2_Overview of Income Tax in Bangladesh_AY 2015-16

7/25/2019 2_Overview of Income Tax in Bangladesh_AY 2015-16

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KeyWords/Outline

Overview of Income Tax


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Historical Perspective of Income Tax Laws in Bangladesh

Year Important Events

1798 First income tax in the world was introduced by British Prime Minister William Pittthe Younger on 0!1"!1798 w!e!#! $an 1799 to de#ray the %a&oleon War

ex&enditures!

18'0(')

*ncome(tax in the *ndian subcontinent had its origin in 18'0 when Mr! $amesWilson+ the #irst Finance Member in *ndia+ introduced the *ncome(tax Bill entitled,-n -ct #or im&osing .uties on Pro#its arising #rom Pro&erty+ Pro#essions+ /radesand ##ices! /he Bill sought to raise additional #inances in order to re&lenish there2enue de#icit caused by the 3e&oy Mutiny o# 18)7! 4owe2er+ the tax le2ied was

e2entually discontinued in 18')!

18'7(78

*n 18'7+ the tax was reim&osed under the 5icence /ax -ct 18'7 and a#ter one year+the tax was im&osed in an im&ro2ement #orm as a certi#icate tax 6erti#icate /ax-ct 18'8! *n 18'9+ the certi#icate tax was con2erted into regular income(tax on awider co2erage o# assesses 6under the -ct * o# 18'9! *n 187(7:+ when there wasa com#ortable budgetary sur&lus+ income(tax was altogether abolished!

1878(8'

Fi2e years later+ the tax was again re2i2ed in the #orm o# licence taxes 65icence /ax-ct 1877 and continued till the year 188)(8'!

188'(19"1

*n 188'+ the ;o2ernment o# *ndia enacted the *ndian *ncome(tax -ct+ 188'! *n191'+ com&elled by the necessity to re&lenish the #inances damaged by the War o#191:(18+ the ;o2ernment made some enhancement in the rates o# income(tax in the

graduated scale! *n 1917+ su&er tax was introduced! *n 1918+ the *ncome(tax -ct188' was substantially amended to consolidate the law relating to income(tax!


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Historical Perspective of Income Tax Laws in BangladeshYear Important Events

1971(8:

/he declaration o# inde&endence o# Bangladesh was made on "' March 1971 and through anarmed struggle+ the #inal 2ictory was achie2ed on 1' .ec! 1971! /he onstitution o#Bangladesh was ado&ted on : %o2! 197"! For the transitional &eriod between "' March 1971

and the commencement o# the onstitution+ in the article 1)0 o# the onstitution+,/ransitional and tem&orary &ro2isions are set out in the Fourth 3chedule to thisonstitution! -s &er &ara 1 o# this Fourth 3chedule+ ,-ll taxes and #ees im&osed under anylaw in #orce in Bangladesh immediately be#ore the commencement o# this onstitution shallcontinue to be im&osed but may be 2aried or abolished by law!/hus+ #rom "'!0!1971+ income tax and ca&ital gains tax were being collected under the*ncome(tax -ct+ 19"" 6-ct * o# 19"" and the *ncome(tax -ct 19"" was e##ecti2e u& to30

June 1984!Tax Administration:

26 Mar! 19"1 to 1# $eem%er 19"1:/he entral Board o#


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198: andonwards

*n &ursuance o# the &roclamation o# ":th March 198" and in exercise o# all &owersenabling him in this behal#+ the President is &leased to maAe and &romulgate the

*ncome /ax rdinance+ 198: 6=* o# 198: which came into #orce on the 1st$uly+ 198:+ to consolidate and amend the law relating to income tax! /he *ncome(tax-ct+ 19"" was re&ealed and re&laced! /he *ncome(tax -ct+ 19"" was e##ecti2e u& to0!0'!198: and then it was re&laced by the *ncome /ax rdinance+ 198:!*n the *ncome /ax rdinance 198:+ sections :) and :' are #or tax holiday!/axable income C /otal income less -llowancesD was the tax(base u& to assessmentyear 6-Y 1991(199"+ exce&t #or non(cor&orate non(resident tax&ayers! /herea#ter

,/otal income is the tax(base #or all ty&es o# assessees!'ome (t!er )e*orms in Inome Tax:

5/@(*ncome /ax+ created in 1999

Withholding tax being #inal discharge o# tax liability uEs 8" since -Y 1998(99

@ni2ersal sel#(assessment uEs 8"BB since -Y "007(08

3el#(assessment #or non(cor&orate assessee uEs 8- #rom -Y 1990(91 to -Y "007(08

3el#(assessment #or cor&orate assessee uEs 8-- #rom -Y 1997(98 to -Y "007(08

-ssessment on the basis o# re&ort o# a chartered accountant uEs 8--- #rom -Y"000(01

n(line return submission #or 5/@ tax&ayers since -Y "009(10


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+asi ,rinip-es o* .!ar/in/Imposin/ Inome Tax: 'e 16

enera- ,rinip-es us 161:

1! Income taxpayer:*ncome tax is &ayable by e2ery &erson?

section 1'61D!"! Income tax rate:*ncome tax rate is &ro2ided by an -ct o#

Parliament?+ i!e! the Finance -ct sec 1'61D!

! Income tax base: *ncome tax base is the ,total income o#

the tax&ayer during the inome 5earsec! 1'61D!

:! Timing of income tax base+ i!e!+ total income is to be

com&uted #or the ,income year section 1'61D!

)! Timing of income tax payment:*ncome tax is to be &aid in

the ,assessment year section 1'61D!

Exeptions to enera- ,rinip-es:

1! Income tax payment otherwise: /ax deducted at sources

6/.3 or &ayment o# ad2anced income tax 6-*/ where a&&licable section 1'6"D!

"! Special income tax rate:For ,ca&ital gain+ ,income #rom

lotteries+ crossword &uIIles etc! uEs 1961 or ,non(cor&orate non(resident?s

income tax rates are s&ecial and gi2en in the 3econd 3chedule sec 1'6D


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ASSESSMENT !LE "nder Income Tax Law

-ssesseeuEs "67D

Pre&aration o#


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ompliance &$ligations "nder Income Tax Laws

&ollowin' are te tax com)liance

activities as )er various sections teIncome Tax Ordinance !*+,

($ O-li'ations as an assessee

(tax)ayer$($ O-li'ations as a tax collector on

-ealf of tax autority and

(0$ O-li'ations as related )ersons.


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'() ompliance as an assessee 'taxpa%er)*1ollection of TIN 1ertificate u/s *+2% *+3

4is)layin' of TIN 1ertificate u/s *+13dvance income tax )ayment u/s +*% #+5"06re)aration of tax return u/s "76ayment of tax as )er tax return u/s "+&ilin' of tax return and statements in )rescri-ed forms u/s "7

&ilin' of revised return if any omission or incorrect statement in te)reviously filed return discovered -efore te assessment is made u/s

"*8aintenance of accounts and documents, u/s 076roduction of accounts and documents on recei)ts of a notice from

te 41T, u/s "!1oo)eration wit income tax autority durin' ins)ection (u/s +$%

survey (u/s 7$% en9uiry (u/s #$% searc and sei:ure (u/s "$ and

verification re'ardin' deduction or collection of tax at source (u/s

"3$

ompliance &$ligations "nder Income Tax Laws


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'() ompliance as an assessee 'taxpa%er)*ompliance with vario"s notices*

Notice of 4emand u/s 07% Notice to file return u/s ""% Notice to )roduce accounts% statements and documents u/s

"!% Notice to file statement of assets% lia-ilities and life style u/s

*;


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'+) ompliance as a tax collector on $ehalf of tax

a"thorit%*

1ollection of Tax 1ollection 3ccount num-er u/s

*+22


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',) ompliance o$ligations of related persons of a

$"siness entit%-

3))earance on -ealf of te assessee at any incometax )roceedin's u/s "+%

Le'al re)resentative to -e treated as deemed to -e

assessee in case of a deceased )erson u/s !%

Lia-ility in certain cases (as a re)resentative ofanoter )erson u/s !7% as an a'ent of a non5resident

)rinci)al u/s !#% ; and ;03$% &ilin' a return of te income of any oter )erson for

wom te com)any is assessa-le


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Enforcements#onse."ences for Non/ompliance

In case of non5com)liance wit any of te a-ove issues% a )erson may

face te followin',

different t%pes of enforcements $% the tax a"thorit% s"chas* ins)ection of re'ister of com)anies u/s +% survey enterin' any )lace of )remises u/s 7% en9uiry and )roduction of documents u/s #%

searc any )lace/veicle and sei:ure of any)ysical/electronic documents or )ro)erty u/s "% verification of deduction or collection of tax u/s "3% -est Dud'ment assessment u/s *+

and thereafter recovery of tax u/s 0+5+0%

im)osition of )enalty for defaults u/s 0500% 0" )rosecution for offences u/s 0+5"%

disallowances of ded"ctions "#s ,01 disallowances of exemptions d"e to not having

appropriate evidence of the income1

imposition of penalt% interest "#s 23 4 3,1 etc-


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5rievance Mitigation Meas"res* 6hat Taxpa%ers can do7

3 tax)ayer may see> first appealto te 3))ellate Coint 1ommissioner or te

1ommissioner (3))eal$ u/s 7057# on )ayment of ;E of te tax as

determined -y te 41T were return was not filed u/s 70(+$ or first 4

final appealto te Ins)ectin' Coint 1ommissioner u/s 7" a'ainst te

order of Tax Becovery Officer and second appealto te Taxes 3))ellate

Tri-unal u/s 7*57! on )ayment of ;E of te difference -etween tax as

)er te first a))eal order and te tax )aya-le as )er return u/s "+%

a))ly for revisionu/s 3 su-Dect to waiver of ri't to a))eal% 'o for referenceto Fi' 1ourt 4ivision u/s #;5# (if G9uestion of law?

arises in te verdict of te Taxes 3))ellate Tri-unal$ on )ayment of 7E

(were tax demand u) to T>. ; la>$ or 7E (were tax demand

exceeds T>. ; la>$ of te difference -etween te tax as )er Tri-unal

order and te tax )aya-le as )er Beturn u/s "+ and reference to 3))ellate

4ivision u/s # (if te Fi' 1ourt 4ivision allows$% or a))ly u/s 7357@ for A89 'Alternative 8isp"te 9esol"tion) of a

dis)ute wic is )endin' -efore any income tax autority% Tri-unal or

1ourt.

2ut everytin' is costly and is su-Dect to not only )ecuniary costs% -ut also

)olitical and )sycic costs.


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2_Overview of Income Tax in Bangladesh_AY 2015-16

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