A Comprehensive Guide to Tax Return Filing in Bangladesh for 2024: Laws and Key Considerations

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Tax filing is a crucial aspect of every citizen's financial responsibility. In Bangladesh, the process of filing tax returns has evolved over the years, especially with the increasing digitization of the economy. The National Board of Revenue (NBR) oversees tax collection and return filing procedures, which are subject to various laws and regulations. In 2024, there are significant updates and considerations that both individual taxpayers and businesses should be aware of. This article provides a comprehensive guide to tax return filing in Bangladesh in 2024, covering the relevant laws, procedures, and essential tips.

1. Understanding Income Tax in Bangladesh

Income tax is a direct tax imposed on individuals and businesses based on their earnings. In Bangladesh, the tax system follows a progressive tax model, where tax rates increase with the level of income. Every resident, regardless of their occupation, is required to file an income tax return if their income exceeds a certain threshold.

Who Should File a Tax Return?

As per the Income Tax Ordinance of 1984 (which is the foundational tax law in Bangladesh), the following individuals and entities are required to file an annual tax return:

  • Salaried employees earning over BDT 300,000 annually (threshold may vary based on gender, age, and disability status).
  • Self-employed individuals (e.g., freelancers, consultants) who earn above the tax-free threshold.
  • Businesses, partnerships, and sole proprietorships.
  • Companies registered under the Companies Act, 1994.
  • Non-resident individuals earning income in Bangladesh.
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2. Tax Filing Deadlines in 2024

The tax filing deadline is a crucial date for all taxpayers in Bangladesh. In 2024, the deadline is typically set for November 30th, but extensions may be granted based on the discretion of the NBR. It's important to file tax returns on time to avoid penalties and interest on late filings.

Penalties for Late Filing:

  • Late filers are subjected to a fine of 10% of the tax payable or a minimum of BDT 1,000 for individuals and BDT 5,000 for companies.
  • For prolonged delays, the NBR can levy additional fines or even take legal action.

3. Key Tax Laws and Provisions for 2024

Income Tax Ordinance, 1984

This ordinance is the main legislative framework governing income taxes in Bangladesh. The law outlines who is liable to pay taxes, what qualifies as taxable income, allowable deductions, tax rates, and other regulatory aspects.

National Board of Revenue (NBR) Circulars and Updates

Each year, the NBR issues new circulars, amending certain provisions or introducing new tax rates, rebates, or allowances. For 2024, notable updates include:

  • Tax rate changes for various income brackets.
  • Revised thresholds for tax-free income for women and senior citizens.
  • Enhanced rebates for investments in certain government-approved savings schemes, pensions, and insurance products.

Tax Identification Number (TIN)

Every taxpayer must have a valid Tax Identification Number (TIN) to file returns. In 2024, the NBR has continued its push for mandatory TIN registration for certain transactions, including property purchases, vehicle registrations, and opening bank accounts. TIN registration is now digitized, and taxpayers can easily register via the NBR’s online portal.

Income Sources and Taxable Income

Income tax in Bangladesh applies to the following sources of income:

  • Salary income: Wages, bonuses, allowances, and other benefits from employment.
  • Business and professional income: Revenue from business operations, freelance work, or professional services.
  • Property income: Rental income from real estate.
  • Capital gains: Income from the sale of capital assets (e.g., property or shares).
  • Investment income: Dividends, interest from bank deposits, and other investment returns.
  • Foreign income: Any income earned abroad but repatriated to Bangladesh is subject to tax under certain conditions.

4. Step-by-Step Guide to Filing a Tax Return in 2024

Step 1: Gather Necessary Documents

Before starting the filing process, ensure you have all the relevant documents at hand, including:

  • TIN Certificate: Ensure that your Tax Identification Number is up to date.
  • Income Statements: For salaried individuals, this could be the monthly salary breakdown and annual statement from employers. Self-employed individuals should prepare profit and loss statements.
  • Investment Proofs: Documents showing investments in tax-saving schemes like bonds, national savings certificates, and insurance policies.
  • Bank Statements: Proof of income from interest, dividends, and other financial instruments.
  • Property Income Documents: Lease agreements or rent receipts if you earn rental income.
  • Expense Receipts: Any deductible expenses, including medical expenses, charitable donations, and mortgage payments.

Step 2: Calculate Total Income and Deductions

Income tax is computed on the total income from all sources. Taxpayers can claim deductions for eligible expenses, including:

  • Investment in Tax-Saving Instruments: Contributions to government-approved savings schemes (e.g., Provident Fund, National Savings Certificates).
  • Donations: Contributions to charitable organizations and welfare funds.
  • Medical Expenses: Deductions for expenses incurred for treatment of specific diseases.
  • Education Expenses: A small tax rebate is available for parents paying tuition fees.

Step 3: Submit the Return Form

Taxpayers have two options for filing their tax returns in Bangladesh:

  1. Manual Submission: Taxpayers can collect return forms from the local tax office or download them from the NBR website. After filling out the necessary details, the forms can be submitted to the tax office along with supporting documents.
  2. Online Submission: The NBR’s online tax return filing system, introduced in recent years, allows taxpayers to file returns online. To use this, you need to:
    • Log in to the NBR portal.
    • Fill in your income details, deductions, and rebates.
    • Upload relevant documents.
    • Submit the form and print the acknowledgment receipt.

5. Key Considerations and Tips for Filing Returns

1. Keep Digital Records

With increasing digitization, it is wise to maintain soft copies of all financial records, including salary slips, bank statements, investment proofs, and expense receipts. This helps streamline the filing process, especially if you are using the NBR’s online filing system.

2. Be Mindful of Tax Rebates

The tax law allows various rebates for specific investments and expenses, including:

  • Investments in savings schemes, insurance premiums, and retirement funds.
  • Charitable donations to registered organizations.
  • Education and medical expenses. Filing for rebates correctly can significantly reduce your taxable income.

3. Plan for Advance Tax Payments

For individuals with significant income from businesses or investments, advance tax payments are required. Paying taxes in advance ensures that you don't face a large tax liability at the end of the fiscal year. Failing to make advance payments can result in penalties.

4. Claiming Foreign Tax Credits

If you have paid taxes on foreign income in another country, you may be eligible for a foreign tax credit to avoid double taxation. Ensure that you maintain proper documentation of your foreign income and taxes paid.

6. Updates for Businesses and Corporations

Corporate Tax Rates

For businesses, tax rates vary based on the sector and turnover. In 2024, the following corporate tax rates apply:

  • Publicly listed companies: 20%-25%.
  • Non-listed companies: 30%-35%.
  • Banks and financial institutions: 40%-42.5%.

Audit Requirements

Companies must maintain proper financial records and undergo regular audits to ensure compliance with tax regulations. Failure to submit audited financial statements may result in penalties or disqualification for certain tax benefits.

Transfer Pricing

Multinational companies should be aware of the Transfer Pricing Regulations that require transactions between associated enterprises to be at arm’s length. The NBR may scrutinize such transactions, and failure to comply with transfer pricing rules could lead to additional tax liabilities.

7. Penalties and Consequences for Non-Compliance

Taxpayers should be aware of the consequences of non-compliance:

  • Failure to file returns can result in penalties, including fines and interest on overdue taxes.
  • Providing false information or underreporting income is considered tax evasion and can lead to severe penalties, including imprisonment in extreme cases.
  • Delayed payments: In addition to fines, delayed payments may attract interest, increasing the overall tax liability.

8. Benefits of Filing Tax Returns on Time

Filing tax returns on time provides several benefits, including:

  • Avoidance of penalties for late filing.
  • Access to tax rebates and deductions, reducing the overall tax burden.
  • Eligibility for government services: Taxpayers with updated returns can access various services, including loans, government tenders, and licenses.
  • Contribution to national development: Taxes collected by the government fund infrastructure, education, healthcare, and social welfare programs.

9. Conclusion

Filing tax returns in Bangladesh for 2024 requires careful preparation, understanding of tax laws, and adherence to deadlines. Whether you are an individual or a business, staying compliant with the regulations set by the NBR is essential to avoid penalties and ensure smooth financial management. By keeping accurate records, claiming eligible rebates, and staying informed of tax updates, taxpayers can minimize their liabilities and contribute to the nation's development.