4.

Income from business or profession (section 45-56):

Particulars Ref
Income from business or profession includes :
1 profits and profits of a business carried on or deemed to be carried on Sec 45
income derived by any business or professional organization or by any such organization
2 Sec 45
from rendering certain services to its members;
the fair market value of any benefit arising out of or in continuation of a person's past,
3 Sec 45
present or potential future business relationship, whether convertible into cash or not;
any management fee incurred by any management company, including Mudaraba Management
4 Sec 45
Company;
any amount due to the lessor bank, insurance or financial institution against leasing to any
5 Sec 45
other person any asset owned by himself or others;
6 realized gain from currency exchange subject to the Third Schedule; Sec 45
7 any income received during the income year from a discontinued business. Sec 45
8 Income from sales of Assets Sec 46
Receipts by way of insurance, salvage or compensation on account of the abandonment, wiped out or
9 Sec 46
destruction of an asset after being use
Income from transfer of the whole or part of the export quota distributed in his favor by the
10 Sec 46
government
In any income year, any expenditure on account of interest or profit payable to any person is deducted
11 and if such interest or profit is not paid within 3 (three) years after the end of the income year in Sec 46
which the deduction is made, on completion of following 3(three) years
any subsequent income in respect of which the taxpayer receives any benefit in respect of the trading
12 Sec 46
liability in the said income year
If the trading liability or any part thereof remains unpaid within 3 (three) years after the end of the
13 income year in which the said trading liability has been taken into account, the said unpaid trading Sec 46
liability
If in any income year a loss, credit or any expense is deducted in computing income under this
14 Chapter and if in any subsequent income year the taxpayer receives any benefit in respect of such Sec 46
deducted loss, credit or expense
In the case of filing of return under section 180, any deficiency in the initial capital shown at any time
15 Sec 46
within 5 (five) years after the year in which the return is filed
In computing the income of a financial institution, interest or profit income on loans classified as bad
16 or doubtful loans by Bangladesh Bank shall be credited as profit and loss in that income year, or in Sec 46
the income year in which it is actually received, whichever is earlier
17
Separate Consideration of Speculative Business Sec 48
Calculation of Profit of Insurance Business (Fourth Schedule) Sec 47
Calculation of Profit of Extraction and exploration of natural gas, petroleum or other
Sec 47
minerals (Fifth Schedule)

Less : Allowable General Deductions in Computing Income from Business : Sec 49

expenditure on purchase of raw materials, stocks, goods for business purposes and for use in
1 Sec 49
business and any depreciated expenditure;
such customs duties, municipal taxes, local taxes, land development taxes or rents and
2 government fees not paid under this Act and the Donation Tax Act, 1990 (Act No. 44 of 1990), Sec 49
but paid for the purpose of business;
3 payment expenses for development and maintenance for the land and yard used for business; Sec 49
all such expenses, welfare expenses or remuneration which are deemed to be income from
4 Sec 49
employment under this Act;
 5 repair and maintenance expenses; Sec 49
6 insurance premiums incurred and paid for business purposes; Sec 49
7 electricity and fuel including other service charges; Sec 49
8 transportation, clearing and forwarding charges of goods; Sec 49
expenses in the nature of commissions, brokerage, discounts or warranty charges relating to the
9 Sec 49
sale;
10 advertising and campaign expenses; Sec 49
11 expenditure on account of training of personnel; Sec 49
12 for conference, hotel and accommodation expenses of sales representatives; Sec 49
13 expenses for conveyance and travelling; Sec 49
14 internet service, postal and telecommunication related expenses; Sec 49
15 expenses for receiving of legal, audit and other professional services; Sec 49
16 expenses relating to entertainment and hospitality; Sec 49
17 subject to the Third Schedule, cashed exchange loss of foreign currency; Sec 49
subscriptions to any club or commercial association, including admission fees, for the use of
18 Sec 49
their facilities;
any expenses incurred in connection with travelling abroad as a member of any trade delegation
19 Sec 49
sponsored by the Government;
20 royalties, technical fees, head office expenses; Sec 49
amount paid to the Labor Participation Fund, Welfare Fund and the Labor Welfare Foundation Fund
21 established under section 234 of labor Welfare Foundation Act, 2006 (Act No. 25 of 2006) not Sec 49
exceeding 5% (five percent) of the net business profits shown; and
22 other expenses incurred wholly and exclusively for business purposes. Sec 49
23

Less : Allowable Special Deductions from Income from Business : Sec 50 & ( Third Schedule)
1 general depreciation allowance; Sec 50
2 initial depreciation allowance; Sec 50
3 accelerated depreciation allowance; Sec 50
4 amortization allowance; and Sec 50
5 research and development expenditure. Sec 50
6 Loss on sales of Assets Sec 50
7 Bad debt expenses allowed under section 51 shall be deducted in computing income from business. Sec 50
The interest expense allowed under section 52 and 53 shall be deducted in computing income from
8 Sec 50
business.

any income donated to any fund established under or by the Prime Minister's Education Assistance
Trust Act, 2012 (Act No. 15 of 2012), subject to the following maximum amount, namely:-
6th Sch
9 (i) l0% (ten percent) of the income of a company or 8 (eight) crores, whichever is less;
Part 2
(ii) 10% (ten percent) of the income of any taxpayer other than the company or 1 (one) crore,
whichever is less;

income donated to any girls' school or women's college approved by the Ministry of Education of the 6th Sch
10
Government; and Part 2
income donated to any technical and vocational training institute approved by the Ministry of 6th Sch
11
Education of the Government; Part 2
income donated to through bank transfer to any national level institution involved in research and 6th Sch
12
development for agricultural, scientific, technological and industrial development. Part 2

Add : Deduction not Allowable in Certain Cases.- Sec 55

any expenditure or payment in respect of which the provisions of Part- 7 have not been
(a) Sec 55
duly complied with;
interest, salary, commission or gratuity paid by any firm or association of individual to any
(b) Sec 55
partner of the firm or any member of the association;
 (c) payment of any commission or discount by a company to a shareholder director; Sec 55
any amount in excess of Tk. 10 (ten) lakhs paid to an employee in respect of
(d) Sec 55
perquisites as defined in the explanation to section 32:
an excess of 10% (ten percent) of the net business profit shown in the financial statements
in respect of the aggregate of expenses for royalties, license fees, technical service fees,
(e) Sec 55
technical assistance know-how fees or any other fees of a similar nature incurred for the
use of intangible property;
an excess of 10% (ten percent) of the net trading profit shown in the financial statements in respect
(f) of head office or intra- group expenditure, by whatever name, incurred by any such company not Sec 55
registered in Bangladesh;
an additional figure of 0.5% (zero point five percent) of the business turnover shown in the financial
statements in respect of expenses related to foreign travel for business purposes:
Provided that this limit shall not apply if the taxpayer travels abroad for rendering any service to the
(g) Government: Sec 55
Provided further that the limit provided in this clause shall not apply if evidence is produced in
support of the additional figure calculated under this clause and the commercial reasonableness
thereof is proved;
Excess of entertainment expenses-
(i) 4% (four percent) of the first Tk. 10 (ten) lakhs of the assessed business income excluding
(h) entertainment expenses; and Sec 55
(ii) 2% (two percent) of remaining business income assessed excluding deduction of
entertainment expenses;
(i) Excess of distribution of free samples - Sec 55
Assessed Turnover % of Turnover
Pharmaceuticals Food, Cosmetics & Toiletries Other Industry
Up to Tk. 5 Crore 2% 1% 0.50%
Exceeding Tk. 5 Crore but up to Tk. 10 1% 0.50% 0.25%
Crore
Exceeding 10 Crore 0.50% 0.25% 0.10%

exceeding 0.5% of business turnover in respect of promotional expenditure other than

(j) Sec 55
advertising;
(k) employee is paid through any other medium than through banking; Sec 55
(l) Rent is paid through any other medium than through banking; Sec 55
payment in respect of raw material has been paid through any other means rather than through
(m) Sec 55
banking more than Tk. 5 (five) lakhs;
all expenses other than clauses (k), (1) and (d), the additional sum of Tk. 50 (fifty) thousand not
(n) Sec 55
paid through banking but amount is paid through any other means;
if at the time of payment such person fails to submit evidence of filing return as per clauses 25, 26,
(o) Sec 55
28, 29, 36, 37, 42 and 43 of sub-section (3) of section 264, ;
(p) any expenditure of a capital nature or any personal expenditure of the taxpayer; Sec 55
(q) any liability not expressly assessed; Sec 55
(r) all such expenses not connected with business activities; Sec 55
deduction of any depreciation allowance and interest claimed in respect of right of use of an asset in
accordance with International Financial Reporting Standard:
(s) Sec 55
rent, development and maintenance expenses payable for the land or premises used for business
purposes shall be allowed for deduction
(t) impairment loss; Sec 55
(u) money paid to any fund not authorized by the Board; Sec 55
all unproven expenses for non-compliance with the provisions of accounting in the prescribed
(v) Sec 55
manner.

Explanation.- For the purposes of this section,-

 "Net Business Profits" means the business profits directly carried on by an entity, but does not
(a)
include profits derived from any subsidiary, associate or joint venture;
"Promotional Expenses" means business expenses claimed against the provision of goods,
(b) money or other benefits to any person for the purpose of business, but shall not include
advertising expenses.

54 General Conditions for Approval of Deduction.-

(1) If in any income year any such expenditure is allowed as a deduction under this Chapter which
represents in whole or in part of an asset, no further deduction shall be allowable in respect of that
asset in the same income year.
(2) In sanctioning any expenditure under section 49, the commercial reasonableness of the expenditure
concerned shall be considered and the following matters shall be taken into account in considering
the commercial reasonableness, namely:-
(a) if the expenditure incurred on for the purpose of earning income from the business;
(b) if the expenditure incurred is revenue in nature; and
(c) if the expenditure incurred is reasonable in the circumstances.
56 Special Business Income :
(1) Notwithstanding anything contained in any other provision of this Act, all expenditure disallowed
under clauses other than those covered by clause (d) of section 55 shall be treated as special business
income.

(2) No expenditure, adjustment of losses or carry forward and no allowance under the Third
Schedule shall be allowed deemed to be income of special areas as "special business income" or
"income from business" under this Chapter and such income shall be taxable at the ordinary rate.

6th Schedule :
Part 1 Excluded from computation of gross income
(3) grants received by Government or local authorities and any taxes, fees and duties;
(10) Any income earned by the following entities recognized by the Bangladesh Securities and Exchange
Commission, namely:
(a) Mutual Fund (Mutual Fund);
(b) Alternative Investment Fund (c) Real Estate Investment Trust; (d) Exchange Traded Fund;
(11) Income derived from house-property under a trust or other legal obligation held wholly for charitable
or religious purposes, except in the case of private institutions registered by the Bureau of NGO Affairs, if
the said income-
(a) used for charitable or religious purposes in Bangladesh in the relevant income year; or
is not used for any charitable or religious purpose, but is accumulated or finally set aside for the
(b)
fulfillment of such purpose in Bangladesh, and-
inform the Deputy Commissioner of Taxes for what reason and for what period such
(i)
income has been accumulated or set aside;
(ii) the term mentioned in sub-clause (a) does not exceed 10 (ten) years;
such accumulated or set-aside money is invested in Government securities or in any
other securities approved by the Government for the purpose, or deposited in any Post
(iii)
Office Savings Bank, or deposited in any such Scheduled Bank of which 51 % (fifty-one percent)
or more of its shares are held by Govt.
(12) Voluntary contributions received by religious or charitable institutions which are used only
for religious or charitable purposes:
Provided that nothing in section 17 or 18 shall exempted from the provisions of this Act that part of
the gross income of a private religious trust which does not ensure public welfare;
(13) Any service charge arising out of the micro credit activities of a non-governmental
organization registered with the Bureau of NGO Affairs or the Microcredit Regulatory
Authority if it-
(a) revolving only as microcredit;
(b) is not used to acquire any funds other than revolving microcredit; and
(c) is not used as capital in any business other than revolving microcredit;
Explanation. -- For the purposes of this clause, "service charge" means any financial charge, or
interest or profit share, however called, paid or payable by the borrower for the amount lent under
the microcredit activities of the private sector;

(21) Income of a resident person or a non-resident Bangladeshi person arising from any of the following
businesses during the period from July 1, 2020 to June 30, 2024, namely:-
(a) software development;
(b) software or application
(c) Nationwide Telecommunication Transmission Network (NTTN);
(d) digital animation development;
(e) website development;
(f) Website Services;
(g) web listings;
(h) IT process outsourcing;
(i) website hosting;
j) digital graphics design;
(k) digital data entry and processing;
(l) digital data analytics;
(m) Graphic Information Services (GIS);
(n) IT support and software maintenance services;
(o) Software Test Lab Services;
(p) call center services;
(q) overseas medical transcription;
(r) search engine optimization services;
(s) document conversion, imaging and digital archiving;
(t) robotics process outsourcing;
(u) Cyber Security Services:
(v) cloud services;
(w) system integration;
(x) e-learning platforms;
(y) e-book publication;
(z) mobile application development services; and
(za) IT Free Lancing;
(22) any income arising from export of handicrafts between July 1, 2020 and June 30, 2024;
(23) any amount paid as tax by the Government on behalf of a petroleum exploration company engaged in
exploration for petroleum products in Bangladesh under a Production Sharing Contract (PSC) with the
Government of Bangladesh;
(24) Income arising from small or medium industries involved in the production of any goods, which-
(a) If the industry is owned by women, the annual turnover does not exceed Tk. 70 (seventy) lakh;
(b) in other cases, the annual turnover does not exceed Tk. 50 (fifty) lakhs;
(25) Subject to the following conditions, any income arising from zero coupon bonds by persons other than
banks, insurance or any financial institution, namely:-
(a) the said zero coupon bond has been issued by any bank, insurance or financial institution with the prior
approval of Bangladesh Bank or Bangladesh Securities and Exchange Commission;
(b) zero coupon bonds have been issued by any institution other than a bank, insurance or financial
institution with the prior approval of Bangladesh Bank or the Bangladesh Securities and Exchange
Commission;
(26) Any such income received by an educational institution which is not treated as "income from
financial resources" and if the educational institution complies with the following conditions-
(a) belongs to the Government's MPO (listed for monthly pay order);
(b) follows the curriculum approved by the Government;
( c) is managed by a Board of Directors constituted under the rules of the Government;
 (28) any income other than interest or dividends received by any Government University or any
professional institute (professional institute) established under any law and managed by any professional
body of Chartered Accountants or Cost and Management Accountants or Chartered Secretaries;
(30) any award received by any person from the Government;
(31) any income arising from the operation of an old age home;
(32) tax-paid dividend distributed in favor of a company, if the company distributing such dividend
maintains a separate account for such tax-paid dividend;

(33) Business income earned by any ocean going ship being Bangladeshi flag carrier within 30 June
2030 is similar income if brought into Bangladesh following the provisions relating to foreign remittances.

6th Schedule :
Part 2 Deductions from gross income
The following income shall be deducted from the total income, namely:-
(1) By bank transfer by the taxpayer in any income year-
any income donated to any fund established under or by the Prime Minister's Education Assistance
(a)
Trust Act, 2012 (Act No. 15 of 2012), subject to the following maximum amount, namely:-

( i) l0% (ten percent) of the income of a company or 8 (eight) crores, whichever is less;
10% (ten percent) of the income of any taxpayer other than the company or 1 (one) crore,
(ii)
whichever is less;
income donated to any girls' school or women's college approved by the Ministry of Education of the
(b)
Government; and
income donated to any technical and vocational training institute approved by the Ministry of
(c)
Education of the Government;
(2) Income donated by the taxpayer in any income year through bank transfer to any national level
institution involved in research and development for agricultural, scientific, technological and industrial
development.

6th Schedule :
Part 3 Investments and expenses applicable for general tax rebate

6th Schedule :
Part 4 Tax Holiday
1. Industrial establishments eligible for tax holiday-
(1) Subject to the provisions of this Act, any approved tax holiday entity engaged in the following activities
shall be eligible for tax holiday, namely:-
(a) manufacture of the following goods, namely:-
(1) active pharmaceutical ingredients and radio pharmaceuticals;
(2) agricultural machinery;
(3) automatic brick;
(4) automobiles;
(5) barrier contraceptives and rubber latex;
(6) basic components of electronics (ie resistors, capacitors, transistors, integrated circuits, multilayer
PCB);
(7) bi-cycles, including spare parts thereof; (8) Bio-fertilizers/organic-fertilizers;
(9) Biotechnology based agricultural products/agro products;
(10) Boiler including its spare parts and equipment;
( 11) Compressors, including their spare parts; ( 12) computer hardware;
(13) furniture;
(14) Household items or home appliances (blender, rice cooker, microwave oven, electric oven,
washing machine, induction cooker, water filter);
(15) Insecticides and pesticides;
( 16) leather and leather products;
(17) LED TV;
(18) Processing of locally produced fruits and vegetables;
(19) mobile phones;
(20) petrochemicals;
(21) Pharmaceuticals;
(22) plastic recycling;
(23) textile machinery;
(24) tissue grafting;
(25) toy manufacturing;
(26) tire manufacturing;
(27) Electrical transformers;
(28) Manufacturing of synthetic fiber/fibers or man-made fibers;
(29) Manufacturing of automobile components or parts and components;
(30) automation and robotics design, manufacturing, parts and components thereof;
(31) artificial intelligence based system design and manufacturing;
(32) Nanotechnology based product manufacturing;
(33) Aircraft heavy maintenance services, including spare parts manufacturing;
(b) processing and preservation of locally produced fruits and vegetables;
tissue grafting, development of biotechnology and development of radio active (diffusion)
(c) application industries (ie improvement of quality of polymers or degradation of polymers
or preservation of food or sterilization of medical devices);
any other sector or industrial establishment or any other performing entity prescribed by the
(d)
Board, by notification in the Official Gazette.
(2) The approved tax holiday entity shall be located in Bangladesh and shall commence commercial
production between July, 2020 and June, 2025.

2. Tax-exempted income for entities referred to in paragraph- 1

(1) Income derived from business arising from the activities referred to in paragraph-1 of an approved tax
holiday entity shall be exempted from tax in accordance with subsection (4).
(2) Income derived from any source other than the activities mentioned in sub-section (1) shall not be
included in this section.
(3) No City Corporation Area or District Headquarter Municipalities, Rangamati, Bandarban, and
Khagrachari Districts shall be eligible for exemption from income tax arising from activities mentioned in
paragraph 1.
(4) The amount of tax exemption shall be as follows, namely:-
If the approved tax holiday entity is situated in any district (excluding City Corporation Area) other
than Dhaka or Chittagong Division and Rangamati, Bandarban or Khagrachari District, shall
(a)
be shall be exempted, at the rate specified in the table below for a period of 10 (ten) years from the
month of commencement of commercial production namely:-

Year of commercial production exempted income

First Year 90%
Second Year 90%
Third Year 75%
Fourth Year 75%
Fifth Year 50%
Sixth Year 50%
Seventh Year 50%
Eighth Year 25%
Ninth Year 25%
Tenth Year 25%
(b) If the approved tax holiday entity is located in Dhaka or Chittagong division (outside City Corporation area), it
shall get tax holiday at the rate mentioned in the table below for a period of 5 (five) years from the month of
commencement of commercial production, namely:-

Year of commercial production Exempted income

First year 90%
Second year 80%
Third year 60%
Fourth year 40%
Fifth year 20%

3. Physical infrastructure eligible for tax exemption.—

(1) Subject to the provisions of this Act, any approved tax exempted entity set up for the provision of physical
infrastructure facilities referred to in sub-section (2) shall be eligible for tax relief, namely:-
(a) deep sea port, sea port or river port;
(b) elevated expressway;
(c) export processing zone;
(d) flyover;
(e) toll roads and bridges;
( f) gas pipe lines;
(g) JCT Park, Zone or Village;
(h) Hi-Tech Park;
(i) approved water treatment plants;
(i) water supply or water drainage system;
(k) liquefied natural gas (LNG) terminals and transmission lines;
(l) Railways including mono-rails and subways;
(m) renewable energy;
(n) any other type of physical infrastructure facilities prescribed by the Board, by notification in the Official
Gazette.
(2) Physical infrastructure facilities shall be located in Bangladesh and commercial production shall commence
by June, 2024.
4. Tax-exempt income for entities referred to in section 3.---
(1) Income earned by a approved tax-exempt entity from business arising out of the facilities referred to in
section 3 shall be exempted from tax in accordance with sub-section (3).
(2) Apart from the facilities mentioned in sub-section (1), income derived from any other source shall not
be covered by this section.
(3) Tax exemption shall be provided for 10 (ten) years from the month of commencement of commercial
production at the rate mentioned in the table below, namely:-

Year of commercial Production Exempted income

First Year 90%
Second Year 90%
Third Year 75%
Fourth Year 75%
Fifth Year 50%
Sixth Year 50%
Seventh Year 50%
Eighth Year 25%
Ninth Year 25%
Tenth Year 25%
 Corporate tax rate at a glance
1 Conditional Listed company tax rate 20% for the assessment year 2023-24:
20%
i More than 10% paid-up capital through IPO
ii All sales/receipts must be through banking channel Violation of serial
In case of investment and expenditure, per transection exceeding Tk. 5,00,000 must be number ii & iii will
iii through banking channel and altogether yearly transection exceeding Tk.36,00,000 must be lead to tax rate 22.5%
through banking channel.
2 Conditional Listed company tax rate 22.5% for the assessment year 2023-24:
22.50%
i 10% or less than 10% paid-up capital through IPO
ii All sales/receipts must be through banking channel Violation of serial
In case of investment and expenditure, per transection exceeding Tk. 5,00,000 must be number ii & iii will
iii through banking channel and altogether yearly transection exceeding Tk.36,00,000 must be lead to tax rate 25%
through banking channel.
3 Conditional One Person Company tax rate 22.5% for the assessment year 2023-24: 22.50%
i All sales/receipts must be through banking channel Violation of serial
In case of investment and expenditure, per transection exceeding Tk. 5,00,000 must be number i & ii will lead
ii through banking channel and altogether yearly transection exceeding Tk.36,00,000 must be to tax rate 25%
through banking channel.
4 Conditional tax rate of non-listed companies for the assessment year 2023-24: 27.50%
i All sales/receipts must be through banking channel Violation of serial
In case of investment and expenditure, per transection exceeding Tk. 5,00,000 must be number i & ii will lead
ii through banking channel and altogether yearly transection exceeding Tk.36,00,000 must be to tax rate 30%
through banking channel.
5 Banks, insurance and other financial institutions (except merchant banks) if not publicly listed 40%
6 Banks, insurance and other financial institutions (except merchant banks) if publicly listed 37.50%
7 Merchant banks 37.50%
8 Cigarette, zarda, bidi, gul or any other tobacco product manufacturing companies (companies, firms and
45%
individuals) irrespective of listing status
Income surcharge in addition to above tax is applicable on business income. 2.50%
9 Mobile phone operator companies if not publicly listed 45%
10 Mobile phone operator companies that convert themselves into a publicly traded company by transfer of
at least 10% shares through stock exchanges, of which maximum 5% may be through Pre-Initial Public
Offering Placement 40%
[If mobile phone operator companies list at least 20% of their paid up capital through IPO, they shall
receive a rebate of 10% in the year of listing.]
11 Association of persons 27.50%
12 Cooperative societies registered under Cooperative Society Act, 2001 15%
13 Private universities, Private medical college, Private dental college, Private engineering college or
15%
Private college engaged in imparting education on information technology
14 If any assessee owned any small and medium industry engaged in the production of goods at less developed area or least
developed area, it will enjoy tax rebate at a rate as mentioned below:
5% of tax payable on
If production in volume exceeds 15% but does not exceed 25% as compared with preceding year.
such income
10% of tax payable on
If production in volume exceeds 25% as compared with preceding year.
such income
Question : Cure Pharmaceuticals Limited : Income Year : for the year ended June 30, 2023
1 Net Profit before Tax was Tk 65,000,000 as per Income Statement.
2 Turnover was Tk. 1,300,000,000
3 Products of Tk 7,000,000 was distributed as free sample.

4 Company paid commission of Tk 1,200,000 to a distributor, but did not complied with the provisions of Sec 94 of ITA 2023.
5 Company claimed Tk 4,000,000 as entertainment expense.
6 Company sponsored Tk 100,000 in the annual picnic of Sunrise club.

7 Company received dividend of Tk 800,000 after tax deduction from the investment in shares. Amount of TDS was Tk 200,000.
8 Interest expense of Tk 500,000 was unpaid since AY 2019-20 and Tax authority already allowed the expense.
9 Company's Trading Liability of Tk 600,000 was waived within 2years but it was not credited in the income statement.
10 Tk 800,000 was paid as consultancy fee but tax was not deducted at source.
Company sold an equipment for Tk 500,000. its acquisition value was 400,000 and depreciated value was Tk 200,000 as per
11 3rd schedule. For this purppose Company showed Tk 300,000 income in the income statement.
Extension part of a building was burnt. Its acquisition value was Tk 200,000 and accumulated depreciation was Tk 50,000.
12 Company received Tk 250,000 from the insurance company and Tk 30,000 by selling the salvages.
13 Salary includes Tk 330,000 which was paid to a director without deduction of tax at source.
14 Headoffice Expense has been shown Tk 6,500,000, but audit certificate of head office has not been provided.
15 Penalty of Tk 100,000 against noncompliance of Customs Act has been included in income statement.
16 Donated Tk 500,000 to a Boys school.
Salary includes Tk 750,000 which was paid to the servants of managing director. Perquisites amount was Tk 1,000,000
17 excluding this.
Interest expense was claimed for Tk 3,350,000. Loan outstanding was Tk 21,000,000. Company provided interest free loan of
18 Tk 7,500,000 to one of its associate enterprise.
19 Company purchased a new machine and claimed Tk 500,000 as initial depreciation.
20 Interest was accrued Tk 400,000 against fixed deposit, which was not received yet.
21 Receipts against cancellation of contract was Tk 600,000.
Company recived Rent of Tk 4,000,000 from a commercial building . And the company received unadjustable security deposit
22 of tk 5,000,000 from the leasee , which will be refunded to the leasee on expiry of the lease.
Sales of the company was Tk 1,200,000,000, out of which Products of Tk 250,000,000 was supplied to various company. And
23 the companies deducted tax at source of Tk 12,500,000.
24 Advance income tax was Tk 5,000,000 against import of raw materials.
25 Company paid Tk 9,600,000 as advance tax in 4 equal installments.
26 Carry forwarded Business loss was Tk 8,000,000.
 Company Spent Tk 500,000 to establish a hospital for the benefits of the employees. Company provided health service
27 without taking any charge from the employee.
In the books of accounts Depreciation was 2,500,000 but Tax depreciation was Tk 3,000,000 as per 3rd schedule excluding
28 initial depreciation.

29 Company spent Tk 200,000 for foreign tour as a member of the commerce represntative by government patronisation.
Company paid annual membership of Tk 150,000 to Bangladesh Pharmaceutical Society, which is a board approved
30 professional association.
31 Company received Interest of Tk 480,000 after tax deduction from Bank. Amount of TDS was Tk 120,000.
32 Book Value of a machine is Tk 5,000,000, but FMV as per IFRS was Tk 8,000,000.

You are requested assertain the taxable income and net tax liability of the company.
Solution : Cure Pharmaceuticals Limited

Tk. Tk.
Net Profit After Tax 65,000,000
Less : Income to be considered separately Details # 1 (5,830,000) 59,170,000
Add: Expenses to be considered separately Details # 2 23,350,000 82,520,000
Add: Special Areas of Income from Business U/S 46 Details # 3 1,350,000 83,870,000
Add: Inadmissible Expenses (Sec 55) Details # 4 3,780,000 87,650,000
Less : Admissible Expenses (Sec 49, 50,51,52,53,55) Details # 5 (18,070,571) 69,579,429
Computed Business Income without considering Entertainment Exp 69,579,429
Less : Entertainment Expense Details # 6 (1,411,589)
Computed Business Income after considering Entertainment Exp 68,167,840
Less : Special Business Income under Sec 56 for inadmissible Expenses U/S 55 Details # 7 (7,451,411)
60,716,429
Less : Carry forwarded business loss (8,000,000)
Computed Business income without Inadmissible expense U/S 55 52,716,429

Minimum Tax as per Sec 163(2) : 88-92, 94-95, 100-102, 105, 106, 108, 110-118, 120-129 and 132-139;

Income Other Income

Total
U/S 163(2) Except U/S 163(2)
Division of Computed Business income without Inadmissible
Note - 10 52,716,429 11,070,450 41,645,979
expense U/S 55
Income from Rent Note - 9 2,800,000 - 2,800,000
Capital Income :
Gain on Sale of assets Note - 3 100,000 - 100,000
Gain on Damage of assets Note - 4 80,000 - 80,000
Income from Financial Assets :
Dividend Note - 7 1,000,000 1,000,000 -
Bank Interest Note - 8 600,000 600,000 -
Income from Other Sources 600,000 600,000
Computed Total income without Inadmissible expense U/S 55 57,896,429 12,670,450 45,225,979
 Tax for Other
Tax for Income
Tax Rate Income Tax Income Except U/S
U/S 163(2)
163(2)
Calculation of Taxpayable :

A Income from Business

1 Tax from Business 27.50% 3,484,374 12,437,144
Income Tax ( Higher of 1 & 2)
2 Minimum Tax US 163(2) 12,500,000

24,937,144 12,500,000 12,437,144

B Income from Rent 27.50% 770,000 - 770,000

C Capital Income 15.00% 27,000 - 27,000
D Income from Financial Assets : 365,000
Dividend 20.00% 200,000
Bank Interest 27.50% 165,000
3 Total 365,000
Income Tax ( Higher of 3 & 4)
4 Minimum Tax (TDS) 320,000

Income from Other Sources 27.50% 165,000 - 165,000

5 Total Tax Liability 26,264,144

6 Minimum Tax US 163(5) (Gross Receipts) Note -11 7,230,780

Income Tax ( Higher of 5 & 6)
Total Tax Liability 26,264,144

Tax on Special Income considered under U/S 56 27.50% 2,049,138

Total Tax Payable 28,313,282

 Less : Advance Tax (27,420,000)
Advance Tax deducted U/S 89 12,500,000
Advance Tax deducted U/S 117 200,000
Advance Tax deducted U/S 102 120,000
Advance Tax deducted U/S 120 5,000,000
Advance Tax Paid U/S 155 9,600,000

Net Tax Payable 893,282

Details # 1 Income to be considered separately (5,830,000)

Gain on Sale of assets Note - 3 300,000
Gain on Damage of assets Note - 4 130,000
Dividend Note - 7 1,000,000
Bank Interest Note - 8 600,000
Interest from Fixed Deposits 400,000
Receipts against Indemnity of Loss for Cancellation of Contract 600,000
Income from Rent Note - 9 2,800,000

Details # 2 Expenses to be considered separately 23,350,000

Headoffice Expense Note - 1 6,500,000
Interest Expenses Note - 2 3,350,000
Depreciation as per Books of Accounts 2,500,000
Free Sample Note - 5 7,000,000
Entertainment Expense Note - 6 4,000,000

Details # 3 Special Areas of Income from Business U/S 46 1,350,000

Gain on Sale of assets - Business Income Note - 3 200,000
Gain on Damage of assets - Business Income Note - 4 50,000
Unpaid Interest 500,000
Trading Liability -Waived 600,000
Details # 4 Inadmissible Expenses (Sec 55) 3,780,000
Salary paid without TDS 330,000
Penalty for noncompliance of Customs Law 100,000
Commission paid without TDS 1,200,000
Donation in unapproved School 500,000
Excess Perquisites (payment to the servants of MD) 750,000
Payment against Consultancy without TDS 800,000
Sponsor in the Picnic of Sunrise club 100,000

Details # 5 Admissible Expenses (Sec 49, 50,51,52,53,55) (18,070,571)

Headoffice Expense Note - 1 5,917,000
Interest Expenses Note - 2 2,153,571
Initial Depreciation Allowance 500,000
Depreciation as per 3rd Schedule 3,000,000
Free Sample Note - 5 6,500,000

Details # 6 Entertainment Expense Note - 6 (1,411,589)

Details # 7 Special Business Income under Sec 56 for inadmissible Expenses U/S 55 (7,451,411)
Salary paid without TDS 330,000
Headoffice Expense Note - 1 583,000
Penalty for noncompliance of Customs Law 100,000
Commission paid without TDS 1,200,000
Donation in unapproved School 500,000
Excess Perquisites (payment to the servants of MD) 750,000
Payment against Consultancy without TDS 800,000
Sponsor in the Picnic of Sunrise club 100,000
Free Sample Note - 5 500,000
Entertainment Expense Note - 6 2,588,411
Note - 1 Head-office Expense
Headoffice Expense : 6,500,000
Admissible Headoffice Expense 10% 5,917,000 5,917,000

Inadmissible Headoffice Expense 583,000

Computation of Net Business Profit :

Net Profit before Tax (as per FS) 65,000,000
Less : Other Incomes : (5,830,000)
Net Business Profit 59,170,000

Note - 2 Interest Expenses

Interest Expenses 3,350,000
Bank Loan 21,000,000
Interest free Loan Provided (7,500,000)
13,500,000
Admissible interest expense (proportionate) Sec 52(2) 2,153,571

Inadmissible interest expense (proportionate) Sec 52(2) 1,196,429

Note - 3 Gain on sale of Assets Sec 46(2)

Sale value a 500,000
Less : Depreciated value c (200,000)
Total Gain d = (a - c) 300,000

Purchase value / Acqusition cost b 400,000

X2AT

Capital Income (Sale Value - Purchase value) e = (a - b) 100,000

Business Income (Total Income - Capital Income) f= (d - e) 200,000
Note - 4 Receipts of Indemnity from Insurance Company Sec 46(3)
X2A1T

Indemnity 250,000
Add : Scrap Value (Sale of Salvage ) 30,000
Total Receipts a 280,000

Construction Value b 200,000

Less : Accumulated Depreciation (50,000)
Depreciated value c 150,000
X2A0T

Total Gain d = (a - c) 130,000

Construction Cost / Acqusition cost b 200,000

Capital Income (Total Receipts - Construction cost) e = (a - b) 80,000

Business Income (Total Income - Capital Income) f = (d - e) 50,000
X2A3T

Note - 5 Free Sample Sec 55(zha)(b)(1)

Free Sample 7,000,000
Turnover 1,300,000,000

Admissible Expense (Free Sample) 0.50% 6,500,000 6,500,000

Indmissible Expense (Free Sample) 500,000

Note - 6 Entertainment Sec 55(za)

Entertainment 4,000,000
X2A4T

Computed Business Income without considering Entertainment Exp 69,579,429

Admissible Expense (Entertainment) : 1,411,589

on First 1,000,000 4% 40,000
on remaining 2% 1,371,589
1,411,589
Indmissible Expense (Free Sample) 2,588,411
X2A5T
Note - 7 Dividend Income 1,000,000
Dividend Receipts 800,000
X2A6T

TDS (20%) 200,000

Note - 8 Bank Interest Income 600,000

Interest Receipts 480,000
TDS (20%) 120,000
X2A3T

Note - 9 Income from Rent 2,800,000

X2A16T

Annual Value 4,000,000

Less : Admissible Expense [Sec 38(Gha)] 30% (1,200,000)
X2A0T

Security Deposit 5,000,000

(Security Deposit is liability of Taxpayer that’s why it will not be included in total income)

Note - 10 Division of Business Income as per Sec 163(2) % Sales

Supply to company (TDS applied) 21% 250,000,000
Supply to other than company (TDS not applied) 79% 950,000,000
Total Sales 100% 1,200,000,000

Division of Computed Business income without Inadmissible expense U/S 55 52,716,429

X2A4T

U/S 163(2) 21% 11,070,450

Other Than U/S 163(2) 79% 41,645,979

Note - 11 Minimum Tax US 163(5) (Gross Receipts)

X2A17T

Gross Receipts Rate Tax TK.

Turnover 0.60% 7,200,000 1,200,000,000
Other Receipts : Sec 163(5) 30,780 5,130,000
Business income from Sale of Assets 0.60% 1,500 250,000
Income from Rent 0.60% 16,800 2,800,000
Capital Income 0.60% 1,080 180,000
Income from Financial Assets (Bank Interest) 0.60% 3,600 600,000
Income from Financial Assets (Dividend) 0.60% 6,000 1,000,000
Income from Other Sources 0.60% 1,800 300,000
X2A7T

7,230,780 1,205,130,000
X2A14T
 X2A10T

X2A8T

X2A15T

X2A7T

X2A5T

X2A1T

X2A18T

X2A1T

X2A6T

X2A19T

X2AT
 X2A1T

X2A13T

X2A9T

X2A8T
 Seventh Schedule (Special Tax Rate)

1 Capital Gains : Tax Rate

Company 15%
Other than Company :
within 5years of acquisition Gross Income & Regular Tax Rate
after 5years of acquisition 15%

2 Dividend [ 2(81) ] : Tax Rate

Company 20%
Other than Company : Gross Income & Regular Tax Rate

Any money received from winnings in lottery, word

3 25%
games, card games, online games or games of any

Charge of additional tax: section 19

if any person, who is not a citizen of Bangladesh, without the prior approval of the
competent authority of the Government, in any income year provides employment or
employ any such person in his trade or profession, such person shall be liable to 50% (fifty
percent) of the payable tax under this Act or 5 (Five) lakhs, whichever is higher, shall be
paid as additional tax.

Taka Taka
Income 20,000,000
Income tax @ 30%
30% 6,000,000
[assuming condition to avail 27.5% tax rate not fulfilled]:

Additional tax @ 50% of tax or

3,000,000 3,000,000
Tk.5,00,000 whichever is higher
500,000
Total tax to be paid 9,000,000

Charge of tax on the difference of investment, import and export: section 20

on the difference between actual and shown value of

50%
import and export

on the difference between actual and shown value of

50%
investment
 Imposition of Penalty on Foreign Assets not Disclosed in Return : section 21
Where any such overseas property is found to be not shown
in the return of a resident Bangladeshi taxpayer and the
taxpayer fails to furnish any satisfactory explanation as to Equal to fair market value
the source or nature of acquisition of such property or the of the property
explanation furnished is not satisfactory to the
Commissioner of Taxes

on the difference between actual and shown value of

50%
import and export

on the difference between actual and shown value of

50%
investment

Charge of 10% tax on retained earnings, reserves, surplus etc.: section 22

lf in an income year, the total amount transferred to retained

earnings or any fund or reserve or surplus, called by @10% of the total amount
whatever name, by any listed company which exceeds 70% so transferred
of the net income after tax, then tax shall be payable

Charge of 10% tax on stock dividend: section 23

If in an income year, the amount of stock dividend declared
@10% on the whole amount
or distributed by any listed company exceeds cash dividend
of stock dividend
then tax shall be payable

Charge of 10% tax on stock dividend: section 23

If in an income year, if only stock dividend is declared or @10% on the whole amount
distributed without cash dividend then tax shall be payable of stock dividend

Sec 2(81) : Dividend shall include-

(a) any distribution of the accumulated profits, whether capitalized, to the shareholders of
the company, if such distribution results in a reduction in whole or in part of the assets or
reserves of the company;

(b) any distribution of accumulated profits to theshareholders of the company by way of

debentures,debenture stock or certificates of deposit of any kind, whether capitalized;

(c) on the winding up of a company, whether capitalized, distribution to its shareholders out
of the accumulated profits of the company immediately before such winding up;
(d) distribution ofretained earnings owned by the company to the shareholders of the
company, whether capitalized;
(e) any profits remitted out of Bangladesh by any such company not incorporated under the
Companies Act, 1994 (Act No. 18 of 1994);
(f) distribution of profits of any mutual fund, real estate investment trust, exchange traded
fund or alternative investment fund;
(g) any amount paid by a private company as an advance or loan to any shareholder out of
the accumulated profits owned by it, whether forming part of the assets of the company, or
any amount paid by such company on behalf of or for the personal benefit of any such
shareholder,

However, it shall not include the following matters, namely:

i) in the case where no shareholder or debenture holder is entitled to a share in the surplus
assets of the company on the winding up of the company, in respect of any shares including
preference shares in accordance with sub-clause (c) or (d) the distribution in full in cash, or
the redemption of debentures or debenture-stock;
(ii) advances or loans made to any shareholder in the ordinary course of business where the
principal business of a company is lending;
(iii) any dividend paid by the company which has been adjusted by the company against
any amount previously paid in whole or in part and treated as a dividend within the
meaning of sub-clause (e), to the extent so adjusted;

(iv) bonus shares issued by any company; Explanation."accumulated profit" shall include,-

(a) in this section, any allowance, deduction or exemption admissible under this Act,
partially or wholly reserve created;
(b) in respect of sub-clauses (a), (b) and (d), all profits of the company up to the date of
such distribution; and

(c) in the case of sub-clause (c), all the profits of the company up to the date of winding up;

if any person, who is not a citizen of Bangladesh, without the prior approval of the
competent authority of the Government, in any income year provides employment or
employ any such person in his trade or profession, such person shall be liable to 50% (fifty
percent) of the payable tax under this Act or 5 (Five) lakhs, whichever is higher, shall be
paid as additional tax.