Presentation on theme: "Taxation Institute of Chartered Accountants Bangladesh"— Presentation transcript:
1 Taxation Institute of Chartered Accountants Bangladesh Md. Shakhawat HossainArticled StudentHowladar Yunus & Co.
2 Income from other source Topic ListReferenceIntroductionDividendInterest Income other than Interest on SecuritiesIncome from Letting of AssetsDeemed Income under different sub-sections of Section 19Allowable DeductionsInadmissible DeductionsIllustrations for practice
3 Income from Other Source ReferenceDefinition: 2(26), 2(31), 2(56)Sections: 33, 34, 35, 36, 19(1)-19(5), 19(8)- 19(13), 19(21), 19(21B), 19(24), 19(26), 19(27), 19(28)
4 Income from Other Source IntroductionThis is the residuary head of income as mentioned in Section 20 of the Income Tax Ordinance 1984.CategoriesParticularsReferencesSpecified IncomeDividend, interest, royalties, fees for technical services, income from letting of specified assetsSection 33 (a), (b) and (c)Deemed incomeIncome as specified in different subsections of section 19Section 33(d), Section 19(1), (2), (3), (4), (5), (8), (9), (10), (11), (12), (13), (21), (21A) and (24).Residual incomeAny income that is not classified as income in any other sectionsSection 33 (e)
5 Income from Other Source DividendSection 2(26) defines dividendExemption: Any income from dividend of a mutual fund or a unit fund is exempted up to Tk. 25,000 [Sixth schedule, Part A, Para 22A].Tax Deducted at Sources: Tax on dividend income will be deducted at following rates:Grossing up: Yes. However, it is important to know the rate of TDS before grossing up.Type of AssesseeResidential StatusTDS RatesCompanyBoth resident and non-resident20%Person other than CompanyResident and non-resident Bangladeshi10%Non-resident foreigner25%
6 Income from Other Source Interest Income other than Interest on SecuritiesSources of Interest incomeTDS rateExemptionInterest on Savings / Fixed deposits from a Bank, co-operative bank, non-banking financial institution, leasing company, housing finance company10%No exemptionShare of profit from any bank run on Islamic Principles.Interest on Savings Certificates:5 years Bangladesh Sanchayapatra3 monthly profit based 3 year Bangladesh SanchayapatraPensioner SanchayapatraParibar Sanchayapatra5%Interest on Post Office Savings BankInterest on Wage Earner’sDevelopment Bond.
7 Income from Other Source Interest Income other than Interest on SecuritiesSources of Interest incomeTDS rateExemptionInterest on Non-Resident ForeignCurrency Deposit AccountNilFully exemptedInterest on DPS / Contributory Savings Scheme run by a commercial Bank and approved by the government.Interest on Bangladesh IndustrialDevelopment Bond10%Exempted up to Tk. 25,000. If the interest amount exceeds Tk. 25,000, 10% TDS is allowed on the whole interest amount and to be considered as the final payment of tax as per Section 82(c).US Dollar Premium BondUS Dollar Investment Bond
8 Income from Other Source Income from Letting of AssetsIncome from letting of machinery, plant or furniture belonging to the assessee and also building inseparable from the mentioned assets is taxable as income from other sources if the same is not chargeable to tax under the head “Income from Business or Profession under section 28” or under the head “Income from House Property under section 24”. In this case the letting does not constitute a business activity.
9 Income from Other Source Deemed Income under different sub-sections of Section 19Sectio nIncome to be shown under the head ‘Income from Other Sources’19(1)Unexplained credits19(2)Unexplained investments19(3)Unexplained expenditure19(4)Unrecorded investments19(5)Unrecorded money, jewellery etc.19(8)Purchase of assets at a price lower than the fair market value19(9)Salami or premium for granting leases19(10)Goodwill money or compensation19(27)Purchase or hire of car at a price exceeding 10% of paid up capital
10 Income from Other Source Deemed Income under different sub-sections of Section 1919(11)Benefit or advantage on account of cancellation of indebtedness19(12)Managing agency commission19(13)Winning from lotteries, crossword prizes etc.19(21)Unpaid loan19(21A)Loan or gift received under some circumstances19(21B)Transfer of initial capital19(24)Disclosing investment in equity of an unlisted company19(26)Loan taken by a company otherwise than by a crossed check or bank transfer
11 Income from Other Source Allowable DeductionsAs per section 34, followings are the allowable deductions from the income classifiable as income from other sources as per section 33.Interest paid on money borrowed for the purpose of acquisition of shares of a company. Interest payable outside Bangladesh on which tax has not been paid and from which tax has not been deducted at source shall not however be admissible deduction.Any expenditure, not being capital expenditure or personal expenses, spent solely for the purpose of making or earning the relevant income.Where income from other sources is derived from letting on hire any machinery, plant or furniture is inseparable with buildings, allowance for repairs, insurance premium, depreciation and obsolescence allowance are admissible in the determination of income from business under section 29(1) (vi), 29(1) (vii), and 29(1) (xi), respectively as if the income from such letting on hire were income from business or profession.Provided that the provisions of section 19 (16) shall also be applicable for the determination of any profits where the sale proceeds of such machinery, plants, furniture or building exceeds the written down value thereof.
12 Income from Other Source Inadmissible DeductionsAs per section 34(4), following two expenses are not admissible:Any interest chargeable under the Ordinance which is payable outside Bangladesh on which tax has not been paid and from which tax has not been deducted at source under section 56; orAny payment which is chargeable under the head “Salaries” if tax has not been paid thereon or deducted there from under section 50.
13 Illustrations for practice Income from Other SourceIllustrations for practiceStudy Manual_Taxation-I (ICAB)- Page:Study Manual_Taxation-II (ICAB)- Page:Bangladesh Income Tax_ Nikhil Chandra Shil- Chapter -12_Page:Previous Questions of ICAB_ Professional Stage KL