Introduction: Income tax is a direct tax, which enjoys a pride of place in the revenues of the governments all over the world. In the fiscal scheme of our country, at present, income tax is levied along with other direct and indirect taxes like VAT, Excise duty, Gift Tax etc. It is one of the most important sources of revenue for the government to ensure equitable distribution of resources. The present law of income tax is contained in the Income Tax Ordinance, 1984 and the Income Tax Rules, 1984.
Definition of Income Tax Income Tax is a direct and single tax charged on the income of any person for a relevant income year in relevant assessment year. That means, in order to generate revenues, Government imposes tax on various areas. Of them Income Tax is the tax which is levied on the taxable income of a person or entity as per the provisions of the income Tax Ordinance, 1984.
Characteristics of income Tax It is a direct tax. The levy of income tax is regulated by the Income Tax ordinance, 1984. It is charged on the total income of an income year of a person in an assessment year. Income tax is levied by the government on an annual basis. Tax imposed on items other than income is not the income tax.
Objectives and Importance of Income Tax Revenue collection Re-distribution of income Increase in savings Increase in capital investment Economic development
Taxation In Bangladesh In Bangladesh, the principal taxes are Customs Duty, Value-Added-Tax (VAT), Supplementary Duty and personal income taxes and corporate income taxes. The standard rate of VAT is 15% levied on transaction value of most of the imports and supplies of goods and services. The top income tax rate for individuals is 25%. For the 2011/12 tax year (July 1, 2011–June 30, 20112) the top corporate rate was 45%. However, publicly traded companies registered in Bangladesh are charged a lower rate of 27.5%. Banks, financial institutions and insurance companies are charged the 45% rate. All other companies are taxed at the 37.5% rate. Effective 1 July 2011, The National Board of Revenue (NBR) is the central authority for tax administration in Bangladesh. Administratively, it is under the Internal Resources Division (IRD) of the Ministry of Finance (MoF). MoF has 4 Divisions, namely, the Finance Division the Internal Resources Division (IRD), the Banking Division and the Economic Relations Division (ERD).
1. Tax Holiday Scheme 2. Investment Allowance 3. Accelerated Depreciation Allowance 4. Tax Incentives for Encouraging Savings 5. Tax Incentives for Small & Cottage Industries 6. Tax Exemption in Certain Expenditure 7. Tax Incentives for Foreign Investors 8. Allowance for Scientific Research 9. Tax Incentives for Remittance to Bangladesh Role of Income Tax in Economic Development of Bangladesh
1.The Income Tax Ordinance,1984 2.Income Tax Rules,1984 3.Finance Act 4.SRO(Statutory Regulatory Orders ) 5.Judicial decisions Scope of Bangladesh Income Tax Law
Every person whose total income is excess of the amount which is not chargeable under income tax, he is responsible to pay the tax. The amounts are- Individual- 165000 < the amount Women & age above 65 years- 180000 < amount Disable persons- 200000 < amount The scheme of income tax: An overview
o Income earned by person is chargeable if exceeds the maximum amount. o “Person” includes an individual, firms, association, Hindu undivided family. o Income tax is charged from current year taxable income but is taxable in the next assessment year. o Residential status is considerable. o Taxable income arises from 7(seven) heads. o Losses can be set off against the respective heads. o Tax payers can submit their tax return. The special features of Bangladesh Income Tax
The income tax ordinance,1984 came into force on 1 st July,1984 as income tax manual. It has 23 chapters, 187 sections, numerous sub-sections and eight schedules containing provisions regarding assessment penalty, appeal etc. The Income Tax Rules,1984: The IT rules 1984 comprises sixty nine rules to supplement various sections and provisions of the IT ordinance,1984. Structure of Income Tax Ordinance, 1984
Bangladesh inherited a system of taxation from it’s past British and Pakistani rules. The system, however, developed on the basis of generally accepted cannons and there had been efforts towards rationalizing the tax administration for optimizing revenue collection. Reducing tax evasion and preventing revenue leakage through system loss. In the Indian sub-continent, first Income Tax Act has been introduced in 1860 by the then English rulers following the Income Tax Act of England. A Brief History of Income Tax Law in Bangladesh
Rights of a Tax payer General Rights: - A tax payer is entitled to receive professional service and assistance. - A tax payer may either represent himself. - A tax payer is entitled to have access to his own tax records. - The tax authorities are required to act in partially and use their power in a fair and professional manner. - A tax payer has a right to be heard before a penalty is imposed. - In certain situation, tax payer may avail installment payment of arrears.
-When to appeal -Initial appeal -How and when to file and appeal -Subsequent appeals 1. Appeal to the appellate tribunal. 2. Reference to the high court division of the supreme court. 3. Appeal to the appellate division of the supreme court. 4. Alternative dispute resolution. Appeal Rights :
A taxpayer should file correct return. o A taxpayer is required to pay advance tax. o Tax payer is obliged to provide his details of his assets and liabilities. o A taxpayer is complied with statutory notice by tax authority. o Taxpayer is required to furnish correct and accurate particulars of his income. Obligations of a Tax payer
Consequences of default Serial no. NaturePenalty 1. Failure to file a returna)10 % of the tax imposed on last assessed income b)For continuing default tk. 50 per day c) minimum penalty tk. 1000 2. Failure to file or furnish certificate, statement. a)tk. 500 b)For continuing default, a further penalty of tk. 250 per month. 3. Failure to file or furnish information to DGCIC, DCT. a)tk. 25000 b)For continuing default, a further penalty of tk. 500 per day. 4. Penalty for using fake TIN. Not exceeding tk. 20000. 5 Failure to pay minimum 80% of the tax Not exceeding 25% of the total tax.
Subject to the following conditions, punishment for non-compliance of certain obligations is enumerated in various provisions of the ITO 1984 No prosecution shall be institute except with the provision sanction of the national board of revenue Commissioner is empowered to compound any punishable offence either before or after the institution of prosecution Punishment for non-compliance of certain obligation
Agriculture Income Annual Value Assesses Assessment Assessment year Income Year Market value Perquisite Recognized Provident Fund Royalty Tax Relevant Statutory Concept about Tax: