Taxation is a crucial aspect of financial planning for individuals and businesses. With the introduction of the Income Tax Act 2023, there have been significant updates under the Finance Act 2024 that impact individual taxpayers in Bangladesh. This article provides a comprehensive breakdown of the latest tax regulations, including tax rates, exemptions, and filing requirements.
New Tax Rates for Individual Taxpayers
Under the Finance Act 2024, individual taxpayers are subject to specific tax rates based on their income levels. The latest tax slabs are as follows:
- Men: No tax on income up to Tk 350,000
- Women & Senior Citizens (65+ years): No tax on income up to Tk 400,000
- Physically Challenged Individuals & Third Gender: No tax on income up to Tk 475,000
- War-Wounded Freedom Fighters: No tax on income up to Tk 500,000
- Parents/Guardians of Physically Challenged Individuals: Additional exemption of Tk 50,000
Tax Rate for Non-Residents
Non-residents, except Bangladeshi non-residents, are taxed at a flat rate of 30% on their total income.
Minimum Tax Payable
Even if an individual falls below the taxable income bracket, a minimum tax is applicable based on their income source and location.
Surcharge & Environmental Tax
The Finance Act 2024 introduces:
- Surcharge based on individual income levels.
- Environmental Tax on individuals owning more than one motor vehicle, payable at the time of registration or fitness renewal.
Determining Tax Residency
A person is considered a Bangladesh tax resident if they:
- Stay in Bangladesh for 183 days or more in a financial year.
- Stay for 90 days or more in a financial year and have lived at least 365 days in the past four years.
Mandatory Tax Return Filing
Filing an income tax return is compulsory for:
- Individuals earning above the exemption limit.
- Directors, partners, and shareholders of companies.
- Public servants and non-residents with a permanent establishment in Bangladesh.
- Taxpayers with prior tax assessments in the last three years.
Who is Exempt from Filing Tax Returns?
- Government-funded primary and secondary schools.
- Public universities.
- Bangladesh Bank and local authorities.
- Non-residents with no fixed base in Bangladesh.
Key Tax Filing Deadlines
- Individuals & Businesses: 30 November each year.
- First-Time Filers: 30 June of the following year.
- Non-resident Bangladeshis: Within 90 days of their return to Bangladesh.
Assessment of Income & Taxable Benefits
Taxable Income Sources
Income is classified into six key categories:
- Employment Income (Salary, Bonuses, Benefits)
- Rental Income
- Agricultural Income
- Business Income
- Capital Gains
- Financial & Other Sources
Deductions & Exemptions
Certain income components are non-taxable, including:
- Pension payments from the Government.
- Gratuity up to Tk 2.5 crore.
- Provident Fund contributions.
- Allowances for medical treatments (heart, kidney, cancer, etc.).
Investment Tax Rebates
Individuals can reduce their tax liability by investing in:
- Life Insurance Premiums
- Provident Funds & Pension Schemes
- Donations to Government-Approved Charities
- Government Bonds & Securities (Up to Tk 500,000)
- Shares in Listed Companies
Calculation of Tax Rebates
Taxpayers can claim the lowest of the following:
- 3% of total taxable income
- 15% of total investments
- Tk 1 million
Conclusion
The Income Tax Act 2023 introduces several changes that impact individual taxpayers in Bangladesh. Understanding these updates can help individuals maximize exemptions, reduce tax liability through investments, and comply with filing requirements. If you need personalized tax guidance, consult a tax professional to ensure compliance with the latest regulations.
