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The income Tax Rate in Bangladesh is from 5% to 25% depending on the person and income. Individuals will not have to pay any tax up to the tax-free limit i.e. tax-free limit up to Tk 300,000 for normal men and 65 years of age.
The tax-free limit is up to Tk 350,000 for those of third gender, women, and men above 65 years of age. No tax up to TK 450,000 in the case of the disabled and TK 475,000 in the case of freedom fighters.
Income Tax Rate in Bangladesh
The income Tax Rate in Bangladesh is designed to be both progressive and inclusive, catering to a diverse population with varying income levels and demographics. Key Taxation Highlights in Bangladesh:
- Minimum Tax Rate: Individual taxpayers in Bangladesh are subject to a minimum business turnover tax rate of 0.25%.
- Investment Credit: Taxpayers are eligible for an investment credit, which is a flat 15% of the eligible amount. The eligible amount is calculated as 20% of the total income. In cases of failure to submit a return, the investment credit rate is reduced to 7.5%.
- Submission of Income Tax Return: The first Income Tax Return must be submitted by June 30th at the end of the income year.
- Importance: The submission of an Income Tax Return is mandatory for individuals seeking to obtain or maintain a credit card. Additionally, it is required when selling land located in specific areas with a deed value exceeding Tk. 1,000,000 (Ten Lakhs only).
- ETIN Requirement: The requirement for an Electronic Taxpayer Identification Number (ETIN) has been replaced with the need to provide proof of the submission of the tax return.
- Submission of IT-10B (Asset & Liabilities Statement): Taxpayers are required to submit IT-10B, detailing their local and global assets and liabilities. This statement provides a comprehensive overview of an individual’s financial holdings and obligations.
Know here- How to Return Tax Online
Minimum Income for Paying Tax in Bangladesh
Now we will know how much income tax has to be paid to a person in Bangladesh i.e. what amount of income has to be paid in income tax.
It varies between men and women and for disabled and freedom fighters. We have presented them separately below.
- 300,000 for normal and male taxpayers below the age of 65 will not pay any income tax. Above TK 300,000 they have to pay tax.
- 350,000 in case of the third gender, female taxpayers or male taxpayers of 65 years of age or above will not have to pay any tax. But if their income is above TK 300,000 then they have to pay tax at a fixed rate.
- For those with disabilities, no tax is payable up to TK 450,000. If it goes above TK 450,000 then tax will apply to them.
- Gazetted freedom fighters will not have to pay any tax up to TK 475,000. Income above TK 475,000 has to be taxed at a fixed rate.
Income Tax Rate in Bangladesh Details
Above we have discussed how much income tax has to be paid. But we don’t know how much income tax has to be paid. Now we will know how much percentage of income tax will be applicable on how much money.
- 5% on the first 100,000 of income outside the tax-free limit for these individuals
- 10% up to the next 300,000
- 15% up to the next 400,000
- 20% up to the next 500,000
- And 25% will be applicable on subsequent income.
Bangladesh has provisions in place for individuals who possess undisclosed offshore assets. Here are the key guidelines:
- Declaration of Immovable Assets: Undisclosed offshore asset holders have the option to declare any immovable assets located outside Bangladesh in their tax returns. This declaration is subject to a 15% tax on the Fair Market Value of these assets.
- Repatriation of Cash and Financial Assets: For Bangladeshi citizens, there are two routes for handling offshore assets:
- Repatriation to Bangladesh: Individuals can repatriate their cash, bank deposits, bank notes, bank accounts, convertible securities, and financial instruments. A 7% tax is levied on the repatriated assets.
- Legalizing Assets without Repatriation: Bangladeshi citizens also have the option to legalize their offshore assets without the need for repatriation. In this case, a 10% tax is imposed on these assets.
Source: Bangladesh Income Tax Website
Bangladesh Income Tax Rate by Area
According to the rules of the Bangladesh government, the amount of tax may decrease or increase depending on the area. In this case, the minimum tax rate has been stated by the government. It is presented in table form below.
- City Corporations: Those who pay tax in Dhaka North City Corporation, South City Corporation and Chittagong City Corporation area have to pay a minimum tax of Tk 5000. That is, if the amount of tax is less than 5000 TK in the case of these persons, they still have to pay a minimum tax of 5000 TK.
- Other City Corporation Areas: The minimum tax is TK 4000 for residents of City Corporation areas other than above mentioned City Corporations.
- Other Areas: The minimum tax is TK 3000 for tax-paying residents located in areas other than City Corporation.
These are area-wise tax amounts if a person calculates income tax area-wise If the income tax is less then they have to pay the above minimum tax.
Company Income Tax Rate in Bangladesh
Here are given company income tax rates in Bangladesh. Follow the discussion below to know all about Bangladesh corporate tax rate.
Publicly Traded Companies Tax Rate
Publicly Traded Companies with at least 10% share allotted to the general public through IPO: Tax rate is 20%. This rate can be increased to 22.5% in case of non-compliance.
Publicly Traded Companies with less than 10% share allotted to the general public through IPO: Tax rate is 22.5%. This rate can be increased to 25% in case of non-compliance.
Non-listed Public and Private Companies Tax Rate
The tax rate is 27.5%, with a potential increase to 30% in case of non-compliance.
Artificial Entities and Taxable Entities (Excluding Companies and Associations) Tax Rate
The tax rate is 27.5%, with a potential increase to 30% in case of non-compliance.
Private Educational Institutions Tax Rate
A 15% tax is imposed on the income of private universities, medical colleges, dental colleges, engineering colleges, and colleges solely dedicated to ICT education.
Associations of Persons Tax Rate
The tax rate is 27.5%, with a potential increase to 30% in case of non-compliance.
One Person Company (OPC) Tax Rate
The tax rate is 22.5%, with a potential increase to 25% in case of non-compliance.
All receipts and income must be transacted through bank transfers, and expenses and investments over Tk. 12,00,000 (Twelve Lakhs) annually must also be transferred through the bank.
Tax Rates on Banks and Financial Institutions
- Publicly traded banks, insurance companies, and financial institutions (except merchant banks): The tax rate is 37.5%.
- Non-publicly traded banks, insurance companies, and financial institutions: The tax rate is 40%.
- Merchant banks: The tax rate is 37.5%.
Tax Rates on Tobacco Producing Companies
Companies producing tobacco items (cigarettes, bidi, chewing tobacco, and gul) are subject to a 45% tax rate, with an additional 2.5% surcharge.
Tax Rates on Mobile Operator Companies
- Publicly traded mobile operator companies: Tax rate is 40%.
- Non-publicly traded mobile operator companies: Tax rate is 45%.
Tax on ICT Start-up Businesses
For encouraging ICT start-up businesses, all other reporting requirements are exempted, and the turnover tax rate is fixed at 0.10%.
Tax on Textile Industry
The current tax rate for the Textile Sector is 15%, and this rate is applicable until June 30, 2025.
Tax from Non-residents
Efforts are being made to formulate proper scope and areas of income and exemption for non-residents to ensure revenue collection.
This may include inserting a mandatory provision related to the proof of tax return submission when income arises from Bangladesh through digital presence.
Taxation for the Third Gender
The current tax-free limit for third-gender taxpayers is up to TK 350,000.
Employers who hire 10% of their total workforce from the physically challenged or third-gender community (a minimum of 25 persons) are entitled to receive:
- 5% of the tax payable, or
- 75% of the salary paid to these individuals, or 5% of the tax payable (whichever is less).
Tax Deduction at Source in Bangladesh:
Deduction at Source refers to the practice of withholding a certain percentage of income or payment at the source before the recipient receives it.
In Bangladesh, various items and payments are subject to deduction at source, and the tax rates differ based on the nature of the transaction. The following are the key aspects of deduction at source:
- Import Stage: 3% source tax on HR coil and zinc, raw materials used for manufacturing galvanized iron sheets or steel products.
- Bank Interest for Company Taxpayers: 20% source tax on bank interest for company taxpayers.
- Export Proceeds: 1% source tax on export proceeds.
- Payments to Non-Residents: 10% source tax on payments made to non-residents on account of bandwidth payment. In the case of non-scheduled payments, the tax rate increases to 20%.
- Lease Rent of Water Bodies: 5% source tax on lease rent of water bodies, excluding those owned by the government.
Export Income Tax Rate in Bangladesh
The Government of Bangladesh has introduced tax incentives for export income to promote and encourage exports. These tax rates are applicable from 01 July 2022 to 30 June 2025. Here are the details of the tax rates on export income:
- Export Income of Individuals, Firms, and Hindu Undivided Firms: Tax will be exempted at a rate of 50% on the export income of individuals, firms, and Hindu Undivided Firms.
- Export Income of Others: Tax will be exempted at a rate of 12% on the export income of entities other than individuals, firms, and Hindu Undivided Firms.
- Tax Exemption for LEED Certified Factories: A 10% tax exemption will be provided for any income earned by entities other than individuals, firms, and Hindu Undivided Firms from exporting goods manufactured in Leadership in Energy and Environmental Design (LEED) Certified Factories.
- Exclusions: Transportation services, mobile telecommunication services, internet services, and internet-related services will not be eligible for tax benefits under SRO-158-Aain/Aikor/2022.
FAQs About Income Tax Rate in Bangladesh
Here are some frequently asked questions related to the Income tax rate in Bangladesh as follows-
What is the minimum and maximum income tax rate in Bangladesh?
The income tax rate in Bangladesh varies from 5% to 25% based on the individual’s income and category. The rates increase progressively as income exceeds certain thresholds.
What is the tax-free limit in Bangladesh for different categories of taxpayers?
The tax-free limit is as follows:
- Normal men and those under 65 years old: Up to Tk 300,000.
- Third gender, women, and men aged 65 and above: Up to Tk 350,000.
- Disabled individuals: Up to Tk 450,000.
- Freedom fighters: Up to Tk 475,000.
What is the taxation rate on undisclosed offshore assets in Bangladesh?
Undisclosed offshore assets can be declared in tax returns at a 15% tax rate based on the Fair Market Value. Bangladeshi citizens can repatriate assets or legalize them without repatriation by paying a 7% or 10% tax, respectively.
What is the taxation rate for non-residents and the third gender community?
Efforts are ongoing to establish proper areas of income and exemptions for non-residents. For the third-gender community, the current tax-free limit is up to Tk 350,000. Employers hiring individuals from this community are entitled to certain tax benefits.
Conclusion
This comprehensive guide provides an overview of income tax rates in Bangladesh, tax-free limits, investment credits, and key provisions for various types of taxpayers.
It also covers tax deductions at source and recent changes in taxation, including tax exemptions for export income. Individuals and businesses need to be aware of these tax regulations to ensure compliance and optimize their financial planning in Bangladesh.
