or debit, exceeds BDT
100,000 but does not exceed BDT 500,000, at any time during a year.
BDT 150/account
(c) In cases where the balance, whether credit or debit, exceeds BDT
500,000 but does not exceed BDT 1,000,000, at any time during a
year.
BDT 500/account
(d) In cases where the balance, whether credit or debit, exceeds BDT
1,000,000 but does not exceed BDT 10,000,000, at any time during a
year.
BDT 2,000/account
(e) In cases where the balance, whether credit or debit, exceeds BDT
10,000,000 but does not exceed BDT 50,000,000, at any time during a
year.
BDT 12,000/account
(f) In cases where the balance, whether credit or debit, exceeds BDT
50,000,000, at any time during a year.
BDT 25,000/account
64
Excise DutiesService
Code
Description of Services Rate of Duty
E032.00 Services Rendered by Bank or Financial Institute-
(a) In cases where the balance, whether credit or debit, does not
exceed BDT 100,000 at any time during a year
Nil
(b) In cases where the balance, whether credit or debit, exceeds BDT
100,000 but does not exceed BDT 500,000, at any time during a year.
BDT 150/account
E033.00 Services Rendered by Airline -
(a) Services rendered by airline through issuing a domestic "Airline
Ticket per seat" for single journey, which may involve one or more
stops over on its way to ultimate airport of destination.
BDT 500.00
b) Services rendered by airline through issuing an international "Airline
Ticket per seat" for single journey, which may involve a connecting
flight from a domestic airport.
(i) For SAARC
countries BDT 500.00
(ii) For other countries
of Asia BDT 2,000.00.
(iii) For Europe, USA
and rest of the World
BDT 3,000.00.
(c) Foreign national of Diplomatic class, showing his/her diplomatic
passport at the Airline Ticket counter and check-in counter.
Nil