The Financial Act 2019 Compressed
The Financial Act 2019 Compressed
The Financial Act 2019 Compressed
By
INCOME TAX
1.00 Income Tax
1.01 Rates of income tax of individual (including non-resident Bangladeshi), Hindu
undivided family, partnership firm, an association of persons, fund, trust, NGO
and every other artificial juridical person (except business of cigarette, bidi, jorda,
gul and all tobacco products) are as follows
Assessment year 2019-2020 Assessment Year 2018-2019
Annual income Income tax rate Annual income Income tax rate
First Tk. 2,50,000 Nil First Tk. 2,50,000 Nil
Next Tk. 4,00,000 10% Next Tk. 4,00,000 10%
Next Tk. 5,00,000 15% Next Tk. 5,00,000 15%
Next Tk. 6,00,000 20% Next Tk. 6,00,000 20%
Next Tk. 30,00,000 25% Next Tk. 30,00,000 25%
Balance amount 30% Balance amount 30%
Rates of income tax mentioned above for the assessment year 2019-2020 was same
as that of the assessment year 2018-2019.
For an individual who is a non-resident (not non-resident Bangladeshi), the rate of
income tax would be 30% on his total income as before.
Tax-free limit of income of all female taxpayers, senior male taxpayers aging 65 years
and above is Tk. 3,00,000. Tax free limit of individuals with disability is Tk. 4,00,000
and that of gazetted war-wounded freedom fighters is Tk. 4,25,000. Tax-limit of
income of the parents or legal guardian of the person with disability will be Tk.
50,000 higher (for each child with disability). Only one of the parents can avail the
benefit. Any person registered under section 31 of the Persons with Disabilities
Rights and Protection Act, 2013 would be considered as ‘person with disability’.
Minimum tax for any individual category of taxpayer has been kept the same as the
one in previous year which is shown below:
Sl. No. Location of taxpayer Minimum tax (Taka)
Minimum surcharge, if applicable, for individual taxpayer having net wealth more
than Tk. 3 crore but not more than Tk. 10 crore or taxpayer owning more than 01
motor vehicles or taxpayer having house property in city corporation measuring
more than 8,000 square feet will be Tk. 3,000 for the assessment year 2019-2020 and
for the individual taxpayer having net wealth over Tk. 10 crore the minimum
surcharge has been kept same at Tk. 5,000 for the assessment year 2019-2020 as in
the assessment year 2018-2019. For assessees having net wealth more than Tk. 50
crore, minimum surcharge will be higher of 0.1% of net worth or 30% of tax
payable on total taxable income
Notes:
(1) net worth means the demonstrable total net worth, which will be shown in the
statement of assets, liabilities, and expenses according to section 80 of Income Tax
Ordinance, 1984 and (2) motor vehicles mean the private car, zip or microbus.
Manufacturers of cigarette, bidi, jorda, gul and all other tobacco products shall pay
2.5% surcharge on the income earned from the said business.
Page | 02 Important Changes Introduced by The Finance Act, 2019
1.03 Corporate tax rates
A brief picture of the corporate tax rates applicable for the assessment years
2019-2020 and 2018-2019 is shown in the table below:
Assessment Year
Sl. No. Particulars
2019-2020 2018-2019
Publicly traded companies (except banks, insurance companies,
a. financial institutions, merchant banks, mobile phone operators 25% 25%
and tobacco-based product manufacturing companies)
Non-listed companies including branch offices (except banks,
insurance companies, financial institutions, merchant banks, 35% 35%
b. mobile phone operators and tobacco-based product
manufacturing companies) *
i) Mobile phone operator companies (not publicly traded) * 45% 45%
*Non-listed companies will receive rebate of 10% in the year of listing if they list at
least 20% of their paid-up capital through initial public offering.
** Vide SRO No. 217-Law/Income Tax/2019 dated 23 June 2019.
Important Changes Introduced by The Finance Act, 2019 Page | 03
*** Vide SRO No. 218-Law/Income Tax/2019 dated 23 June 2019.
**** Vide SRO No. 258-Law/Income Tax/2016 dated 10 August 2016.
• School, College, University and NGO would be subject to excess income tax of
5%, if special arrangement facilitating the disabled persons was not made.
• If an assessee appoints minimum 10% physically handicraft individual of total
employee as an appointment authority then such assessee shall get 5% tax
rebate on income tax payable.
1.04 Changes in definition. [Section 2]
1.04.01 Changes in definition of “perquisite”. [Section 2(45)]
The words “not exceeding ten percent of disclosed profit of relevant income year” and
“or leave fair assistance” have been omitted. The amended version of this clause is
as follows:
“perquisite” means-
(i) any payment made to an employee by an employer in the form of cash or in
any other form excluding basic salary, festival bonus, incentive bonus, arrear
salary, advance salary, leave encashment and over time, and
(ii) any benefit, whether convertible into money or not, provided to an employee
by an employer, called by whatever name, other than contribution to a
recognized provident fund, approved pension fund, approved gratuity fund
and approved superannuation fund.
1.04.02 Modification in definition of “resident”. [Section 2(55)]
New sub-clauses (d) & (e) have been inserted after sub (c). Amended section 2
(55) stands as follows:
“resident”, in respect of any income year, means –
(a) an individual who has been in Bangladesh –
(i) for a period of, or for periods amounting in all to, one hundred and eighty
two days or more in that year; or
(ii) for a period of, or periods amounting in all to, ninety days or more in that
year having previously been in Bangladesh for a period of, or periods
amounting in all to, three hundred and sixty-five days or more during four
years preceding that year;
(b) a Hindu undivided family, firm or other association of persons, the control
and management of whose affairs is situated wholly or partly in Bangladesh
in that year;
(c) a Bangladeshi company or any other company the control and management
of whose affairs is situated wholly in Bangladesh in that year;
(d) a trust, a fund or an entity, the control and management of whose affairs is situated
1.15 Insertion of new section “Exemption from tax of newly established industrial
undertakings set up between the period of July, 2019 and June, 2024, etc. in
certain cases”. [Section 46BB]
The newly inserted section is follows:
(1) Subject to the provisions of this Ordinance, income, profits and gains under section 28
from an industrial undertaking (hereinafter referred to as the said undertaking) set-up
in Bangladesh between the first day of July, 2019 and the thirtieth day of June, 2024
(both days inclusive) shall be exempted from the tax payable under this Ordinance for
the period, and at the rate, specified below:
(i) if the said undertaking is set-up in Dhaka, Mymensingh and Chattogram divisions,
excluding Dhaka, Narayanganj, Gazipur, Chattogram, Rangamati, Bandarban and
Khagrachari districts, for a period of five years beginning with the month of
commencement of commercial production of the said undertaking:
Provided that any industry engaged in the production of item as referred to in clause
(viii) or clause (xii) of sub section (2) shall be entitled to exemption from tax under the
provision of this section even if it is set up in the districts of Dhaka, Gazipur,
Narayanganj or Chattogram.
(2) For the purpose of this section, "industrial undertaking" means-
(a) an industry engaged in, or in the production of-
(i) active pharmaceuticals ingredient and radio pharmaceuticals;
(ii) agriculture machineries;
(iii) automatic bricks;
(iv) automobile;
(v) barrier contraceptive and rubber latex;
(vi) basic components of electronics (e.g. resistor, capacitor, transistor, integrated
circuit, multilayer PCB etc.);
(vii) bi-cycle including parts thereof;
(viii) bio-fertilizer;
(ix) biotechnology based agro products;
(x) boiler including parts and equipment thereof;
(xi) compressor including parts thereof;
(xii) computer hardware;
(6) The Board shall give its decision on an application made under clause (e) of
sub-section (4) within forty five days from the date of receipt of the application by the
Board, failing which the undertaking shall be deemed to have been approved by the
Board for the purposes of this section:
Provided that the Board shall not reject any application made under this section
unless the applicant is given a reasonable opportunity of being heard.
(7) The Board may, on an application of any person aggrieved by any decision or order
passed under sub-section (6), if the application is made within four months of the
receipt of such decision or order, review the previous decision, order or orders and pass
such order in relation thereto as it thinks fit.
(8) The income, profits and gains of the undertaking to which this section applies shall be
computed in the same manner as is applicable to income chargeable under the head
Provided that in respect of depreciation, only the allowances for normal depreciation
specified in paragraph 3 of the Third Schedule shall be allowed.
(9) The income, profits and gains of the undertaking to which this section applies shall be
computed separately from other income, profits and gains of the assessee, if any, and
where the assessee sustains a loss from such undertaking it shall be carried forward
and set off against the profits and gains of the said undertaking for the next year and
where it cannot be wholly set off, the amount of the loss not so set off, shall be carried
forward for the following year and so on, but no loss shall be carried forward beyond
the period specified by the Board in the order issued under sub-section (6) or (7).
(10) Unless otherwise specified by the Government, nothing contained in this section
shall be so construed as to exempt the following from tax chargeable under this section,
namely-
(a) any dividend paid, credited or distributed or deemed to have been paid, credited or
distributed by a company to its share-holders out of the profits and gains;
(b) any income of the said undertaking classifiable as ''Capital gains'' chargeable under
the provisions of section 31;
(c) any income of the said undertaking resulting from disallowance made under
section 30.
(11) Where any exemption is allowed under this section and in the course of making
assessment, the Deputy Commissioner of Taxes is satisfied that any one or more of the
conditions specified in this section are not fulfilled or any individual not being a
Bangladeshi citizen is employed or allowed to work without prior approval of any
competent authority of the Government for this purpose, the exemption shall stand
withdrawn for the relevant assessment year and the Deputy Commissioner of Taxes
shall determine the tax payable for such year.
(12) Any such undertaking approved under this section may, not later than one year from
the date of approval, apply in writing to the Board for the cancellation of such
approval, and the Board may pass such order or orders thereon as it may deem fit.
(13) Notwithstanding anything contained in this section, the Board may, in the public
interest, cancel or suspend fully or partially any exemption allowed under this section.
(14) The Board may make rules regulating the procedure for the grant of approval under
sub-section (6), review under sub-section (7), furnish information regarding payment
of other taxes by the said undertaking, and take such other measures connected
therewith or incidental to the operation of this section as it may deem fit.
Explanation. - For the purpose of this section set-up means completion of establishment
of the industry referred to in this section.”
(1) Subject to the provisions of this Ordinance, income, profits and gains under section 28
from physical infrastructure facility, hereinafter referred to as the said facility, set up
in Bangladesh between the first day of July, 2019 and the thirtieth day of June, 2024
(both days inclusive) shall be exempted from the tax payable under this Ordinance for
ten years beginning with the month of commencement of commercial operation, and at
the rate, specified below:
(2) For the purpose of this section, "physical infrastructure facility" means,-
(i) deep sea port;
(ii) elevated expressway;
(iii) export processing zone;
(iv) flyover;
(v) gas pipe line
(vi) Hi-tech park;
(vii) Information and Communication Technology (ICT) village or software technology
zone;
(viii) Information Technology (IT) park
(ix) large water treatment plant and supply through pipe line;
(x) Liquefied Natural Gas (LNG) terminal and transmission line;
(xi) mobile phone tower or tower sharing infrastructure;
(3) The exemption under sub-section (1) shall apply to the said facility if it fulfils the
following conditions, namely:-
(a) that the said facility is owned and managed by-
(i) a body corporate established by or under any law for the time being in force with its
head office in Bangladesh; or
(ii) a company as defined in †Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb) with its
registered office in Bangladesh and having a subscribed and paid up capital of not
21 less than two million taka on the date of commencement of commercial
operation;
(b) that thirty percent of the exempted income under sub-section (1) is invested in the
said facility or in any new physical infrastructure facility during the period of
exemption or within one year from the end of the period to which the exemption
under that sub-section relates and in addition to that, another ten percent of the
exempted income under sub-section (1) is invested in each year before the expiry of
three months from the end of the income year in the purchase of shares of a company
listed with any stock exchange, failing which the income so exempted shall,
notwithstanding the provisions of this Ordinance, be subject to tax in the assessment
year for which the exemption was allowed:
Provided that the quantum of investment referred to in this clause shall be reduced
by the amount of dividend, if any, declared by the company enjoying tax exemption
under this section;
(c) that the said facility is approved, and during the relevant income year, stands
approved by the Board for the purposes of this section;
(d) that application in the prescribed form for approval for the purposes of this section,
as verified in the prescribed manner, is made to the Board within six months from the
end of the month of commencement of commercial operation;
(e) that the said facility maintains books of accounts on a regular basis and submits
return of its income as per provisions of section 75 of this Ordinance.
(4) The Board shall give its decision on an application made under clause (d) of
Important Changes Introduced by The Finance Act, 2019 Page | 17
sub-section (3) within forty five days from the date of receipt of the application by the
Board, failing which the facility shall be deemed to have been approved by the Board for
the purposes of this section:
Provided that the Board shall not reject any application made under this section
unless the applicant is given a reasonable opportunity of being heard
(5) The Board may, on an application of any person aggrieved by any decision or order
passed under sub-section (4), if the application is made within four months of the
receipt of such decision or order, review the previous decision, order or orders and pass
such order in relation thereto as it thinks fit.
(6) The income, profits and gains of the facility to which this section applies shall be
computed in the same manner as is applicable to income chargeable under the head
"Income from business or profession":
(7) The income, profits and gains of the facility to which this section applies shall be
computed separately from other income, profits and gains of the assessee, if any, and
where the assessee sustains a loss from such facility, it shall be carried forward and set
off against the profits and gains of the said facility for the next year and where it
cannot be wholly set off, the amount of the loss not so set off, shall be carried forward
for the following year and so on, but no loss shall be carried forward beyond the period
specified by the Board in the order issued under sub-section (4) or (5).
(8) Unless otherwise specified by the Government, nothing contained in this section shall
be so construed as to exempt the following from tax chargeable under this section,
namely-
(a) any dividend paid, credited or distributed or deemed to have been paid, credited or
distributed by a company to its share-holders out of the profits and gains;
(b) any income of the said facility classifiable as "Capital gains" chargeable under the
provisions of section 31;
(c) any income of the said facility resulting from disallowance made under section 30.
(9) Where any exemption is allowed under this section and in the course of making
assessment, the Deputy Commissioner of Taxes is satisfied that any one or more of the
conditions specified in this section are not fulfilled or any individual not being a
Bangladeshi citizen is employed or allowed to work without prior approval of any
competent authority of the Government for this purpose, the exemption shall stand
withdrawn for the relevant assessment year and the Deputy Commissioner of Taxes
shall determine the tax payable for such year.
(10) Any such facility approved under this section may, not later than one year from the
(e) income or loss computed in accordance with clause (d) or the proviso of
clause (d) shall not be set off with loss or income, respectively, computed for
any regular source.
(3) Where the assessee has income from regular source in addition to the income
from source or sources for which minimum tax is applicable under sub-
section (2)-
Provided that such rate of tax shall be zero point one zero percent (0.10%)
of such receipts for an industrial undertaking engaged in manufacturing of
goods for the first three income years since commencement of its commercial
production.
(b) where the assessee has an income from any source that is exempted from tax
or is subject to a reduced tax rate, the gross receipts from such source or
sources shall be shown separately, and the minimum tax under this
sub-section shall be calculated in the following manner-
(i) minimum tax for receipts from sources that are subject to regular tax rate
shall be calculated by applying the rate mentioned in clause(a);
(ii) minimum tax for receipts from sources that enjoys tax exemption or
reduced tax rate shall be calculated by applying the rate mentioned in
clause (a) as reduced in proportion to the exemption of tax or the
reduction of rate of tax;
(iii) minimum tax under this sub-section shall be the aggregate of the
amounts calculated under sub-section (i) and (ii).
Explanation.- For the purposes of this sub-section, ‘gross receipts’ means-
(i) all receipts derived from the sale of goods;
(ii) all fees or charges for rendering services or giving benefits including
commissions or discounts;
(iii) all receipts derived from any heads of income.
(5) Where the provisions of both sub-section (2) and sub-section (4) apply to an
assessee, minimum tax payable by the assessee shall be the higher of
Sl. No. 6 and 7 have been inserted after Sl. No. 5 of Table-2 of clause (b). The
newly inserted items are follows:
Sl. No. 33, 38, 39, 40, 47, 48, 49, 50, 67, 68, 69, 72, 77, 79, 91, 92, 108, 137, 141, 146,
147, 150, 151, 168, 170, 177, 185 & 212 of proviso of Table-3 have been omitted.
Input VAT shall not claim on goods against an acquisition or import, if-
• such acquisition or import relates to a passenger vehicle, or its spare parts or
for the repair and maintenance services of such vehicle:
provided that input tax credit may be allowed when dealing in vehicles,
renting them out or supplying transportation services are included in the
economic activities of such person and the vehicle is acquired for that
purpose;
• such acquisition or import relates to entertainment or is used to provide
entertainment:
provided that input tax credit may be allowed when provision of
entertainment relates to such person’s economic activities and the
entertainment is provided in the normal course of his economic activities;
A registered person shall, in support of his claims for input tax credit at the time
of filing of returns, be in possession of the flowing documents, namely—
• in case of an import, a bill of entry bearing the name of the importer and the
business identification number.
• in case of a supply, a tax invoice issued by the supplier;
• in case of a withholding entity, a combined tax invoice and withholding
certificate issued by the supplier.
• Treasury challan for proof of payment of tax.
2.11.01 Adjustment of closing balance lying with Account Current Register
(Mushak-18) under Value Added Tax Act, 1991. [Rule 118]
If there lies closing balance in Account Current Register (Mushak-18) of any
registered person under the Value Added Tax Act, 1991, hereinafter referred to as
the said Act, and if he is unable to adjust the same against the payable tax under
the said Act, then he can take decreasing adjustment of the closing balance
accrued on the date of introduction of the Act in observance of the subsequent
provisions of these Rules.
Any registered person shall not be able to make decreasing adjustment of the
closing balance under the Act accrued against the Act, if: –
• If he is not registered under this Act;
• If there remains any undisposed case pending against him under the said Act;
• If any appeal or writ remains pending against him under the said Act; or
• If any arrear tax remains unrealized with him under the said Act.
Any registered person can make decreasing adjustment of the input tax in each tax
period of the maximum 10% (ten percent) amount of the net tax payable under
the Act.
With the purpose of making decreasing adjustment under Sub-Rule (3), the
registered person shall apply to the Commissioner with submitted return
(Mushak-19) under the said Act.
The Commissioner shall verify the conditions within one month of the receipt of
the application and shall issue a certificate in form “Mushak-18.6” on the basis of
which the closing balance of the registered person accrued under the said Act
shall be disposed of under the Act.
Circumstances under VAT Act 1991 Instruction under VAT and SD Act 2012
Rebate on released goods by using It will be a decreasing adjustment by
11-digit old BIN and purchase of input complying the provisions of law.
goods through Mushak-11 up to 30 June,
2019.
Adjustment of closing balance of VAT According to rule 118 of VAT and SD
current account. Rules 2016, decreasing adjustment shall
be given in the VAT return.
Input VAT rebate on tariff-based goods. Tariff-based goods under previous law, if
now fall under 15% VAT, a decreasing
adjustment can be made for total amount
of VAT including stored input.
Circumstances under VAT Act 1991 Instruction under VAT and SD Act 2012
Goods produced before 30 June 2019 but Price declaration is not required for the
supplied after 30 June 2019. sale of goods after 1 July 2019 but
required to submit input-output
coefficient in a prescribed form for all
goods.
2.17.08 Duty drawback claimed to Duty Exemption and Drawback Officer (DEDO)
Circumstances under VAT Act 1991 Instruction under VAT and SD Act 2012
In case of application submitted for It shall be settled in accordance with the
drawback on or before 30 June 2019. VAT Act 1991.
In case of export made under VAT Act An application shall be made to the
1991 on or before 30 June 2019. Director General, Duty Drawback Officer
(DEDO). The director General shall settle
the case under the VAT Act 1991.
In case of duty drawback claimed on or An application shall have to be submitted
after 1 July 2019. to the Director General, Duty Exemption
and Drawback (DEDO) of the Customs
Division of the national Board of
Revenue. The director General shall settle
the case under the regulation of The
Customs Act, 19639.
2.17.09 Comparison of important provision of VAT Act 1991 and VAT and SD Act 2012
Subject matters The VAT Act 1991 The VAT and SD Act 2012 Remarks
Registration VAT registration was If same types of goods Significant
required to obtained for are supplied form changes
each place of business. different locations with
Central VAT registration maintaining books and
could be obtained by records centrally, central
applying to the VAT VAT registration can be
authority. taken, otherwise VAT
registration is required
for each place eparately.
*The End*