Taxation Course

8/10/2019 Taxation Course

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WEL OME

To The Presentation On

INDIRECT TAXES (VAT CUSTOMS)

Academic Course under ― Course A 408 : Taxation ‖

for the BBA students of 19th Batch 8th Semester

IBA ,Dhaka University

Organized by

Institute of Business Administration ( IBA )

Dhaka University

August 2014 – January 2015

INTRODUCTION TO THE COURSE TEACHER

MD. ABDUL KAFI COMMISSIONER

LARGE TAXPAYERS UNIT, VAT



2

Date & Time Course Contents

(1) (2)

November 23,

26, 30 and

December 03,

07, 10, 17, 21 &

24 ( 2014 )

08.30 - 10.00 AM

Brief history on introduction of VAT system in Bangladesh.

Organizational structure and manpower of Bangladesh VAT

Contribution of VAT in the NBR Revenue

Basic concepts & determination of VAT

The Act and the Rules Rate of VAT

Taxes under VAT system

Supplementary Duty

Turnover Tax

Applicable area of VAT

Exemption of VAT and SD.

Exemption benefits for Cottage Industries

Input tax credit mechanism.

How does the tax credit / rebate system work at different level of a business

supply chain under the VAT system

Importance and procedure of valuation under VAT system

Course Schedule

(A) Value Added Tax System in Bangladesh



3

Date & Time Course Contents

(1) (2)

- Do - Truncated base system for services and tariff value for goods

VAT at trade level and ATV

Business process under VAT system

(a) Responsibilities and duty-cycle of a taxable person

(b) VAT Registration

(c) When VAT is payable

(d) Who will pay VAT and other related taxes(e) VAT payment procedure and time frame

(f) Procedure to be maintained for delivery of goods and services.

(g) Record Keeping by the Taxpayer

(i) Tax invoice

(ii) Other documents

(iii) Submission of VAT Return Deduction of VAT at source

Dispute resolution and Alternative Dispute Resolution (ADR)

Export incentives, duty drawback

Refund in VAT System

Enforcement and Audit management

Factors and constraints in VAT management of Bangladesh

Continued……



4

Reference Books evsjv‡`‡ki g~j¨ ms‡hvRb Ki e¨ e¯’v , AvBb wewa I cÖÁvcb † gv: Rûiæj nK

g~j¨ ms‡hvRb Ki AvBb wewa I e¨envi gyn: RvwKi †nv‡mb

g~j¨ ms‡hvRb Ki AvBb, weavb I Kg©c×wZ

kvgQzj Bmjvg Lvb g~j¨ ms‡hvRb Ki Ges AveMvix ïé- AvBb, wewagvjv, cÖ‡qvM c×wZ I wbix¶v

‡ gvt gvndzRvi ingvb AvK ›`

mnR fvlvq f¨vU W. † gvt Avãyi iDd Tolley’s Value Added Tax Rhianon Davies & David Rudling

The Modern VAT

International Monetary Fund (IMF) Value Added Tax : Concept and Practice Alan A. Tait

Value Added Tax (VAT) in Bangladesh M. A. Baree

The VAT Guide (Notice 700 March 1996, HM Customs and Excise, U.K)

New Zealand Goods and Services Tax Legislation

Key issues in Tax Reform Edited by Cedric Sandford (Article: Issues in Adopting and Designing A Value Added Tax by Sijbren Cnossen)

Administrative and compliance costs of Taxation by Cedric Sandford

and Michael Godwin

Value Added Tax System of Bangladesh : Act, Rules & Procedure

Dr. Md. Abdur Rouf.



5

Continued… .. .

(B) Customs Management and Formalities Date & Time Course Contents

(1) (2)

December 28,

31 (2014) &

January 04,

07 & 11

( 2015 )

08.30- 10.00 AM

Organizational structure and manpower of Bangladesh Customs

Revenue performance of customs

Duties and Taxes under Customs Management

Tariff regime in Bangladesh

Prohibitions & Restrictions on Import & Export

Imposition of Duty

Exemptions

Valuation, Transaction value method, PSI system

Bill of Entry, Clearance procedure

Bill of Export, Export procedure

H. S. Code, Assessment of duty

Bonded warehouse

Auction



6

Reference Books

(B) Customs Management and Formal it ies :

– The Customs Act, 1969

– Customs Act, 1969

Najib A. Choudhry – Aspect of Customs Law Abdul Latif Sikder

– Valuation Considerations for Bangladesh Customs Abdul Latif Sikder

– The Customs Act Dhaka Law Report

– Bangladesh Customs- Act and Policy Mohammad Zakir Hossain

e‡ÐW Iq¨vinvDm e¨ e¯’vcbv W †gv gwZDi ingvb



7

INDIRECT TAXVALUE ADDED TAX (VAT) SYSTEM IN BANGLADESH

BRIEF HISTORY ON INTRODUCTION OF VAT

Background : Just before the introduction of VAT the Excise Duty (as Indirect Tax)

under the Excises and Salt Act, 1944 was the domestic source ofrevenue for the Govt. of Bangladesh

Business Turnover Tax (BTT) for 8 services under the BusinessTurnover Tax Ordinance, 1982. The revenue from BTT was very

insignificant. Sales Tax on some selected goods at the import stage under the Sales

Tax Ordinance, 1982.

Share of Direct tax (Income tax & others) was only about 12% and it wasvery difficult to raise the share shortly.

Taking the pressures for reducing the revenue dependence on customsduty into an account.

NBR used to increase the rate of taxes every year and the incidence oftax on tax (cascading effect) was hampering productions and trades.

With the narrow base and regressive nature, the major domestic revenuesource Income tax and Excise system was unable to mobilize theincreasing need of revenue for the Govt. and the development of thecountry.



8

Continued ……

Development budget was dependent on Paris Consortiummeeting (Bangladesh Aid Gr. or Dev. Partners meeting).

World Bank and IMF suggested to introduce the VAT systemas progressive and useful for Bangladesh to enhancerevenue and mitigate the crisis of dev. fund.

A joint delegation from Govt. Official and Trade bodiesvisited some of the countries, already implemented VAT orSales Tax system.

Govt. lastly decided to leave the Excise system andintroduce the modern and progressive VAT system.

It was also decided to introduce the VAT system by replacingthe Sales Tax (chargeable at a different rates at importstage), the Excise Duty (chargeable at different rates on

locally produced goods and rendered services) and theBusiness Turnover Tax (chargeable at a rate of 2% on somelocal small units).

France was the first country to introduce the modern VATsystem in 1954. At present about 144 countries are realizingrevenue under VAT system.



9

With the recommendation and help of Intl. Monetary Fund (IMF)

and World Bank (WB) VAT Act and Rules were drafted.

The Customs and Excise Department was entrusted to implement

the VAT system in Bangladesh.

At the time of introduction, VAT system was introduced only at

the import stage, manufacturing stage and service rendering stage

only, trade level was not covered. But now it is extended to all levels

with wholesale and retails.

VAT system was introduced on 2nd June, 1991 through promul-

gation of Value Added Tax Ordinance, 1991 (Ordi. 26 of 1991).

At the Budget time (FY 1991-92) the Value Added Tax Act, 1991

was passed by the Parliament and then signed by the Hon’ble

President in due course. At the same time the Value Added Tax

Rules,1991 was also formulated by NBR under the VAT act.

Later on Electricity duty, Advertisement tax and Guest Control fee

were merged into VAT system for better service and revenue realization .

Continued ……..



Continued……..

Disadvantages of Excise System• Narrow tax base

• Different rates with some higher rates

• Rate of taxes was increased every year

• Cascading effect of taxes were hampering production and trades

• Unable to mobilize the increasing need of revenue

• Foreign debt was increasing day by day and development programwas hampered

Advantages of VAT System:• Modern and progressive tax system with credit mechanism

• Single standard rate of 15%

• Audit and account based system minimizing harassment and

forcible enforcement• Broaden tax base and ensure proportionate low tax incidence

• No cascading effect of taxes

• Balanced tax system with equity

• Minimizes tax evasion and cost of tax collection

• Increases domestic revenue realization.



11

ORGANIZATIONAL STRUCTURE AND MANPOWER OF

BANGLADESH VAT

Ministry of Finance has four divisions :

Internal Resources Division (IRD)

Finance Division

Economic Relation Division (ERD)

Bank & Financial Institution

Each division is headed by a Secretary and each of them are separately

reportable to Hon'ble Finance Minister.National Board of Revenue (NBR) is working under Internal Resources Division(IRD). Secretary, IRD is the Ex- Officio Chairman of NBR . NBR has threefunctional wings.

Value Added Tax (VAT)

Customs

Income Tax

Each wing of NBR has separate Members. Now VAT wing has three Members.All the twelve functional Commissionerates and two Directorates are functioningunder these three Members. The function and organizational structure of NBRand Bangladesh VAT is given below :



12

FORMULATION OF TAX POLICY AND REVENUE BUDGET

FORMULATION OF TAX RULES AND REGULATION

COLLECTION OF DIRECT AND INDIRECT TAXES

ADMINISTRATION OF —

Income Tax Value Added Tax

Travel Tax Supplementary Duty

Gift Tax Turnover Tax

Customs duty

Excise Duty

Regulatory Duty Surcharge

TO PROVIDE WAIVERS AND INCENTIVES UNDER DIFF. TAX LAWS

TO GIVE SUGESSIONS AND OPINIONS TO GOVT. ON VARIOUS FISCAL

ISSUES

MAIN FUNCTIONS OF NBR

Continued……



13

Continued ……

National Board of Revenue (NBR)

Administration of

Direct Taxes & Indirect TaxesMinistry of Finance

Finance Division

National Board of Revenue (NBR)

Functional Wings:1. VAT Wing

2. Customs Wing

3. Income Tax Wing

Supporting Wings:1. Administration

Research & Statistics

Information Technology

Central Intelligence Cell (CIC)

Law Officer

Appellate Tribunal

IncomeTax

Customs, Excise& VAT

Internal Resources

Division (IRD)Economic Relation

Division (ERD)

Bank & Financial

Institution Div.



Continued ……

ORGANISATIONAL STRUCTURE OF BANGLADESH VAT

Under each Commissionerate Office there are some (5-11) Division Offices and under divisional

offices there are some (2-5) Circle Offices. But LTU, VAT office don‘t have any outside Division

or Circle offices.

NATIONAL BOARD

OF REVENUE

WINGS OF NBR

Income TAXCUSTOMS

VAT RESEARCH &

STATISTICS ADMINISTRATION

OFFICES UNDER

THE VAT WING

DUTY EXEMPTION &

DRAWBACK

DIRECTORATE

VAT

Audit, Intl. & Inv.

DIRECTORATE

DHAKA

(South)

Commissionerate

DHAKA

(North)

Commissionerate

CHITTAGONG

Commissionerate

RAJSHAHI

Commissionerate

KHULNA

Commissionerate

JESSORE

Commissionerate

SYLHET

Commissionerate

CENTRAL INTL.

CELL (C I C)

LTU,VAT,Dhaka

Commissionerate Comilla Rangpur Dhaka (West) Dhaka (East)



Continued ……

ORGANISATIONAL STRUCTURE OF VAT FUNCTIONAL UNITS

[VAT Field Administration]

Each Commiss ionerate Office is headed by a Comm issioner, Divis ion Off ice is headed by a

Deputy/Ass istant Comm issi oner and Circle Off ice is headed by a Revenue Off icer (RO). Circle

Off ice is the grass root level of f ice of VAT system in B angladesh w hich d irect ly deals w ith the

tax payer and the Range Off icer performs h is dut ies from Circle Off ice.

COMMISSIONERATEOFFICE

CE&VDIVISION

OFFICE

CE&VDIVISION

OFFICE

CE&VDIVISION

OFFICE

CE&VDIVISION

OFFICE

CE&VDIVISION

OFFICE

RANGE/AREA

RANGE/AREA

RANGE/AREA

RANGE/AREA

RANGE/AREA

CE&V CIRCLE

OFFICECE&V CIRCLE

OFFICE

CE&V CIRCLE

OFFICECE&V CIRCLE

OFFICE



16

Continued ……

Number of VAT Offices under VAT

VAT Commissionerates 12

Directorates 2

VAT Divisional Offices 84 (29)

VAT Circle Offices 254 (111)

VAT Ranges/ Areas 1270 (540)

M d VAT



17

Manpower under VAT Continued ……

Member VAT 3

VAT Commissioners 12

Director Generals 2

Additional Commissioners 32

Joint Commissioners 30

System Analyst / Senior Programmer 2

Deputy/Assistant Commissioners 210

Programmer / Assistant Programmer 15Revenue Officer 562

ARO 3125

Computer Personnel 68

Ministerial staff 1335

Motor Vehicle Driver 341

Sub-Inspectors 233

Sepoys 1981

MLSS 375

Total = 8324 (5084)



18

CONTRIBUTION OF VAT IN NBR REVENUE

Like other developing countries, trade-based taxesdominated the tax structure with Customs Duty alone

accounting for more than 51% of total NBR revenue. Afterintroducing VAT in Bangladesh tax system, gain fromVAT revenue was quite impressive (55.63% of total taxrevenue in 2011 - 2012), it recorded to 28.4% of totalrevenue during 1990-1991. Historically, revenue collectionof NBR does not always reach the target but it recorded

surplus in FY08-09, FY09-10, FY10-11, and FY11-12 andthe collection of FY 12-13 & FY 13-14 was also satisfactoryin the context of international and domestic reality.

This outcome of the recent VAT collections is quiteimpressive though VAT system is not fully modernized andexist a lot of exemptions and is suffering from acutemanpower. A lot of scope still remains to boost up VATrevenue collections if a modern and efficient VAT systemcould be implemented through initiating different reformmeasures and adequate manpower and logistics areprovided.

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19

0

2000040000

60000

80000

100000120000

140000

13676.03

42915.5

63389.74

120512.83

Customs Income Tax VAT NBR

Continued ……..

Twenty three year old Bangladesh VAT has contributed a very handsome

share in the NBR revenue which is shown below :

REVENUE PERFORMANCE OF

VAT, CUSTOMS, INCOME TAX & NBR TOTAL

FY 2013-14 (Rev. Figur e in Cr ore Tk .)

VAT Revenue (VAT+SD+Turnover Tax+ Excise Duty) includes

both Import & Local level. Only local level 43,726.41 Crore Tk.



Continued ……

REVENUE COLLECTION BY THE VAT WING IN COMPARISON

TO TOTAL REVENUE COLLECTED BY NBR.

20

17473165 3876 4087 4986 5508 6161 6519 6793 7143

8769 952512509

1410716156

18719 20015

25646 28900

35134

43922

52711

58131

63389.74

6152 7348 8638 899610523 11370 12503 13802 14869 15123

1877420224

2377026195

29905

3396137219

47436

52525

62103

78692

94754

108618

120512.83

0

20000

40000

60000

80000

100000

120000

140000

VAT TOTAL



21

Number of VAT Registered Units/ Taxpayersunder VAT system of Bangladesh

( As on November, 2014 )

Manufacturing Units 54,371

Service rendering Units (excluding construction units) 1,78,130

Construction Units 2,51,888

Trader (local) 3,05,316

Trader (Commercial Importers) 58,450

Importers (excluding Comm. Imp.) 82,314

Exporters 43,740

Total 9,74,209

Total No. of VAT Registered Units 8,06,805

Continued……



BASIC CONCEPTS AND ISSUES RELATED TO VAT

Self assessing, self accounting, self depositing and self clearance system. Advalorem tax system with invoice binding supply / delivery.

Uniform, single standard rate 15% .

Wide tax net ( Import stage, production stage, service rendering stage, wholesaleand retail stage ) and limited exemption including exemption on primary andunprocessed agricultural goods .

Internal balance and equitable treatment .

Liberal treatment like turnover tax and cottage industries facilities for the smallunits.

Elimination of cascading effect ( No Tax on Tax).

Zero rate on all exports, deemed exports and outgoing ship stores.

On imports VAT is an addition to customs duties to initiate VAT system from theimport stage and to protect certain economic activities.

Supplementary Duty and Turnover Tax realized under VAT act .

Audit and account based system.

Positive and helpful for maximizing revenue realization.

Main Features of Bangladesh VAT



23

Continued ……

The Concept and Determination of VAT

Value Added Tax is a tax on consumer expenditure and is collected on

business transactions and imports.The basic principle of VAT is to charge VAT at each stage in the supplyof goods and services (output tax). If the customer is registered for VAT and uses the supplies for business purposes, he will receive creditfor this VAT (input tax). The broad effect is that businesses are notaffected and VAT is actually borne by the final consumer.

According to Carls. Shoup , “ VAT is a tax on the value added by abusiness firm , through its activity, to the goods and services it buysfrom other business firms”.

According to Bannock & Peacock, “ VAT is a tax on final consumption

which is collected at every stage of production and distribution ratherthat at the retail stage alone”.

In other words, VAT is an expenditure tax or a transaction tax or aconsumption tax.



24

Continued ……

The Concept and Determination of VAT

Value: Here the Value means the Value on which the VAT will

be calculated or assessed or imposed, but not the Value incommon sense or in Economics.

Value Added: Added Value is the value that a manufacturer or a

service renderer or a businessman add to his inputs or raw materials or

other purchases by the time he sells the product or service. In otherwords, the added value is the differential amount between the salesprice and the input cost.

And the Tax here is, the tax on that Added Value; and that's the Value Added Tax (VAT) stands for.

So, Value Addition = Sales Price – Input (raw mate.) cost

And VAT = Output Price 15% – Input price 15% (if any)

[the rate of VAT in Bangladesh is uniformly 15%]

i,e VAT = Tk. 150

15% – 100

15%

= Tk. 22.50 – 15.00 = 7.50 (Net VAT)



The Act and the Rules : Value Added Tax (VAT) is administered under the Value Added Tax Act,1991 and the Value Added Tax Rules, 1991 and the SRO’s and Order’s

made there-under.

The Act contains 73 sections, 3 Schedules and the Rules contain 42rules and 27 Forms. Now the Act contains 101 sections, 3 Schedulesand the Rules contain 52 rules and 37 Forms.

RATE OF VAT Standard/uniform rate of 15% on all VAT applicable goods and services.Though there are some applicable net rates for services like, 2.25%, 3%, 4%,4.5%, 5%, 5.5%, 6%, 7.5%, 9% etc. But practically these rates come from thetruncated base for assessable value for VAT of some specific service items. Ifthe truncated base value of an item is made tk. 30 over market price tk.100,

then the amount of VAT at the rate of 15% on tk. 100 will be tk. 4.5, That it isgenerally, but unofficially known as 4.5% VAT on the total amount.

Zero rate on all exports, deemed exports and foods for consumption outsideBangladesh and other goods supplied to an out going conveyance. (Section-3 )

Continued



26

Continued……

Rate of VAT in different countries

Name of Countries Yr. of intro Standard rate (%) Reduced rate (%)

Austria 1973 20 12,10

Argentina 21 10.5

Germany 1968 16 7

Denmark 1967 25 ---

Thailand 1992 7 ---

South Africa 14 ---

South Korea 10 ---

Nepal 13 ---

New Zealand 1986 12.5 ---

Canada 1991 7 ---

Japan 1989 3 ---

Italy 1973 19 4, 9



28

TAXES UNDER VAT SYSTEM

The under mentioned taxes are administered and realized underVAT Act and Rules made there-under :

(a) Value Added Tax (VAT)

(b) Supplementary Duty (SD)

(c) Turnover Tax (TT)

(d) Advanced Trade VAT (ATV)

Duty Drawback or Export Rebate against the VAT, SD, Customs Duty(CD), Excise Duty and other duties & taxes paid on the inputs used atthe time of manufacture of goods or rendering of services or paid atthe production level are given under VAT Act.

SURCHARGE IMPOSED UNDER FINANCE ACT, 2014

(a) Health development Surcharge @ 1% on tobacco products

(b) Environment protection Surcharge @ 1% on all goodsproduced in an industry, pollutes environment

(c) Information and communication technology DevelopmentSurcharge @ 1% on Mobile phone set imported or produced

The above surcharge shall be levied and realized as and when VAT is

levied and realized.



29

SUPPLEMENTARY DUTY ( SD ) : Goods and services socially undesirable, luxurious and not

essential mentioned under the Third Schedule of the VAT

Act are subject to SD under VAT Act [Section 7 and SRO] at a rate ranging from 5% to 500%, such as: 5%, 10%,

15%, 20%, 25%, 30%, 35%, 43%, 45% 60%, 61%,

93.24%, 100%, 150%, 200%, 250%, 350%, 500%.

The SD imposed major items are :

Goods : Import Stage

Fresh and Chilled Tomato, Fresh and dried Nut, Fresh and

dried Fruits, Spices, Finished Chock let

Marble, Granite, Cement, Petroleum products

Detergent powder, Mosquito coil, Printed PVC Sheet Toilet paper, Tissue paper, Oven fabrics, Carpet

Diamond, Imitation Jewellery

Explosive powder, Revolbar, Pistol and other fire Arms.

Liquor, Motor Vehicle

TV, Refrigerator, VCP, VCR, VCD, DVD

Continued



30

Continued ……

Goods : Production Level

• Cigarettes, Cigarettes Paper, Biri, Zarda and Gool,

• Natural Gas in gaseous form

• Shampoo, Perfume, Cosmetics And other luxury goods

• Paints

• Mosaic cube and similar goods, Ceramic Tiles, Bath tub, Jacuzzi,Sink, Basin, Commode and other bathroom fitting and fixtures.

• Other Filament lamp, Excepting ultra violet/Infra-red lamp andfloat glass.

• Beverage and Energy drink, Fruit juice and Fruit drink

• Mineral water (up to 3 liter)

Services : Local Stage• Satellite channel distributor

• SIM Card supplier

• Hotel and Restaurant (Incase of liquor & Floor show bills).



31

TURNOVER TAX

Turnover Tax is administered under VAT Act and Rules. It is a liberal and

easier tax treatment for the small enterprises (production and services).

[Sec. 8, 16 and rule 4]

Turnover means total money received or receivable in a certain period by a

registered person against his goods manufactured, service rendered or

goods supplied.

Turnover Tax means the tax payable on the said total money under section 8

of VAT Act,1991 and rule 4 of VAT Rules,1991.

Who is eligible to pay Turnover Tax

Yearly turnover not more than tk. 80 lac, ie upto 80 lac VAT is exempted

and Turnover Tax is payable. Rate of turnover tax to be applied @ 3%.

Not listed in the SRO No.183-law/2012/641-Mushak, dated:07

June,2012.

- 26 goods and 64 services



32

Application (Mushak- 6) to the Divisional Officer, VAT

Issuance of Enlistment certificate (Mushak- 8) by the DivisionalOfficer, VAT within 07 (seven) working days.

Two copies of annual turnover declaration (Mushak- 2Kha) to theDivisional Officer, VAT

Estimated annual turnover and turnover tax declaration to besubmitted every year subsequently by the tax payer within 30

(thirty) days of the date of Enlistment. After examining the declaration; the amount of annual turnover and

Turnover tax ought to be approved by the Divisional Officer

Approval letter to be issued by the Divisional Officer within 30(thirty) working days

Turnover tax is payable on the date of issuance of Enlistment

certificate by the Divisional Officer Deposit the amount of turnover tax to the Govt. treasury under the

account code number 1/1133/0010/0313

Submission of turnover tax Return (Mushak- 4) along with treasurychallan to the Divisional Officer of VAT for every tax period

Continued ……

Procedure to be maintained for Turnover Tax



33

Continued……

Responsib i l i ty of a person l iable to pay Turnover Tax

• Application to the concerned Divisional Officer of VAT with FormMushak-6

• Enlistment by the concerned Divisional Officer of VAT with FormMushak-8

• Issuing of cash memo with serial number at the time of supplyinggoods or rendering services using Enlistment number on it.

• Payment of turnover tax monthly/quarterly/ yearly basis.

• Submission of turnover tax Return (Mushak-4) in every tax period• Registers and documents to be maintained:

– Purchase register (Mushak-16)

– Sales register (Mushak-17)

– Counter foil or copy of cash memo

– Copy of turnover tax Return (Mushak-4) – Documents relating to import and export (if any)

– Relevant commercial documents

• All the documents relating to turnover Tax to be maintained for

6 (six) years



34

Continued……

• Penal provision [Rule 4 (13 Ka)]

– Penalty of Five thousand taka in each case

against failure to pay turnover tax in due time

– Imposition of 2% interest against the

unrealized turnover tax

• Arrear turnover tax to be realized under section

56 of VAT Act and Rule 43 of VAT Rules



35

APPLICABLE AREA OF VAT

VAT Levi-able on -

From the very inception, VAT was applicable on most of the goodsand a few number of services at the rate of 15%.

VAT was applicable on all goods under the H.S. Nomenclature

except the following: [Section3,8]

All exports, deemed exports and foods for consumption outsideBangladesh and other goods supplied to an out going conveyance.

Goods and services under the Turnover Tax.

All goods under Second Schedule of Narcotic Control Act, 1990,incase of manufacturing in Bangladesh. So, VAT is applicable at

import level, service rendering level and trade level also.

Goods described under the First Schedule of the VAT Act, such as:live animals, meat, fish, fresh milk, unprocessed agriculturalproducts, natural sands, rough timber, raw silk cocoon, raw wool,raw cotton, raw jute etc.,

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36

Continued……

VAT is applicable on all services excepting the services described under

the Second Schedule of the VAT Act, such as :

Basic services to live on, Personal Services, Social welfare services,Medical and Health services given by the private sector, Library,Museum, Art gallery, Zoo, Botanical garden, Transmission ofRadio and TV (excepting other commercial activities), Takingdeposit and savings by Bank and Financial Organization, Lifeinsurance policy, Savings, SEC, Transportation of Passenger

(without AC) and goods, Air lines (excepting the farm rentsChartered plane and Helicopter), religious activities, Postalservice (excepting Courier and Express mail service), allcharitable and scientific service activities provided for publicinterest, Stevedoring and Hand operated laundry and cleaning

activities (except services provided in hotel and mechanizedlaundry), etc.

Services under F irst Schedule (Part-2) of the Excises and Salt Act, such as :

Services rendered by Bank or F inancial I nstitute and Services rendered by

air line



EXEMPTIONS OF VAT & SD UNDER SRO’S:

EXEMPTIONS [ Section 14]

Govt. by notification in the official gazette exempt VAT or SD onimportation or supply of any goods or class of goods or onrendering of any services subject to some conditions andlimitations.

NBR may by special order exempt payable VAT or SD on anyimportation of goods, receive of supplies or receive of servicessubject to some limitations and conditions in view ofenforcement of any international or bi-lateral agreement onreciprocal basis.

NBR may by special order exempt VAT or SD on importation orsupplies of any taxable goods or on services renderedmentioning the reason in each case.

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38

Continued……

Goods :

Live saving drugs, Plastic kitchen items, Water bottle, basket and

Tiffin carrier used by the school children, Plastic hanger, hand fanand some other plastic items, Kitchen and household utensils madeof aluminum, MS sheet, Tin or steel (enameled or otherwisecolored), Some medical instruments/ apparatus, Agriculturalmachinery and instruments, Some scientific instruments, Books,booklet, news paper, periodicals and journals, Computer software,

computer and accessories, computer ribbon and modem, Aircraft‘s and parts thereof, Chem. fertilizer, insecticides, fungicides,herbicides, Copra waste, mustard oil, full fat soybean,Contraceptives, Sugar and molasses, loaves and bread, Biscuit(hundred taka per kg) cake (hundred taka per kg-except partycake) Jute goods, electricity, power generator, Hard board,

newsprint (in roll or sheet form) Handloom fabrics of syntheticfiber and cotton, Silk yarn, plastic or rubber sandal (up toTk.100/pair), Ball pen, wood pencils, type writer, Spares of textileand jute mills, Packed liquid milk, ghee, butter, curd (exceptingsweet curd), Hurricane light, kerosene burner, Tractor, powertiller (excepting prime mover) etc.



39

Continued……

Tax exemptions for Cottage industries:

Goods produced by the cottage industries exempted fromVAT and SD under some conditions mentioned below as

per the SRO No-172-Law/2013/676-VAT, Dated 06 June,

2013 issued under section 14(1) of VAT Act.

Conditions :For the purpose of the SRO, Cottage Industries means —

(i) It should not be a joint stock company

(ii) Its Invested capital for plant, machinery and equipment at

any time in the year should not over taka 40 lacs(iii) Its Annual Turnover not more than taka 60 lacs

This Cottage benefit may be taken through certain

procedure :

There is a negative list of items for cottage benefit



40

Continued……

Negative List for cottage benefits:

Palm oil (all sorts), Coconut oil (all sorts),

CDSO, Soya bean oil,

Tea, Lozenge, Biscuit, Chanachur,

Juice, Energy drink, Mineral water,

All types of Cigarette and Biri, Zarda, Gul,

Antiseptic, Disinfectant, Medicine,Paints, Pigments, Varnishes, Polishes,

Perfume, Water used in cosmetics, Cosmetics,

Tooth paste and like items,

Shave and after shave items,Deodorant, Air freshener,

Soap ( all sorts with Liquid),

PVC pipe, Bricks (all sorts),

Continued



41

Continued……

M.S. Products, Metal container,

Super enameled copper wire,

House hold fan (fitted with electric motor of production

capacity not over 125 watt)

Dry cell battery, Storage battery,

VCR, VCP,

Television (all sorts),

Electric bulb, Wires and cables,Cruise Ships (all sorts), Excursion Boats, Ferry boats,

Cargo Ships, Berge and Similar ships for carrying

passenger and goods,

Fishing Boats Factory Ships and Other ships, Used for

preparing and preserving goods like fish,

Yates and other boats, Rowing boats and canoes for games

or entertainments,

Tugs and Pusher craft, Rubber and Plastic foam.

Continued……



42

Procedure: Fulfilling the above SRO conditions the

manufacturer of VAT payable goods except thegoods under the negative list will apply to theDivisional officer of VAT in form mushak-6 with adeclaration in ‗form-ka‘. After enquiring into thematter, if the Divisional officer is confirmed that

the applicant has fulfilled the conditions as per theSRO, then he will enlist the applicant as a cottageindustry in form mushak-8. The enlisted person willmaintain an accounts of transaction in ‗form-kha‘ and at the time of supplying the goods, he will

always issue a cash memo mentioning theenlistment number.

Continued……



43

VAT Exemption on Services:

Temporary Hotel and Restaurant; cold storage; Classified Advertisement in

the News paper; Printing charges on books, Periodicals and Educationalmaterials for the students; Binders, Internet (in case of rendering service to

educational Institution only), VAT payable on Insurance premium by

Private Sector Power Generation Company, VAT payable on Premium of

co-insurance for Aviation Insurance in Foreign Currency . Specialist

Doctor, Travel agency, Indenting Farm Supply of School Tiffin, Organizer of

Cultural Function performed by foreign artist [ less than Tk.100 per single

entry ], Specialist Doctor, Transportation of food grain, Land seller, Power

used for irrigation, Small Tailoring shop for Dhaka & Chittagong city and

non-AC Tailoring Shop for other part of the country, Tourist place or

installation (including historical place), Man power exporter, Stock broker

and other broker, Tour operator, Meditation Services, Purchase of rubber

as industrial raw material through auction by an industry, Private Medical

College & Engineering College, Private University etc.

Continued……



44

Exemption at Trade level

Maize seeds (in package form), Rice all sorts

Protein premix of animal feed

All Contraceptives

Insulin, Vaccination for human medicine, Vaccination for veterinary

medicine, Homeopathic, Aurvedic, Unani and Kidney dialysis solution,

Anti-cancer medicine

All fertilizer

Insecticides, Fungicides, Pesticides, Anti sprouting products, Plant

growth regulator and Disinfectants used in agricultural activities.

Streptokinase

Sheath contraceptives

Mobile phone set,

Insulin pen/ Insulin cartridge.

INPUT TAX CREDIT MECHANISM : [S ti 9 R l 19 ]



45

INPUT TAX CREDIT MECHANISM : [Section 9, Rule 19 ]

Taxpayers are entitled to get input tax credit (rebate) on the VATpaid inputs (goods and services) used for producing/ supplying thetaxable goods or rendering the taxable services whether importedor locally procured. As a result the incidences of taxes aredistributed among the all taxpayer in a same chain and theindividual incidence becomes low. Input tax credit is an incentiveto the tax payer. It is the engine of VAT system. It is a progressivetax system because of input tax credit facility.

INPUT TAX CREDIT :

Input means— [ Section 2(ga) ]

(a) All raw material, Laboratory re-agent, Laboratory equipment,

Laboratory accessories any Gas, any material used as fuel,packaging material, services and machinery and sparesexcepting labor, land, building, office equipment and conveyance.

(b) Incase of trading, goods imported, purchased, achieved, orotherwise procured in view of sale, exchange or in otherwords handing over.

Continued…..



46

Input tax means — [Section 2(gha)]

Value Added Tax paid on imported inputs or purchased

inputs by a registered person from other registered

person and VAT realized in advance (ATV) on imported

inputs at the import stage shall also be included.

Output tax means –

Levi-able tax under Value Added Tax Act, 1991

What is Tax Credit or Rebate

In accordance with the provision of section-9 of VAT Act and

rule-19 of VAT Rules any registered manufacturer, service

renderer, importer or trader of taxable goods or services may

adjust the amount of input VAT paid earlier on his inputs

against output VAT payable on goods or services. The scope or

facilities provided here is called Input Tax Credit/Rebate.

Input Tax Credit = Output Tax Net Tax Payable

Continued……



47

Credit/ Rebate Mechanism: [Section 9, Rule 19 ]

Input tax credit facility is a right for the tax payer. But it is not free to exercise.This rebate can only be taken under certain conditions. Tax credit is notpermissible in the following cases :

Input tax mentioned in the Bill of Entry or Tax invoice (VAT-11) in which the Registration No. does not belong to theRegistration No. of the supplier of goods, trader or servicerenderer.

VAT paid against the goods kept under others possession, right

or supervision.The amount of SD or Turnover Tax paid earlier.

The raw materials used in the production of goods or servicesexempted from VAT.

VAT paid against reusable packaging material, excepting thefirst time use.

VAT paid on Goods and Services which are related to theconstruction. Modernization, expansion, renovation and repairof any building or establishment and also purchase or repair ofany kind of furniture, stationeries, air conditioner, fan, lightingequipment, generator etc.

C ti d



48

Continued……

VAT paid on rent or lease of Architectural Plan and Design,conveyances etc.

VAT paid against expenditure of travel, entertainment, staff welfareand development activities.

VAT paid against such inputs which is not entered in the book ofpurchase (Mushak-16) prescribed by rules.

VAT paid against inputs which is not included in the base value of thetaxable goods.

Input tax on increased price of inputs purchased or procured whenamended value declaration is not submitted after increase of totalinput price exceeding 7.5%.

The amount of VAT concerned with bank guarantee under which theinput is released, till the bank guarantee finally disposed of .

If the NBR by notification in the official gazette fix the rate andamount of value addition for the purpose of assessment of VATincase of supply of goods or class of goods by a trader.

If the NBR by order determine VAT on the basis of real valueaddition or by notification in the official gazette determine VAT onthe basis of fixed rate of value addition on some certain services ,VATpaid against that inputs purchased.

Continued



Continued……

If the total value received or receivable by a trader against his

supplies is determined by rule for the purpose of payment of VAT.

VAT paid on inputs purchased where tariff value is fixed u/s 5(7).

If the amount of payable VAT is not included in the supply price or

price declaration of goods and if there is no proof of payment in the Govt.

treasury, incase when services supplied from outside Bangladesh.

If the value of inputs of goods or services worth Tk. one lac or more andif the purchase price does not paid fully or partially through banking or

electronic channel

Credit is to be taken within the same tax period, in case of failure it must

be taken within next 2 tax period provided the total inputs entered into the

production, supply or service rendering place

Continued……



50

Continued……

Exceptions and other relevant issues

Partial Rebate : As per rule 19 of VAT Rules 1991 the following

percentages of rebate may be taken in respect of place,installation or premises used in connection with production orsupply of goods or rendering of services :

(a) VAT paid on insurance, gas and power distribution: 80%.

(b) VAT paid on telephone, tele-printer, fax, internet, freight

forwarders, C & F agent, WASA, audit and accounting firm,

procurement provider, security service, legal advisor, transport

contractor and banking service (LC) : 80%

Adjustment of Rebate: Any taxpayer may adjust the amount of

VAT shown in the Bill of Entry (B/E) or VAT Challanpatra (Mushak-11) on the rebate column of Account Current Register (Mushak-18)

after the goods entered into the factory or business place.

Continued



51

Continued………..

How does the tax credit / Rebate system work atdifferent levels of a business supply chain ?

[ Flow Chart for Credit / Rebate Mechanism ]

Industry levelValue for VAT 150 tk.

Rate of VAT = 15%

Total VAT= 22.50 tk.

VAT Rebate= 15 tk.Net VAT = 7.50 tk.

VAT paid value

= 172.50 tk.

Distribution levelValue for VAT 180 Tk.

Rate of VAT = 15%


VAT Rebate= 22.50 tk.Net VAT = 4.50 tk.

VAT paid value

= 207 tk.

Import level Value for VAT 100 tk.

Rate of VAT = 15%

Total VAT= 15 tk .

VAT paid value= 115 tk.

ChinaExporting

Country

Whole Sale Level

Value for VAT

210 tk.Rate of VAT = 15%


VAT Rebate= 27.00 tk.

Net VAT = 4.50 tk.

VAT paid value

= 241.50 tk.

Retail Level

Value for VAT

250 tk.Rate of VAT = 15%


VAT Rebate = 31.50 tk.

Net VAT = 6.00 tk.

VAT paid value

= 287.50 tk.

Consumer level

Total value=

250+37.50

=287.50 tk.

(VAT inclusive)



52

Continued…… Cancellation of Rebate and Executive Appeal : [ Section-(2),2ka,2kha ]

If any taxpayer without having legal right of taking rebate

avails tax rebate, the concern officer cancelling the taken

rebate may order for adjustment with the account current

register or tax return(Mushak-19).

The person aggrieved by the order may submit a

written objection to a VAT officer senior to the officer

passing the order within 15 working days.

The officer shall give an opportunity of being heard to

dispose of the issue within 15 working days and the

order issued by the said officer shall be final.

IMPORTANCE AND PROCEDURE OF VALUATION



53

IMPORTANCE AND PROCEDURE OF VALUATION

UNDER VAT SYSTEM

As the realization of VAT in Bangladesh is still dependent onmanufacturing level and the VAT is realizable on ad valorem basis, so

if the correct value is not determined, the actual revenue could not berealized. But whenever the real VAT system will be implemented at allstages of goods and services the question of value for VAT inBangladesh may be dealt with relaxed approach.

Value for VAT does not mean the actual value or sale value of a

commodity or service. Actual value or sale value is determined by themanufacturer or trader or market. Here the value stands for thepurpose of assessment of VAT at different stages only. So the questionof value for VAT in Bangladesh is very important, though it is notimportant for the countries where the ideal VAT system is introducedat all stages like: import, manufacturing, trading and servicerendering.

Provisions regarding determination of value for VAT and SD arecontained in section 5 and 7 of VAT Act and rule 3, 3ka, 3kaka, 3khaof VAT Rules. As per the current position of law the assessable valuefor VAT at different stages are to be calculated as mentioned below :

Continued……



54

Import stage: Assessable value for VAT :

Assessable value for Customs Duty under section-25 or 25A of Customs

Act + Customs Duty + Regulatory Duty (if any) + Supplementary Duty(if any) with other Duties and Taxes (if any), except AIT.

Other duti es and taxes means : Safe Guard Duty (SGD), Counter-veil ingDuty (CVD), Anti Dumping Duty (ADD) etc.

Calculation of taxes is given below:Customs Duty (CD) and Regulatory Duty (RD)

Flat on Value: If assessable value is 100.00

if rate of CD is 25%,

then amount of CD is 25.00

if rate of RD is 05%

then amount of RD is 05.00

Continued



55

Continued……

[Assessable value for SD: Assessable value for Customs

Duty + Customs Duty + Regulatory Duty (if any)].

Supplementary Duty (SD):

Based on : If assessable value is 100.00

Value+ CD If rate of CD is 25%If rate of RD is 5%

and if rate of SD is 20%

Then amount of SD is = (100+25+5) X 20%

= 26.00

[ i.e, Assessable value for SD = 130.00 ]

Continued



56

Continued……

Calculation of Taxes

Value Added Tax (VAT) at Import stage :


Value+CD+RD+SD If rate of CD is 25%

If rate of RD is 5%

If rate of SD is 20%& rate of VAT is 15%

Then amount of VAT is = (100+25+5+26)

X rate of VAT 15%

= 23.40

[i.e, Assessable value for VAT=156.00]

Continued



57

Continued……

Local stage:

Value of goods is determined by aggregating the cost of inputs, other costs & charges,

profit and commissions.

Goods (Manufacturing): [{Value of Inputs + Total Expenses + Commission, Charge,Fee (if any) + all Duties and Taxes (if any), Excepting VAT + Profit} +Supplementary Duty (if any)].

Calculation of Taxes :Value of Inputs = 156.00

Total Expenses = +30.00

Commission = +4.00

Profit = +20.00

Total Cost = 210.00

Supplementary Duty @20% = 42.00

Value for VAT = 210.00+42.00 = 252.00

So the amount of VAT=(252x 15%)= 37.80

[Assessable value for SD: The amount or consideration received or receivable fromthe buyer excluding the amount of SD and VAT.]

Continued……



58

Services

Value for Services :

Total receipts excluding VAT, but including supplementary duty (ifany) ]

• Total receipt means-- Total money received or receivableincluding commission or charge, excepting VAT by the taxableservice renderer in exchange of his services.

[Section 2(bha)]

[Assessable value for SD: Total receipt excluding the amount of SD andVAT.]

• Calculation of Taxes :Value of services = 138.00

Value for VAT = 120.00Value for SD = 100.00

So Total Money received or receivable = 100.00

[Amount of SD @ 20% = 20.00

Continued……



59

Trade ( Whole sale and retail level ): Local Trader :

Base value for VAT : [{Purchase value + 26.67% (value addition)] x 4%,

ie,15% on 26.67 (amount of value addition). Value to be declared under section 5(2) with the ―form-1kha‖ (rule 3) to

the divisional Officer of VAT for supply of goods and taxes to be paid@ 15%.

The rate of value addition for pharmaceutical and petroleumsubstances will be counted as 13.33% and 2% VAT will be calculatedon the total value of the supplies.

In case of payment on the basis of truncated base, no rebate can beclaimed.

The small retail traders whose annual turnover is not over tk. 70 lacthey can pay fixed amount of VAT region wise on the basis of certainamount of value addition determined by NBR .

Rate of value addition is determined to be 26.67%, i.e. net 4% on the saleamount is payable. But one can pay VAT at the rate of 15% on actual basisdeclaring value and maintaining required Registers and formalities [accordingto ideal VAT system]. In that case,

[VAT = Sale value × 15% – Purchase value × 15%]

Commercial Trader : Cont inued……



60


Based on Value If assessable value is 100.00

+ CD+ RD +SD + 26.67% CD is 25%

(Value addition) RD IS 5%

SD is 20%

VAT is 15%

AIT is 5%

ATV is 4%

The amount of ATV is = (100+25+5+26+41.60)

x rate of ATV 4%

= 197.60x rate of ATV 4%

= 7.90

Commercial Trader : Cont inued ……

Advanced Trade VAT (ATV)

[{(Customs assessable value + Customs duty) + Regulatory Duty (if any) +

SD (if any)}+ 26.67% (Value Addition)] × 4%.

Value to be declared under section 5(2) with the ―form-1kha‖ (rule 3) to the

divisional Officer of VAT for the next supply and taxes to be paid @ 15%.

Continued……



61

EXCEPTIONS :

Production on contractual basis – [Section5(2ka)]

NBR may by rule ascertain the procedure of valuation incase ofmanufacturing the brand goods of a registered manufacturer oncontract basis by another registered manufacturer.

The manufacturer of the goods (sub-contractor) will submit a valuedeclaration in form ―Mushak-1‖ to the Divisional Officer of VAT

on the basis of the consideration/charges against each unit of goodshe will receive from the owner of the brand goods.

The owner of the brand goods will also submit a value declarationin form ―Mushak-1‖ to the Divisional Officer of VAT as per normalprocedure laid down in rule 3(1) of VAT rule.

The manufacturer of the goods (sub-contractor) shall only beentitled to supply the manufactured goods to the registeredpremise of the owner of that brand goods. At the time of supply hewill issue a ―Mushak-11‖ using double sided carbon destined to thepremise of the owner.

Continued……

Supply against in different value [S ti 5(2kh ) l 3kh ]



62

Supply against in-different value – [Section 5(2kha ), r ule 3kha]

Both the Manufacturer and Importer can opt for supply against in-differentvalue.

Option to sale with printed in-different value through out the country

Manufacturer will have to pay in total at the factory level and importerwill have to pay in total at his supply level.

Prior approval from NBR is to be taken.

Back Calculation Method – [Section 5(2ga

Whatever the provisions prevail in section 5(2), in view of maintainingstable price for goods and services if the Government through any

Govt. office or other organization determine unit price of such goods

or services then at the level of production or service rendering the

payable total SD and VAT shall be realizable on the basis of back

calculation from the determined price.

In the above case Govt. may by notification in the official gazette

exempt from the responsibility of value declaration under some terms

and condition mentioned in the gazette. (Rule 3kaka)

Continued



63

Continued……

For Retail Price at Production Level –

[Section 5(3)]

Govt. may by notification in the official gazette

determine the goods on which VAT will be applicable

on the basis of retail price.

The retail price of the goods shall be the pricedetermined by the manufacture on approval from the

concerned officer in which all expenses, commission,

charges, duties and taxes are included. and

The goods with special brand and marks sold at theprice to the general consumer and the price is clearly,

remarkably and indelibly printed on to the goods or

its package, bag or cell.

Continued……



64

Trade (Whole sale and retail) level: [Section 5(2)]

NBR by notification in the official gazette may fix the―rate and amount of value addition‖ of any goods orclass of goods at trade level.

For Services – [Section 5(4)]

NBR may by order fix the actual value addition of any servicesor by notification in the official gazette fix the value added taxon the basis of determined value addition.

Govt. may by notification in the official gazette fix a minimumvalue added tax on any service, in spite the service rendererprovides that service free of cost.

TRUNCATED BASE SYSTEM FOR SERVICES



65

TRUNCATED BASE SYSTEM FOR SERVICES

Truncated base value for services were introduced to ––

– protect the interest of govt. revenue,

– protect the interest of the taxpayers who add low value to their

services,

– the items for which input credit system does not work properly

and exist major evasion risks,

– the items for which easier and simple documentation and tax

payment system is essential.

NBR may by order fix VAT on the basis of real value addition or

by SRO in the official gazette fix VAT on the basis of determined

rate of value addition of certain services. [Section 5(4) ]

Continued……



66

Truncated base and net VAT rate of some service items

National Board Revenue SRO No. 108-Law/2014/703-VAT, Dated: 05

June, 2014. Determination of tax on the basis of value addition atcertain rate in case of specific services rules, 2012.

Service Provider Base of Particular Rate of Value Addition Net VAT

Rate

(1) (2) (3)

Restaurant 100% of the amount received against the

Service provided by air conditioned restaurants

50% of the amount received against the service

provided by ordinary (non air conditioned)

restaurants

15%

7.5%

Motor Car

Garage &

Workshop

50% of the total amount received against

servicing and repairing of a motor vehicle along

with the value of the machinery and machinery

parts used by the service provider

7.5%




67


Rate

(1) (2) (3)

Dockyard 50% of the total amount received instead of servicing and

repairing of a marine vehicle along with the value of themachinery and machinery parts added to that vehicle by the

service provider

7.5%

Construction

Firm

36.67% of the value mentioned in the tender for any

particular construction work

5.5%

Land Developer

Building

Construction

Firm

(a) 20% of the total amount received instead of sales or

handover of developed land

(b) 20% of the total amount received instead of sales or

handover of building

3%

3%

Photo Maker 50% 0f the total amount received by the photo maker 7.5%

Furniture Sales

Centre

(a)40% of the total amount received at production stage

(b) 26.67% of the total amount received, at sales stage (on

the condition of having the payment receipt of VAT at the

rate of 6%, at production stage)

6%

4%



69


Rate

(1) (2) (3)

Power Suppliers 33.34% of the total electricity bill received against the

usage of electricity

5%

Buyer of Auctioned

goods

26.67% of the sales value of the auctioned goods 4%

Immigration

Consultant

50% of the total amount received instead of the service

provided by the service provider

7.5%

English Medium

School

50% of the total amount received instead of the service

provided by the service provider

7.5%

Space or Installation

Rent taker

60% of the total amount of rent, in case of space and

structure rent

9%

Sales Centre of RMG

with Own Brand

33.34% of the total amount received at sales stage 5%

Information Technology

Enabled Services

30% of the total amount received by the service

provider

4.5%

Sponsorship Services 50% of the total amount received by the service

provider

7.5%

Continued……



70

VAT will be applicable at the rate of 15% in the cases of

those taxable services which are not mentioned in this

aforesaid table.

The VAT determined in the column (3) of the aforesaid

table will be paid by the service providers.

In case of the aforesaid service providers shown in

column (1), no input tax credit will be allowed.

If any service provider wants to pay VAT at the rate of 15%on the total received amount, taking credit, s/he will be

entitled to do that complying with the applicable terms

and conditions of VAT Act and VAT Rules.

TARIFF VALUE FOR GOODS



71

TARIFF VALUE FOR GOODS

Tariff Value – [Section 5(7)]

NBR by notifications in the official gazette may fix the Tariff Value

for SD and VAT in case of goods or services considering the

importance of public interest and being satisfied after due enquiry.

Tariff Value for goods were introduced to –– [Section 5(7), 5(4) ]

protect the interest of govt. revenue,

protect the interest of the taxpayers who add low value to their

goods/services,

the items for which input credit system does not work properly and

exist major evasion risks, the items for which easier and simple documentation and tax

payment system is essential.

Continued……

National Board of Revenue General Order No 02/Mushak/2014



72

Purified Soya bin oil Tk. 4110/MT

Purified Palm oil Tk. 3700/MTPickle (Bottled) Tk. 50/KG

Pickle (Packed) Tk. 60/KG

Tomato Paste Tk. 15/KG

Mango Juice Tk. 15/KG pack

Newsprint Tk. 10000/MT

National Board of Revenue General Order No.-02/Mushak/2014,

Dated: 05 June, 2014. Some examples of tariff value:

The tariff value is fixed only for the purpose of assessment and

realization of VAT, it is not a market price or real price or total cost

of the goods. It may be the value or amount equal or nearer to theamount of value addition or how much relax treatment the policy

maker wants to consider for a certain sector or item. It is a

distortion to the VAT system, but the government of Bangladesh has

under taken this system on interim basis to address the trade reality.



Continued……

f ― i i ‖ f



74

Role of ―value review committee‖ formed by NBR [Ru le 3(7)]

Committee: Director General VAT Audit, Intelligence and Investigation is thePresident and a member (Additional Commissioner/Joint

Commissioner) from every VAT Commissionerate and VAT Wing(First Secretary).

NBR, any VAT Commissioner or registered taxpayer may proceed tothe committee and committee may give suggestions after review.

Practical Problem in Value declaration

Fluctuation of value of inputs and currency rate

Complication in actual distribution of input-output co-efficient

Problem of adjustment with the market price and instability inbusiness system

Inadequate skilled and efficient person power

May create inconsistency between business flow and system

Less accommodative approach towards reverse interest



Continued……



76

Realization of VAT payable on the supply of goods by theCommercial Importer, Trader and Retail small trader Rules, 2012.

Commercial Importer :

ATV to be paid at the importing customs station through Bill of Entry at the timethe import level duties are paid.

Base value for ATV : [{Approved assessable value + Customs Duty (CD) +Supplementary Duty (SD, if any) + Other Duties & Taxes (except VAT & AIT)}+26.67% (value addition)] x 4%.

Value to be declared under section 5(2) with the ―form-1kha‖ (rule 3) to thedivisional Officer of VAT for the next supply and taxes to be paid @ 15%.

Goods to be supplied subject to payment of taxes and issuance of ―Mushak-11‖ and ―Mushak-11ka‖ challanpatra.

VAT paid at the import level and as ATV may be taken as Credit/Rebate againstpayable taxes subject to the provision of section 9.

Commercial importer should maintain accounts under rule 22, but ―form-ka‖ maybe maintained instead of Books of accounts for purchase (Mushak-16) and Booksof accounts for sale (Mushak-17).

Payable tax to be paid with the head of accounts ―1/1133/concernedCommissionerate code/0311‖ and VAT return (Mushak-19) to be submitted to thelocal VAT office by 15th of the next month.

There is a negative list for ATV.

Continued……

Local Trader :



77

oca ade

Base value for VAT : [{Purchase value + 26.67% (value addition)] x 4%,ie,15% on 26.67 (amount of value addition).

Value to be declared under section 5(2) with the ―form-1kha‖ (rule 3) to the

divisional Officer of VAT for supply of goods and taxes to be paid @ 15%.

Goods to be supplied subject to payment of taxes and issuance of―Mushak-11‖ and ―Mushak-11ka‖ challanpatra.

VAT paid at the earlier stage may be taken as Credit/Rebate againstpayable taxes subject to the provision of section 9.

Local trader should maintain accounts under rule 22, but ―form-ka‖ may be

maintained instead of Books of accounts for purchase (Mushak-16) andBooks of accounts for sale (Mushak-17).

Payable tax to be paid with the head of accounts ―1/1133/concernedCommissionerate code/0311‖ and VAT return (Mushak-19) to be submittedto the local VAT office by 15th of the next month.

The rate of value addition for pharmaceutical and petroleum substanceswill be counted as 13.33% and 2% VAT will be calculated on the total valueof the supplies.

In case of payment on the basis of truncated base, no rebate can beclaimed.

But one can pay VAT at the rate of 15% on actual basis declaring value andmaintaining required Registers and formalities [according to ideal VATsystem]. In that case, [VAT = Sale value × 15% – Purchase value × 15%].

Continued …..

Trade VAT for Small Retail Traders :



78

Trade VAT for Small Retail Traders :

The small retail trader whose annual turnover is not over tk. 70 lac he can

pay VAT as per the amount mentioned in the table below :

Sl.

No.

Ap plicable Area Max. Value Ad dit ion

per year

Rate of VAT Mini . Payable

VAT per y ear

(1) (2) (3) (4) (5)

1. Dhaka & ChittagongCity Corporation

73,334.00 15% 11,000.00

2. Other City Corporation 53,334.00 15% 8,000.00

3. Municipal Area of

District Town

40,000.00 15% 6,000.00

4. Other Area of theCountry

20,000.00 15% 3,000.00

VAT may paid annually or monthly basis.

The small retail trader will have to maintain purchase documents, cash

memo and ―books of accounts for sales‖



Continued……



80

Registration

Payment of

Duty & Taxes

Delivery ofGoods & Services

Declaration

of Value

Assessment ofDuty & Taxes

Submission of

Monthly Return

VAT payment and record keeping process by the taxpayers

Record KeepingRegistration documents

Valuation Documents

Purchase Records

Invoice Book

Sales Records

Account Current

Copy of VAT return

Commercial doc. (if any)

VAT MANAGEMENT IN BANGLADESH



81

To be Registered — [Section 15, Rule 9]

Supplier of taxable Goods

Provider of taxable Services

Importer of any Goods or Services

Exporter of any Goods or Services

Whole sale or Retail Trader

Waiver from Registration — [Section 3 & 14]

Govt.s power for any person or class of personson the basis of annual Turn Over

NBR’s power for any Importer or Exporter

Whose annual Turnover is not over Tk. 80 lakh(They have to be enlisted under Turnover Tax)

Obligatory Registration. [ Sectio n 15(4) ]

Voluntary Registration. [ Sectio n 17, Rule 10 ]

VAT REGISTRATION



82

Submission of Application Form (Mushak-6)

along with the required documents to the

Divisional Officer of VAT or an Officer not

below the rank of Assistant Commissioner asdirected by NBR. [Ru le 9 (1)]

Issuance of Registration Certificate (Mushak-

8) within two working days by the Divisional

Officer/AC. [Ru le 11 (1)]

Online Registration is possible for some

selected VAT Division. [Ru le 9 (1)]

VAT REGISTRATION

REGISTRATION PROCEDURE

Documents to be submitted for Registration



83

g

• Application to be filled with prescribed form mushak-6

• Managing director or Proprietors and authorized signatory’s two copies ofpp size photograph

• Trade license of the particular business

• Tax identification number (TIN)

• Import registration certificate (for Commercial/Industrial importer)

• Export registration certificate (for exporter)

• National ID or photocopy of passport of the proprietor/managing director

• Plant machinery and raw materials (If any) declaration (Mushak-7)

• Blue print or sketch map (where applicable)

• Bank certificate

• Certification of incorporation (for limited company)

• Copy of rent agreement with the space owner or deed for ownership

VAT REGISTRATION



84

One Registration — [ Ru le 9 ( 4 ) ]

Production and supply of more than one goods from oneproduction place or rendering of more than one servicesfrom one place or maintaining of import or export of morethan one goods or services from one place

Separate Registration — [ Sec tio n 15 (2), Ru le 9 ( 1 ) ]

Goods supplied or Services rendered or performing ofImports or Exports or Trading from two or more places.

Central Registration — [ Section 15 ( 2 ) ]One can opt for central registration in the following caseunder prescribed rules :

LOCATION AND OTHER ISSUES

Continued……

Central Registration & Tax Payment Procedure



85

Central Registration & Tax Payment Procedure

Rule ,2012 under Value Added Tax

[ NBR SRO No. 186-Law/2012/644- Mushak, Date : 7 June 2012 ]

Applicability :

a) Where a Manufacturer manufactured goods from one place but supplies

goods from different sales centre.

b) When a commercial Importer imports under his registered address and

supplies through different sales centre.

c) When a Service renderer renders his Service through different branches.

Registration : The suppliers of goods or renderer of Services shall apply in Form Mushak-6 along with

required documents to concerned Divisional officer of VAT where it tends to get Central

Registration. Getting application and papers Okay and NOC from the concerned Commissioner of

VAT, the Divisional officer shall issue Central registration in Form Mushak-8 and send

attested copies to the concern Divisional officer & NBR .

Continued……



86

Tax Payment Procedure :

(1) In case of Manufacturer & Commercial Importer :

Centrally Registered office shall pay the taxes due in advance in acoordinated way and perform different activities against tax ability.

a. Centrically Registered office shall pay the Taxes due in advance in a

coordinated way and perform different activities against Taxability.

b. Centrally Registered Office shall declare the price of goods in Form

Mushak-1 or Mushak-1 Kha to the concerned divisional officer as per

section-5 of VAT Act and Rule-3 of VAT Rules.

c. As the VAT of Trade level is being paid in advance at the Centrally

registered office the amount of Value addition of trade level is to be

included in the declared price.

d. The amount of VAT is to be paid through adjustment in the account current

register at the time of supplying the goods from Centrally registered office tobranch office or consumer.

Continued……



2. In case of Service Rendering :

Centrally registered office shall pay the taxes aggregating the taxes of all service

rendering unit through VAT return within the 15th

of next Tax period. Centrally registered person shall purchase or import the inputs in the name of

centrally registered office.

VAT Challanpatra :

a. Mushak-11 challanpatra is to be issued at the time of supplying goods from

centrally registered office to warehouse or sales unit.

b. Centrally registered office shall supply Mushak-11 or Mushak-11kha challan

book to sales unit and accounts of the challan book supplied to be maintained in

a register with the centrally registered office

c. Sales unit shall issue challanpatra in form Mushak-11 or Mushak-11kha in favor

of each sales and the required information is to be written on the chllanpatra.

d. Address of sales unit is to be written on Mushak-11 or Mushak-11kha issued

from sales unit and VAT shall not be payable insprite of Mushak-11 or Mushak-

11kha challanpatra issued from sales unit.

Continued……



Sales information :

Centrally registered office shall submit to the concerned localVAT office the statement of sales and supplies of each sales

unit in Form prescribed by the divisional officer with VAT

return within the 15th of next month.

Maintaining of Accounts:

Centrally registered office shall maintain all accounts as per

section-31of VAT act rule 22 of VAT rules.

VAT REGISTRATION



89

Change of address or other informations regarding Registration(Application Form Mushak-9 to the Circle Office) [Section 18, Rule 12 ]

Power of Commissioner regarding amendment of Registration[ Rule 14 ]

Exhibition of Registration Certificate and Registration Number onto the Signboard [ Rule 13 ]

Cancellation of Registration (Application Form Mushak-10 to theCircle Office) [ Section 19, Rule 15 ]

Issuance of duplicate registration certificate

Amendment, Exhibition and Cancellation of Registration

(b) When VAT is payable?

Continued……



90

( ) p y

In case of supply of goods, at the time the activity which occurs firstamongst the following four activities:

(a) When goods are delivered or supplied,(b) When the invoice (Mushak-11) regarding supply of goods is issued,

(c) When the goods are consumed/used personally or given for others

consumption/use,

(d) When partial or full value is received.

(c) Who will pay VAT and related taxes ?

The section 3 of VAT Act fixed the liability of payment of VAT through

treasury challan as follows:

• At the import stage –

Incase of imported goods, Importer• At the manufacturing stage –

Incase of manufactured goods, Supplier

• Incase of service providing, Service provider

• Incase of services supplied from outside Bangladesh territory, Servicerecipient

•In other cases, Supplier.

In case of service rendering at the time the

Continued……



91

In case of service rendering, at the time the

activity which occurs first amongst the following

three activities:

(a) When the service is rendered or provided,

(b) When the invoice (Mushak-11) regarding rendering

of service is issued,

(c) When partial or full value is received.

(d) When partial or full value is paid incase of services

received from outside Bangladesh territory.

(d) VAT PAYMENT PROCEDURE AND TIME FRAME

Continued……



92

(d) VAT PAYMENT PROCEDURE AND TIME FRAME

The tax should be paid in the following cases as per the procedure

prescribed by rule : [section 6(5) ]

(1) At the import stage, with import duty;

(2) At the Manufacturing stage and in some cases at the trade

level, through Account current register and Return

(Mushak-19); and

(3) Incase of other goods or services supplied, through Return

(Mushak-19).

The amount of payable taxes should be deposited to the government

treasury through TR-7 mentioning the head of accounts before

supplying the goods incase of goods and 15th of the next month (

before submission of Return Mushak-19 ) incase of rendering the

services

In case of VAT . . . . . . . . . . . . . . 1 / 1133 / 0006 / 0311

In case of SD on goods . . . . . . . . 1 / 1133 / 0006/ 0711

In case of SD on services . . . . . . 1 / 1133 / 0006/ 0721

In case of Turnover Tax . . . . . . . 1 / 1133 / 0006 / 0921

(e) Procedure to be maintained for delivery of goods and

Continued……



93

rendering of services.

Incase of goods :

Value of goods is to be declared and approval is to be taken from

divisional officer

Assessment of duties is to be made as per the indent of the purchaser

Payable duties is to be paid to the Govt. treasury

Tax invoice (Challanpatra) is to be issued properly

Sales register (Mushak-17) is to be filled up as per the indent of the

purchaser

Amount of payable taxes is to be adjusted in the Account Current

Register (Mushak-18)

Incase of Trading, payable duties is to be paid to the Govt. treasury

within 15th of the next month and before submission of VAT return to

the Circle office.

Incase of services :

Continued……



94

Value of some services (selected by NBR) is to be declared and approval is tobe taken from Divisional officer

Assessment of duties is to be made as per the indent of the purchaser

Tax invoice (Challanpatra) is to be issued Sales register (Mushak-17) is to be filled up as per the indent of the purchaser

Payable duties is to be paid to the Govt. treasury within 15th of the next monthand before submission of VAT return to the Circle office.

(f) Record Keeping by a taxpayer:

Records to be maintained and kept by the taxpayer for the next 6 years at hisconcerned factory/business premise. The records are mentioned below:

[Section 31, 32, 33 Rule 22]

• Registration documents (Mushak-6 and Mushak-8)

• Valuation Documents ( Mushak-1 and relevant documents)

• Purchase Records (B/ Entry or Mushak-11 or other Invoice)

• Purchase Register (Mushak-16)• Sales Invoice (Mushak-11)

• Sales Register (Mushak-17)

• Treasury challan

• Account Current Register (Mushak-18)

• Copy of monthly Return (Mushak-19)

•

Other commercial documents(if any)

Tax invoice (Challanpatra) [ S 32 R l 16 ]

Continued……



95

Tax invoice (Challanpatra) [ Sec. 32, Rule 16 ]

Tax Invoice or Challanpatra is a document under prescribed rules

which is mandatory to issue for a registered person when ever hesupplies taxable goods or renders taxable service or exports any

goods or service or sales any taxable imported goods. NBR also by

Official Gazette may allow any other Procedure or Form with serial

number.

Tax invoice is treated as a proof of payment of taxes against any

consignment or any delivery.

Mushak-11, Mushak-11 Ka, Mushak-11 Ga, Bill of Entry, ECR Challan,

POS Software Memo, NBR approved own receipt or bill form used as

Tax invoice.

Only one tax invoice is allowed to issue against a single supply of

taxable goods or sale of taxable imported goods or rendering of a

single taxable service or an exportation of goods or services.

Other documents ( Books of Accounts )

Continued……



96

The under mentioned books of accounts is prepared and

maintained as per prescribed rules :

Purchase register (Mushak-16)

All purchases of a taxable person should be entered in to the purchase

register and maintained for 6 years.

Sales register (Mushak-17)

All sales of a taxable person should be entered in to the sales register andmaintained for 6 years.

Account Current register (Mushak-18)

Accounts of all treasury deposit, payable taxes, adjustments and balance

should be entered and maintained in this register.

VAT Return (Mushak-19)

Summery of tax liability of a registered person for a certain tax period

(generally an English calendar month) along which some important

matters of his business activities should be reflected.

M i i i f VAT d d h h l d f

Continued……



97

Mandatory provision of using VAT automation software prepared

and supplied by a qualified software farm enlisted by NBR.

Such firm to be selected by the concerned Commissioner whose total

revenue of the previous fiscal year was 50 lac or more.

One or more software company on the basis of specific

characteristics, qualification and capability to be enlisted by Member

VAT (Implementation and IT) or by a committee formed in this

regard.

[ Temporari ly it is suspended and some changes are under process.]

Maintaining of VAT documents and accounts through selected software

General Order No.-64/VAT/2011, Dated : 29 June, 2011 issued by

National Board of Revenue under rule 23(3) of Value Added TaxRules, 1991.



S b i i f R t

Continued……



99

Submission of Return [ Section-35 ] Submission of return covering the statement of tax liability of every tax

period by a manufacturer of taxable goods or trader or renderer oftaxable services to the concerned officer (circle officer) within the

specific date (15th of the next month, 20th of the next month incase of

insurance) under prescribed form and procedure. Two copies of Return

on prescribed form Mushak-19 should be submitted ( rule 24).

Examination of Return

The concerned officer will scrutinize the return according to the

procedure prescribed by the Rules.

If short payment of taxes is evidenced, the concerned officer will order,in case of product, to adjust the Account Current, and incase of service,

to repay in prescribed manner for this purpose.

In case of extra payment of taxes, the related officer will provide with

the opportunity to adjust the Account Current on the next tax period.

The officer concerned will arrange necessary survey, if needed to determine

the appropriate Input Output Coefficient of a product or if the amount

Continued……



100

the appropriate Input-Output Coefficient of a product or if the amount

received instead of a service is shown less.

If less tax is shown on the Return or undue Drawback is applied for, the

related officer will have the jurisdiction to determine the amount of payabletaxes along with the Duty Drawback, considering collected information or the

result of survey, after hearing from the taxpayer.

Rule 25

If the submitted Return is found correct and appropriate after being

scrutinized by the Assistant Revenue Officer and Revenue Officer of the

concerned circle, it will be certified having signed along with sealed by

the aforementioned officers; the certified Return should be returned to

the taxpayer within thirty (30) days.

The Commissioner will send the main copy of the Return to the DEDO,

if the amount of rebatable tax is high, in case of a larger exporter incomparison to a 100% exporter or a local supplier.

If a registered person, who is bound to submit the Return, does not

submit the Return of a certain tax period, the related Assistant Revenue

Officer will inform the Divisional Officer via the Revenue Officer for

taking action under Section 37.

R l 26

Continued……



101

Rule 26

If any registered person applies for

deregistration, the Divisional Officer,determining unsettled liabilities, willl order tosubmit the final Return within fourteen (14) days.

Rule 29

The Director General of the DEDO (Duty Exemption

and Drawback Office) will approve the Drawback

after reviewing the Return, export documents anddetermined coefficient.

DEDUCTION OF VAT AT SOURCE



In VAT system, usually the purchaser of goods or receiver of

services pays money and seller/supplier of goods or renderer

of services receives money and deposit the amount of taxes tothe Govt. treasury. It is the obligation of the supplier of goods

or the renderer of services to deposit the taxes.

In spite of the general procedure of paying VAT by the

suppliers of goods or services, NBR may prescribe by rulemake provision to determine the time and procedure for the

payment of VAT and deduction of VAT at source in case of

goods, class of goods or services. Section -6(4)

Under the rules prescribed by NBR payable VAT by aregistered person should be realized or deducted at source

and deposited it to the Govt. treasury at the time of payment

of value or commission by the service receiver or the payer of

the value or the commission. Section-6 (4kaka)

Continued…. .. .





•

If any service renderer under a Foreign Aidedproject maintaining procedure determined by

NBR through rule realize or deduct total payable

VAT and deposit it to the Govt. treasury, and in

this case if the documentary evidence of deductingand depositing VAT at the Govt. treasury is

presented, no any amount of VAT shall be realized

again from a sub-contractor, agent or other

service renderer appointed by a service rendererfor supply of a part of whole services. Sec.(4kaka)

Continued … .. .




104

DEDUCTION OF VAT AT SOURCENBR may by order determine the list and code of services torealize or deduct VAT and deposit it to the Govt. treasury at

the time of taking service by the under-mentionedorganizations. Section- 6(4kakaka) & Rule- 18ka.

Organization eligible to deduct VAT at Source

(a) Government Organization

(b) Semi-government Organization

(c) Autonomous Organization

(d) Non Govt. Organization (NGO)

(e) Bank

(f) Insurance Company(g) Financial Institution

(h) Limited Company

(i) Educational Institution

(j) Other Offices or Institutions, in such case.

Continued… .. .

Responsibilities of the organization deducting VAT



105

p g g

at source: Section-6(4kha), Rule-18(kha)

The person deducting VAT at source will issue a certificate intriplicate, within five (05) working days, by and through the

prescribed rules. S/he will send one of its copy with treasury

challan in original to the Circle officer of that area, another

copy along with photocopy of the treasury challan to the

supplier of the product or the service and the rest will remain

with him/her possession. The above mentioned certificate

regarding deduction of VAT at source on form Mushak-

12Kha will include the following information.

1. VAT Registration number of the taxpayer

2. Total value or commission against the product or services supplied

3. Taxable Value or commission of taxable product or service

4. Amount collected or deducted as VAT

5. Other necessary information

The person ded cting VAT at so rce ill ded ct VAT at the

Continued……



106

The person deducting VAT at source will deduct VAT at the

rate shown against each item in the truncated base SRO or @

15% on the paid value in case where there is no truncated rate.

But VAT will not be deducted at source only in case the service

provider renders the service or the suppliers of the goods

supplies through VAT challanpatra (Mushak-11).

Section-6(gha)

The supplier of goods or services will not be entitled to get

excuse from the obligation of paying VAT of the rest amount

even after s/he deducted partly against any supplies.

[Section- 6(4cha)]

Both the person deducting VAT at source and the provider of

product or service will bear combined responsibility as for the

payable amount of VAT at source. Section-6(4uma)

Continued……



107

Legal restrictions for the organizations realizing/

deducting VAT at source or the payers of thevalue or commission for the service . Section-6(4ga)

If the organization or person deducting VAT at-

source or the payer of the value or commissionfails to collect the VAT at source and/or to

deposit the amount to the Public Treasury -

Section 37(3), Rule-18kha]

The amount with 2% interest per month will be recover-

ble from him/ her, considering him/ her as a registered

person under section 6(4kaka).



Government of the People’s Republic of Bangladesh

National Board of Revenue

Dhaka.

Mushak-12kha



Certificate of VAT deducted at Source (Note Rule 18kha)

The name of person deducting VAT at Source : Business Identification Number (BIN) :

Address :………………………………… Date of Issue :Business Identification Number (If any) :

Certificate Number :

I am ……………………………………hereby certified that, VAT at Source has been deducted form the

under mentioned supplier as per the Value Added Tax Act & Rules. The details are mentioned below :

109

SL

No.

Name &

address of

Supplier

Business

Identification

Number of

Supplier

Sum of money

mentioned in the

Bill/VAT

applicable Valueor Commission

of Goods or

Services

Date of Bill

Payment

Amount

of VAT

deducted

at Source

Applicable

Service

Name &

Code

Number & Date of

Book Transfer

Challan/ Receipt

/Certificate inSupport of Taxdeposit in the

treasury/online

tax payment

Remarks

(1) (2) (3) (4) (5) (6) (7) (8) (9)

I am (Name & Designation) …………………………………………………..with complete understating and

correctly furnishing the above mentioned information.Name, Designation & Signature

To,

Revenue Officer

………………………….Circle

Full Address……………………..

Copy :

Managing Director/Proprietor

M/S. ………………………………

Full Address…………………….

Duties of a registered person at the time of supplying goods

Continued……



110

g p pp y g g

or services to the person deducting VAT at source. (Rule-18ka)

At the time of supplying product or service againsttender or work order, the registered person --

(a) Will issue a VAT challanpatra on actual rate;

(b) Will mention the total amount of VAT on sales invoice or

commercial document; and

(c) Will mention the VAT Registration No. and the matter of

supplying product or service against a tender or a workorder on sales invoice or commercial documents.



General Order no. 24/VAT/2013, dated 06 June, 2013

Continued……



112

, ,

of National Board of Revenue

The Board, with the power given in section 6(4kakaka) ofthe Act, has determined, for the purpose of collection,

deduction of VAT at-source and deposit the amount to the

Public Treasury by the receiver of the service, in case of

the service being received by the government organization,semi-government organization, autonomous organization,

private organization (NGO), bank, insurance company,

financial institution, limited company, or educational

institution.Thirty seven (37) services are shown in Column (3) of the

following table in this regard :

Heading No) Service Code Service Provider

Continued……



113

(1) (2) (3)

S002 S002.00 Decorators & Caterers Workshops

Advertising FirmsS003 S003.10 Motor Car Garages &

S003 S003.20 Dockyards

S004 S004.00 Construction Firms

S007 S007.00 Advertising FirmsS008 S008.10 Printers

S009 S009.00 Auctioneers

S010 S010.10 Land Developers

S010 S010.20 Building Construction FirmsS014 S014.00 Indenters or Indenting Firms

S020 S020.00 Surveyors

S021 S021.00 Renters of Plant or Capital Machinery

S024 S024.00 Furniture Sales Centre

S028 S028.00 Courier service & Express Mail Service

Continued……



114

S028 S028.00 Courier service & Express Mail Service

S031 S031.00 Person, Institute or Organization Engaged in

Repairing or Servicing of Taxable Products

against consideration.

S032 S032.00 Consultancy Firm and Supervisory Firm

S033 S033.00 Izarader

S034 S034.00 Audit & Accounting Firm

S037 S037.00 Procurement provider

S040 S040.00 Security Services

S045 S045.00 Law Consultant

S048 S048.00 Transport Contractor

S049 S049.00 Rent-a-car

S050 S050.10 Architect, Interior Designer or Interior Decorator

S050 S050.20 Graphic Designer

Continued……



115

S051 S051.00 Engineering Firm

S052 S052.00 Renters of Sound and Lighting Equipments

S053 S053.00 Joiners to Board Meeting

S054 S054.00 Broadcaster of Advertisement through Satellite channel

S058 S058.00 Renters of Chartered Aero plane or Helicopter

S060 S060.00 Buyers of Auctioned goods

S065 S065.00 Building, Floor and Premises Cleaning or MaintenanceFirm

S066 S066.00 Seller of lottery tickets

S071 S071.00 Event Management Firm

S072 S072.00 Human Resource Supply or Management Firm

S099 S099.10 Information Technology Enabled Services

S099 S099.10 Information Technology Enabled Services

S099 S099.20 Other misc. Services

S099 S099.30 Sponsorship services

DISPUTE RESOLUTION AND ALTERNATIVE DISPUTE

RESOLUTION (ADR)



116

Value Added Tax Act, 1991 contains a very standard procedure of disputeresolution in which issuance of show cause notice, hearing, adjudication/

judgment, appeal and revision are clearly spelled and exercised.

Offences and Penalties [ section 40 ]

Offences under VAT Act and Rules.

Power of Adjudication.

A. Incase of import and export as per the provision of section 179 of

Customs Act.

B. Incase of goods supplied or services rendered adjudication by VAT

officers as mentioned below:



Confiscation, Fine and Penalties.

Continued……



118

Appeal and Revision.

Appeal to the Commissioner of Appeal

Appeal to the Appellate Tribunal

Appeal to the Hon'ble High Court

Appeal to the Appellate Division the Hon'ble Supreme Court

ALTERNATIVE DISPUTE RESOLUTION (ADR)

In spite of the provision of Adjudication, Judgment, Appeal in the VAT act

an aggrieved person may apply for disposal of his case through

Alternative Dispute Resolution procedure in respect of a case pendingbefore the VAT authority or Appeal authority or a dispute under section

41(ga).

The facilitator appointed by NBR will deal the ADR cases as the

procedure laid down in the rule.

EXPORT INCENTIVES, DUTY DRAWBACK



119

Almost every countries in the world provide zero rate and

incentives to encourage and boost export. Bangladesh is alsomaintaining the same policy.

Zero rate (0%) for all Export —

Export

Deemed export

Foods and other goods supplied to a foreign going

conveyances for consumption

Moreover there are incentives against export of some items.

These are :

Fish, textile, etc.

Export procedure —

Continued……



120

Prepare the Packaging of goods

Application to VAT superintendent for examination of goods in VAT

Form-20 Examination of goods by the Inspector

Permission for export by the Customs Officer, if the seal of thepackages are intact

AC or officer above than AC may order for re-examination

or --

Export procedure

Application to VAT superintendent to examine the goods at the

exporting port in lieu of manufacturing place

Mentioning ‗‗Examination is to be done at the exporting port‘‘ by theinspector of VAT

Examination and certification of export by the inspector of customs

after by the exporter after getting from customs station

Postal Export

Continued……



121

Certification of export by the Head Postmaster afterexportation

Sending of export documents to Customs & Exporter by thePostmaster

Submission of export documents to the superintendent ofVAT by the exporter

Non applicability of the above provisions —

100% exporting industry

Exports done by the Commercial Exporter

Industries exempted from VAT

Export of goods and services exempted from VAT

DUTY DRAWBACK [ Section 13 ]



122

Any person shall be entitled to drawback of Customs Duty ( CD ), SD,

VAT, Excise Duty and all other duties and taxes paid on any input used

in the manufacture or production of –

exported goods or services; or goods or services deemed to have been exported; or any food or consumables mentioned in sub-section (2) of

section 3. t

No person shall be entitled to duty drawback, if –

Income Tax paid in Advance ( AIT );

Determined by the Govt. in the official gazette in this respect theSD paid on any input used in the prod. or manufacture of goods

exported.

The drawback is not claimed within the 6th month of export or

deemed export.

Not-withstanding anything contained in sub-section (1) govt.may by notification in the official gazette determine the rate of

Continued……



123

may by notification in the official gazette, determine the rate ofdrawback of VAT and other duties and taxes where applicable,paid on certain input used in the production or manufacture of

goods or services exported or deemed to have been exported

Any exporter may adjust his all duties and taxes supposed tobe drawn back under sub-section (1 )

NBR may, by order notified in the official gazette, instruct torepay the amount of duties and taxes paid on the input used inthe goods exported, on consignment basis or where applicableon flat rate determined by NBR on the basis of input-output co-efficient of goods exported.

NBR may, by order published in the official Gazette, direct thepayment of drawback of VAT or where applicable, VAT and SDpaid by any person or organization on locally produced goodsor services, subject to such condition as specified in the orderfor the implementation of any international agreement.

REFUND IN VAT SYSTEM



124

Applicability —

VAT or SD or Turn over Tax paid or paid in excess inadvertence,erroneously or for misinterpretation or for other reason

Refund should not be given, if the application of refund is not submitted

within six month of payment

Refund is not payable if their is any scope of adjustment against input

tax credit

Procedure —

Apply in Form TR-31 in triplicate to the divisional officer of VAT and

for the custom house to the DC/AC nominated by commissioner Sanction of refund by the D.O or DC/AC customs having confirm

about the genuinely of the refund

Pre-audit by the office of the commissioner

Disposal of refund application within 90 days

ENFORCEMENT AND AUDIT MANAGEMENT



125

ENFORCEMENT

[Secti on 25, 26, 26kha, 27, 28, 29, 30, 48, 48ka, Rul es 7 ]

Power of sending summons

Power of entering into the production place, service rendering

place, business place & houses.

Power to examine store of goods, raw material and services.

Power to examine accounts, files and documents.

Power to execute supervised supply and monitoring.

Power of search and seizure of confiscable goods and

management of seized goods.

Power of search of any house or vehicle or place.

Power to call for any files and documents and seizure of the

same.

Power of a first class magistrate with regards to the enforcement

of VAT act & rules.

Continued … .. .



126

AUDIT MANAGEMENT

Effective and in-depth audit by the VAT officers for –

the Taxpayers education

better compliance

the strict enforcement of law minimizing tax evasion

proper and maximum realization of revenue

VAT audit is also conducted by Directorate of Audit,

Intelligence & Investigation, Value Added Tax and

Directorate of Local & Revenue Audit

FACTORS AND CONSTRAINTS IN VAT MANAGEMENT

OF BANGLADESH



127

There are so many factors and limitations to implement and

run the modern VAT system in Bangladesh. Shortly these

are mentioned below:

Lack of modern tax culture in the trade sector and Govt.

machinery Negative mentality of the business people about the

payment of tax

Excessive wants of manpower

Lack of adequate education and skill in the filed level of

tax department

In adequate fund and logistics for the tax department

Lack of automation

REALATION BETWEEN VAT AND INCOME TAX



128

Formulation of policy and discharging the duties under the same Boardand same Division/Ministry.

Use of same business information, Data and Statistics of a Taxpayer bythree wings.

Use of Income Tax Return incase of actual payable VAT realization.

Role of CIC for VAT and Income Tax.

Obligation of using TIN in VAT Registration certificate.

Use of Bill of Entry of Customs and VAT Challan (Mushak-11, 11ka, 11ga,11gha), Purchase register (Mushak-16), Sales register (Mushak-17),

Account current register (Mushak-18) and Return (Mushak-19) incase ofassessing actual Income Tax.

Wide network between Custom Houses/Stations, VAT field offices, IncomeTax offices and NBR for exchanging free flow of information.



129

(B) CUSTOMS MANAGEMENT

AND

FORMALITIES

Md. Abdul Kafi

CommissionerLarge Taxpayers Unit, VAT

ORGANISATIONAL STRUCTURE



130

BANGLADESH CUSTOMS

INCOME TAX WING

VALUE ADDED TAX WING

6 (SIX)

CUSTOM HOUSE 178

LAND CUSTOMS

STATIONS

CUSTOMS

INTELLIGENCE &

INVESTIGATION DIRECTORATE

2 (TWO) CUSTOMS

BOND

COMMISSIONERATE

CUSTOMS

VALUATION & AUDIT

COMMISSIONERATE

OFFICES UNDER

THE CUSTOMS

WING

CUSTOMS WING

RESEARCH & STATISTICS

WING

ADMINISTRATION WING

WINGS

OF NBR

NATIONAL BOARD

OF REVENUE

FINANCE

DIVISION

NATIONAL SAVINGS

DIRECTORATE

INTERNAL

RESOURCES DIVISION

ECONOMIC

RELATIONS

DIVISION

MINISTRY OF FINANCE

FINANCE

DIVISION

NATIONAL SAVINGS

DIRECTORATE

INTERNAL

RESOURCES DIVISION

ECONOMIC

RELATIONS

DIVISION

MINISTRY OF FINANCE

Bank & Other FinancialInstitutions

OFFICES UNDER THE CUSTOMS WING OF NBR



131

OFFICES UNDER THE CUSTOMS WING OF NBR

• 6 CUSTOM HOUSES

• 178 LAND CUSTOMS STATIONS

• DIRECTORATE OF CUSTOMS INTELLIGENCE &

INVESTIGATION, DHAKA• 2 CUSTOMS BOND COMMISSIONERATE, DHAKA

& CHITTAGONG

• CUSTOMS VALUATION & INTERNAL AUDIT

COMMISSIONERATE, DHAKA

CUSTOMS STATIONS



132

6 (SIX) CUSTOM HOUSES CHITTAGONG CUSTOM HOUSE (SEA PORT)

MONGLA CUSTOM HOUSE (SEA PORT)

DHAKA CUSTOM HOUSE (AIR PORT)

ICD CUSTOM HOUSE, KAMALAPUR

(INLAND- RAIL)

BENAPOLE CUSTOM HOUSE (LAND PORT)

PANGAON CUSTOM HOUSE (RIVER PORT)

– 178 LAND CUSTOMS STATIONS

16 OPERATIONAL

162 DORMANT



Duties and Taxes



134

Customs Duty (CD) 25%, 12%, 5%, 3%, 0%

Regulatory Duty (RD) 5%

Supplementary Duty (SD) 500%, 350%, 250%, 150%,100% 60%,45%, 30%, 20%

Value Added Tax (VAT) 15%

Advanced Income Tax (AIT) 5%

Advanced Trade VAT (ATV) 4% net (15% on 26.67%value addition)

TARIFF REGIME IN BANGLADESH

Tariff Structure



135

Tariff Structure

Our tariff structure is signified by cascading tariff rates:

(Higher rate on finished goods, lower rate on intermediateproducts and basic raw materials and lowest rate onCapital Machinery & Spares)

1. Finished products 25%

2. Intermediate products; Also Intermediate 12%Raw materials that have local production

3. Basic Raw materials that do not 5%

have domestic production

4. Capital Machinery, Spares & computer items 3%

5. There is also a Zero rate 0%

Regulatory duty (RD) on all goods under 5%

25% CD and Powdered milk imported in bulk

except some item benifited under SRO and Order

Tariff Structure(Basis or Formula of calculation)



136

• Ad valorem duty: Fixed percentage of the value of the

product (25% customs duty on Motor car)

• Specific rate of duty: Fixed sum of money per physical unit

of the product (e.g. Tk. 1500/MT. on Raw sugar, Tk. 3,000on Refined sugar and Tk. 500/MT. on Clinker)

• Bound duty: Maximum Duty rate that a country can impose

on a product. Agreed under WTO negotiations. Bangladesh

has bound duty basically on food products.

Value Calculation for Ad-valorem



137

Free on Board (F.O.B): price of the product on board

a vessel at the time of embarkation

Cost & Freight (CFR): price that include F.O.B. priceand the transportation cost from the country of

exportation to the country of importation

Cost, Insurance & Freight (C.I.F.): price that includes

price of the product up to the port of entry

Prohibitions & Restrictions on Import & Export

Section 15



Section 15

Import is banned on - Counterfeit coin

Forged or counterfeit currency notes

obscene book, photo, article, paint

Goods having counterfeit trade mark or a false tradedescription

Goods with a trade mark that is used by any producer in

Bangladesh (with exceptions)

Piece-goods manufactured outside Bangladesh

Goods with a design that is patented in Bangladesh

Smuggle [ Section 2 (S) ]

Smuggle means to bring into or take out of Bangladesh in breach



139

Section 16

Power of Government to prohibit or restrict importation orexportation of goods.

Section 17

Goods brought in violation of Sections 15 and 16 to bedetained and confiscated and shall be disposed of.

gg g g

of any prohibition or restriction for the time being in force or

evading payment of customs duty or taxes leviable thereon,

………………………………..

………………………………..

………………………………..



Imposition of DutyContinued ….



141

Countervailing Duty ( Section 18A)

Subsidy on manufacturing or transportation in the exporting

country and imported into Bangladesh. Countervailing

Duty not exceeding the amount of subsidy.

• Anti dumping duty (Section 18B ) Goods exported from

any country to BD with a value less than normal value.

Anti-dumping Duty not exceeding the margin of dumping.

• Safeguard Duty (Section 18E ) Increased quantities of

importation which may cause injury to domestic industry

safeguard Duty on that article.

Exemptions



142

Section 19 : (General)

Govt. if satisfied in the public interest to do so, it may,

by notification in the official gazette, subject to such

conditions, limitations or restrictions exempt whole orany part of customs duties chargeable thereon.

If exemption is given on a goods, the rate of duty

can’t be changed more than once in that FY.

Exemption granted shall be effective from the

date mentioned in the notification.

Section 20 (Special)

Exemptions

Continued ….



143

Section 20 (Special)

• Government may provide whole or partial exemptionsunder exceptional circumstances to any particulargoods subject to some conditions, limitations orrestrictions.

Difference between 19 & 20:

Section 19: General Exemption

Section 20: Specific Exemption

Section 21NBR may order to deliver certain goods without payment of customsduty and to repay duty on certain goods subject to such conditions,limitations or restrictions as it thinks fit.

Valuation



144

Section 25 (1): Transaction Value

(a) Value Actually paid

(b) Value to be payable

Detailed by Valuation Rules, 2000.

Previous Basis was –

1. BDV (Brussels Definition of Value)(Example: Quaker Oats, Titan)

2. Tariff Value

Normal Value vs. Transaction Value

Price of Hilsha Fish



145

Price of Hilsha Fish

• For 5 buyer – 300• For A - 280

Normal (A) Transaction (A)

300 280

Transaction Value Methods

Transaction value

Transaction Value of identical goods

Transaction Value of similar goods

Deductive method

Computed method

Fallback method

Each method must be tried in order of hierarchy

Section 25 (1):

• Time of Importation: date of Bill of Entry submission



146

• Time of Importation: date of Bill of Entry submission

• Time of Exportation: date of Bill of Export submission

• Place of Importation: Custom House/ LCO where B/Entry is

submitted

• Place of Exportation: Custom House/ LCO where B/Export is

submitted

Pre-shipment Inspection System

Section 25 A:

Government may appoint PSI company to certify on the quality,quantity, price, description and customs classification of goods

Section 25 B :

PSI system is optional on all types of imported goods.



147

PSI system is optional on all types of imported goods.

Section 25 C: 1% PSI charge deducted

PSI RULES

SRO 255/2002 (new) / SRO 316/2000 (old)

Effective from September, 2005-new / February, 2000- old)

90% goods are cleared without any physical examination10% goods are subject to such examination (5% throughrandom sampling, and 5% through Commissioner’s selection)

Bill of Entry (B/E)Section 79



148

LODGEMENT OF IMPORT DECLARATIONS (B/E)

* IN ALL CUSTOM HOUSES - COMPUTERISED

* IN ALL LC STATIONS – MANUAL

PROCESSING OF IMPORT DECLARATIONS

* IN ALL CUSTOMS HOUSES – COMPUTERISED

* IN LC STATIONS – MANUAL

DOCUMENTATION CHECKING

The owner shall submit a bill of entry in prescribed form and with necessaryparticulars before making entry for home consumption or for warehousing.

Documents to be submitted with B/E :



149

• Letter of Credit Authorization (LCA)

• Letter of Credit (LC)

• Bill of Exchange

• Bill of Lading (BL) / Truck Receipt / Rail Receipt

• Import Registration Certificate (IRC)

• Invoice

• Packing list

• Country of origin’ certificate• Radiation certificate

• Insurance memo

• Pre Shipment Inspection Certificate (CRF)

• Value Added Tax Registration certificate etc.

• TIN Certificate

B/E should be submitted and goods be cleared within 30 days (incustom house/ LCO) or 21 days (in airport) of unloading of goods.

However, Commissioner may allow submission of B/E even before goodsarrive at the port and expected to arrive within 30 days of such submission

Journey of Bill of Entry



150

y y

Goods not selected for Examination:

• Manifest section/On-line submission

• Lodgment section/Pouch center

• Assessment Section

(a) Principal Appraiser

(b) Appraiser

• Treasury for Payment of duty

• Treasury SPEED section for release order

• Port Gate for actual delivery/release

Goods selected for Examination:



151

• Manifest section/On-line submission• Lodgment section/Pouch Center

• Jetty Examination

• Commissioner

• Assessment Section(a) AC/DC/JC

(b) Principal Appraiser

(c) Appraiser

• Treasury for Payment of duty

• Treasury SPEED section for release order• Port Gate for actual delivery/release

Bill of Export

Section 131



152

(1) The owner shall submit a bill of export (Shipping Bill) in

prescribed form and with necessary particulars beforemaking entry for exportation.

(2) NBR may allow any specific goods or a class of goods to beexported within submission of Shipping Bill or payment ofduty.

Assessment of duty

• Section 80 (1) :

First Appraisement (from 10%)

Once B/E is submitted, goods shall without undue delay beexamined or tested in presence of the owner and then beassessed to duty and allowed for clearance

Assessment of duty



153

Section 80 (2) :

Second Appraisement (from 10%)

Goods shall be assessed first and then will be subject to

examination or test at the time of delivery. In case of any

evidence of mis-declaration, goods will be reassessed

Section 80 (3) :

Exemption from examination:

Government may exempt any goods or a class of goods from

the requirement of physical examination (As is done under the

PSI system)

Provisional Assessment

Section 81 (1) :

Goods will be assessed provisionally by an AC if



154

Goods will be assessed provisionally by an AC if

• It requires chemical or other test or a further enquiry for purposes ofassessment, All documents or complete documents or full information are notfurnished ;

Provided that the importer submits a security or bank guarantee

Assessment of duty

• Section 81 (2) :

Once assessed provisionally, final assessment should be made

within 120 days of provisional assessment date, and security/bankguarantee be settled on the basis of final assessment results.

NBR may extend the period under exceptional circumstances,recorded in writing.

Amendment of Assessment

• Section 83A (1) :



155

Section 83A (1) :

AC or above can make amendment to assessment of duty orvalue from time to time to ensure correctness

• Section 83A (2) :

If it imposes liability to importer, he will be given a demand

notice

• Section 83A (3):

Due date of payment is 30 days from issuance of notice

• Section 83B :

Amendment of assessment to increase the amount has to be madewithin 3 years of original assessment

Assessable Value

Assessable value for Customs Duty (CD):



156

FOB Price

+ Freight (actual freight charge or 20% ofValue, if Freight Receipt is unavailable)

= C&F Price

+ 1% Insurance Fee

= CIF price

+ 1% Landing Charge= Assessable Value

HS Code(Harmonised Commodity Description and Coding System)

• Nomenclature of goods, classification of goods.

System of coding the goods numerically and to assess particularly.

• Number of sections 21 and Chapter 98

• Four digit heading for world wide and Eight digit for Bangladesh.

Calculation of Duty



157

• Customs Duty (CD) and Regulatory Duty (RD)


if rate of CD is 25%,

then amount of CD is 25.00

if rate of RD is 05%

then amount of RD is 05.00




158

• Supplementary Duty (SD):


Value+ CD if rate of CD is 25%If the rate of RD is 05%

and if rate of SD is 20%

then amount of SD is =(100+25+5) X

20%= 26.00

[i.e, Assessable value for SD=130.00]




159

• Value Added Tax (VAT) :


Value+ CD+RD+ SD if rate of CD is 25%

If the rate of R is 05%

if rate of SD is 20%

& rate of VAT is 15%

then amount of VAT is = (100 + 25+5 +26) x rate of VAT 15%

=156x15% = 23.40

[i.e, Assessable value for VAT=156.00]




160

• Advanced Income Tax (AIT):

Flat on Value: if assessable value is 100.00

And rate of AIT rate is 5%

then AIT amount of AIT is = 100 X 5% = 5.00

Calculation of Taxes• Advanced Trade VAT (ATV):



161

Based on Value If assessablee value is 100.00

+ CD+ RD +SD + 26.67% CD is 25%

(Value addition) RD IS 5%SD is 20%

VAT is 15%

AIT is 5%

ATV is 4%

then amount of ATV is={(100+25+5+26)+41.60} = 197.60

x rate of ATV 4% = 7.90

Total amount of duties & taxes

(25+5+26+23.40+5+7.90) = 92.30

• PSI Charge :


and PSI charge is 1%

then PSI charge is 1.00

Total Duty and Taxes on Imports

Consider the total duty and taxes on the import of one motor car that costs Tk



162

Consider the total duty and taxes on the import of one motor car that costs Tk.

5,00,000/= CIF. This car is subject to a 25% CD ; 5% RD, 20% Supplementary Duty,

15% Value Added Tax (VAT), 5% AIT and 4% ATV. Total duty & taxes for this car

amount to:

CIF price+1% Landing Charge Tk. 5,05,000.00

Import Duty at 25% Flat; Tk. 1,26,250.00

Regulatory duty at 5% Flat; Tk. 25,250.00

SD at 20% Tk. 1,31,300.00

VAT at 15% Tk. 1,18,170.00

AIT at 5% Flat Tk. 25,250.00

ATV at 4% (Rate of value Addition 26.67%) Tk. 39,916.25

----------------------

Total duty & taxes on the car is Tk. 4,66,136.25

Total price of the import, landed (with all duties & taxes)= Tk. 9,71,136.25

Clearance for Import

S ti 83 (1)



163

Section 83 (1) :

Clearance order (release order) for importable goods will begiven once duty is paid

Section 83 (2) :

An importer or a class of importer may be allowed clearancewithout any release order

Clearance for Export Section 131:

• Clearance order for export will be given once-

• Bill of export/Shipping Bill submitted• Duties applicable paid

• Assessment completed/Shipping Bill approved by Appraiser/Inspector

Auction

Section 82 (1):



164

Section 82 (1):

Goods will be auctioned, after serving due notice to theowner, if they are not cleared or entered into home

consumption or transshipped within 30 days (in custom

house/ LCO) or 21 days (in airport) of unloading of goods.

Acceptance of Bid:

(A) Allow sale at first auction, if 60% of reserve value

covered

(B) Allow sale at second auction, if bid is higher than firstauction

(C) Allow sale at third auction whatever it is the bid.

Auction



165

Section 201:

Sale proceeds is to be distributed in the

following manner-

(a) first to pay expense of sale(b) then to pay freight/other charges

(c) then to pay duties and taxes

(d) then to pay charges of the custodian

(e) then to pay the owner (supplier), if he applies within sixmonths of auction.

Warehousing/Bond

S



166

Sections 12-13:

These sections provides authority to appoint public

warehouses (e.g. Chittagong port, Dhaka Airport, Benapole

land port etc.) and to issue licenses to private warehouses.

Sections 84-119A:

Provide elaborated and detailed guidelines for the operation

of bonding and warehousing system

*Important sections are-

• Section 95 that allows manufacturing and other operations at

warehouses

Warehousing/Bond

• Section 98 that specifies the period for goods to be



167

• Section 98 that specifies the period for goods to be

warehoused, and• Section 104 that outlines the procedure for clearance of

bonded goods for home consumption

Types of Warehouses

• 100% Export Oriented Bond Free

(e.g. Woven and Knitted garments)

(24 Months + 6 Months)

Types of Warehouses

S i li d B d



168

• Specialized Bond

(a) Deemed Free

(e.g. deemed exporters such as plastics, dyeing, packaging)

‘Deemed’ means selling inputs/services to exporters.


(b) Guarantee-based Partial BG

(e.g. leather, ship building etc.)

BG refunded once export is established


Taxation Course

Documents

Transcript of Taxation Course