top of page
  • Writer's pictureLacsb.com

Income Tax in Bangladesh: Legal Obligations and Responsibilities for Individuals and Companies

Updated: Apr 3, 2023





Income tax is a crucial source of revenue for the government of Bangladesh, and both individuals and companies are required to pay taxes on their income. The Income Tax Ordinance, of 1984 is the primary legislation governing income tax in Bangladesh. This ordinance outlines the legal obligations and responsibilities of individuals and companies regarding income tax.


Individuals in Bangladesh are required to pay income tax on their income, which includes salaries, wages, rent, dividends, interest, and other sources of income. The income tax rates vary depending on the individual's income level. The tax rates for the fiscal year 2022-23 are as follows:


Up to BDT 2,50,000: 0%

BDT 2,50,001 to BDT 4,00,000: 10%

BDT 4,00,001 to BDT 7,50,000: 15%

BDT 7,50,001 to BDT 12,00,000: 20%

BDT 12,00,001 to BDT 18,00,000: 25%

Above BDT 18,00,000: 30%


Companies in Bangladesh are also required to pay income tax on their profits. The tax rate for companies is 25% for the fiscal year 2022-23. In addition to income tax, companies are also required to pay supplementary duty, value-added tax (VAT), and other taxes.




Legal Obligations and Responsibilities for Individuals


As per the Income Tax Ordinance, of 1984, individuals in Bangladesh have several legal obligations and responsibilities regarding income tax. Some of these obligations and responsibilities include:


1. Registering for Income Tax: Individuals with an annual income of BDT 2,50,000 or more are required to register for income tax. They must obtain a Taxpayer Identification Number (TIN) from the National Board of Revenue (NBR).


2. Filing Income Tax Return: Individuals are required to file an income tax return if their income exceeds the tax-free limit of BDT 2,50,000. The income tax return must be filed by September 30 of each year.


3. Paying Income Tax: Individuals are required to pay income tax on their income. The tax must be paid by July 15 of each year. Individuals can pay their income tax through online banking, mobile banking, or at authorized bank branches.


4. Keeping Records: Individuals are required to keep records of their income, expenses, and taxes paid. These records must be kept for at least five years from the end of the tax year.




Legal Obligations and Responsibilities for Companies


Companies in Bangladesh have several legal obligations and responsibilities regarding income tax. Some of these obligations and responsibilities include:


1. Registering for Income Tax: Companies are required to register for income tax within 45 days of the commencement of their business. They must obtain a Taxpayer Identification Number (TIN) from the National Board of Revenue (NBR).


2. Filing Income Tax Return: Companies are required to file an income tax return by September 30 of each year. The return must include the company's financial statements and tax computation.


3. Paying Income Tax: Companies are required to pay income tax on their profits. The tax must be paid by July 15 of each year. Companies can pay their income tax through online banking, mobile banking, or at authorized bank branches.


4. Keeping Records: Companies are required to keep records of their income, expenses, and taxes paid. These records must be kept for at least five years from the end of the tax year.




How Lawyers Help in Income Tax Matters


Lawyers play an important role in helping individuals and companies navigate income tax matters. Some of the scenarios and examples of how lawyers help in income tax matters are:


1. Tax Planning: Lawyers can help individuals and companies plan their taxes in a way that minimizes their tax liability. They can advise on tax-efficient investments, deductions, and exemptions, and help structure business transactions to reduce the tax burden.

For example, a lawyer can advise a company on how to structure a merger or acquisition to minimize tax liabilities. They can also advise an individual on how to claim tax deductions for charitable donations.


2. Dispute Resolution: Lawyers can represent individuals and companies in disputes with tax authorities. They can help resolve issues related to tax audits, assessments, and appeals. They can also represent clients in tax litigation cases.

For example, if a company is facing a tax audit, a lawyer can assist in preparing and submitting the necessary documents to the tax authorities. They can also represent the company in any disputes that may arise during the audit process.


3. Compliance: Lawyers can help ensure that individuals and companies comply with income tax laws and regulations. They can assist in the preparation and filing of income tax returns, and advise on tax compliance issues.

For example, a lawyer can advise a company on how to comply with the transfer pricing regulations, which require companies to ensure that their inter-company transactions are at arm's length. They can also advise an individual on how to report foreign income and assets to comply with international tax regulations.


4. Negotiation and Settlement: Lawyers can negotiate with tax authorities on behalf of individuals and companies to reach a settlement or agreement. They can help resolve tax disputes and negotiate favourable tax settlements.

For example, a lawyer can negotiate with tax authorities on behalf of a company that has been assessed with a large tax liability. They can work with the tax authorities to reach a settlement that is favourable to the company.




Income tax is a crucial source of revenue for the government of Bangladesh. Both individuals and companies have legal obligations and responsibilities regarding income tax. Individuals must register for income tax, file income tax returns, pay income tax and keep records. Companies must also register for income tax, file income tax returns, pay income tax and keep records. Lawyers play an important role in helping individuals and companies navigate income tax matters, including tax planning, dispute resolution, compliance, and negotiation and settlement.

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page