Taxation Institute of Chartered Accountants Bangladesh Md. Shakhawat Hossain Articled Student Howladar Yunus & Co.

Income from other source Topic List Reference Introduction Dividend Interest Income other than Interest on Securities Income from Letting of Assets Deemed Income under different sub-sections of Section 19 Allowable Deductions Inadmissible Deductions Illustrations for practice

Income from Other Source Reference Definition: 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)

Income from Other Source Introduction This is the residuary head of income as mentioned in Section 20 of the Income Tax Ordinance 1984. Categories Particulars References Specified Income Dividend, interest, royalties, fees for technical services, income from letting of specified assets Section 33 (a), (b) and (c) Deemed income Income as specified in different subsections of section 19 Section 33(d), Section 19(1), (2), (3), (4), (5), (8), (9), (10), (11), (12), (13), (21), (21A) and (24). Residual income Any income that is not classified as income in any other sections Section 33 (e)

Income from Other Source Dividend Section 2(26) defines dividend Exemption: 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 Assessee Residential Status TDS Rates Company Both resident and non-resident 20% Person other than Company Resident and non-resident Bangladeshi 10% Non-resident foreigner 25%

Income from Other Source Interest Income other than Interest on Securities Sources of Interest income TDS rate Exemption Interest on Savings / Fixed deposits from a Bank, co-operative bank, non-banking financial institution, leasing company, housing finance company 10% No exemption Share of profit from any bank run on Islamic Principles. Interest on Savings Certificates: 5 years Bangladesh Sanchayapatra 3 monthly profit based 3 year Bangladesh Sanchayapatra Pensioner Sanchayapatra Paribar Sanchayapatra 5% Interest on Post Office Savings Bank Interest on Wage Earner’s Development Bond.

Income from Other Source Interest Income other than Interest on Securities Sources of Interest income TDS rate Exemption Interest on Non-Resident Foreign Currency Deposit Account Nil Fully exempted Interest on DPS / Contributory Savings Scheme run by a commercial Bank and approved by the government. Interest on Bangladesh Industrial Development Bond 10% 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 Bond US Dollar Investment Bond

Income from Other Source Income from Letting of Assets Income 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.

Income from Other Source Deemed Income under different sub-sections of Section 19 Sectio n Income to be shown under the head ‘Income from Other Sources’ 19(1) Unexplained credits 19(2) Unexplained investments 19(3) Unexplained expenditure 19(4) Unrecorded investments 19(5) Unrecorded money, jewellery etc. 19(8) Purchase of assets at a price lower than the fair market value 19(9) Salami or premium for granting leases 19(10) Goodwill money or compensation 19(27) Purchase or hire of car at a price exceeding 10% of paid up capital

Income from Other Source Deemed Income under different sub-sections of Section 19 19(11) Benefit or advantage on account of cancellation of indebtedness 19(12) Managing agency commission 19(13) Winning from lotteries, crossword prizes etc. 19(21) Unpaid loan 19(21A) Loan or gift received under some circumstances 19(21B) Transfer of initial capital 19(24) Disclosing investment in equity of an unlisted company 19(26) Loan taken by a company otherwise than by a crossed check or bank transfer

Income from Other Source Allowable Deductions As 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.

Income from Other Source Inadmissible Deductions As 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; or Any payment which is chargeable under the head “Salaries” if tax has not been paid thereon or deducted there from under section 50.

Illustrations for practice Income from Other Source Illustrations for practice Study Manual_Taxation-I (ICAB)- Page: 107-109 Study Manual_Taxation-II (ICAB)- Page: 197-199 Bangladesh Income Tax_ Nikhil Chandra Shil- Chapter -12_Page: 325-257 Previous Questions of ICAB_ Professional Stage KL

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