Tax clearance certificate required for persons leaving Bangladesh: Section 107
(1) A person who is not domiciled in Bangladesh, or a person who being domiciled in
Bangladesh at the time of his departure is not, in the opinion of an income tax authority likely
to return to Bangladesh, shall not leave Bangladesh without obtaining from the DCT authorized
in this behalf by the NBR(a) a tax clearance certificate, or
(b) if he has intention of returning to Bangladesh, an exemption certificate which shall
be issued only if the DCT is satisfied that such person has such intention; and such
exemption certificate may be either for a single journey or for all journeys within the
period specified in the certificate [section 107(1)].
(2) The owner or charterer of any ship or aircraft, who issues any authority to any person
referred to in section 107(1) for travel by such ship or aircraft from any place in Bangladesh to
any place outside Bangladesh unless such person has a certificate required by that section,
shall(a) be liable to pay the amount of tax, if any, which has or may become due and payable
by such person and also to a penalty which may extend to two thousand taka; and
(b) be deemed, for the purposes of recovery of such tax and penalty, to be an assessee
in default, and all the provisions of this Ordinance shall apply accordingly [section
107(2)].
Explanation: For the purposes of section 107(a) ‘exemption certificate’, in relation to any person, means a certificate to the effect that such
person is exempt from the requirement of having a tax clearance certificate for the purpose of
the journey or journeys specified therein;
(b) ‘owner’ or ‘charterer’ includes any representative, agent or employee who may be
empowered by the owner or charterer of a ship or aircraft to issue an authority to travel by the
ship or aircraft; and
(c) ‘tax clearance certificate’, in relation to a person, means a certificate to the effect that such
person has no liability under IT Ordinance,1984 the Income tax Act, 1922, the Gift-tax Act,
1963 or, or the Wealth-tax Act, 1963, or that satisfactory arrangements have been made for the
payment of all or any of such taxes which are or may become payable by which person.
Exemption from production of tax clearance certificate [Rule 63]: The following
exceptions are made under section 107(1) of IT Ordinance, 1984 namely:
(1) all person below the age of 18 years [rule 63(a)];
(2) passengers who can show by the dates stamped on their passports or by other reliable
evidence; that
I. they have not spent more than 90 days at a time in Bangladesh; and
II. they have not spent more than 90 days in any financial year in Bangladesh [rule
63(b)];
(3) all members of diplomatic, trade or commercial missions appointed by foreign
Governments, trade commissioners and consul democratic and all full-time employees of such
diplomatic missions, trade commissioners and consular officers [rule 63(f)];
(4) all officers and employees of foreign Government visiting Bangladesh on duty [rule 63(g)];
(5) the wives and dependents of persons covered by rules 63(f) and (h) [rule 63(h)];
(6) Woman who gives a declaration to the effect that she is wholly dependent upon her husband,
parent or guardian and has no independent source of income [rule 63(i)].
20.3 Residential status of companies
Residential status of companies is different from individuals and IT Ordinance prescribes
different rules for that. On the basis of residential status applicable for companies, there may
be Bangladeshi or foreign companies. The provisions for deciding the residential status of
companies are given below:
"Resident", in respect of any income year, means a Bangladeshi company or any other
company the control and management of whose affairs is situated wholly in Bangladesh in that
year [section– 2(55)(c)]. And, "non-resident" means a person who is not a resident [section –
2(42)]. Thus, to be resident;
1. The company should be a Bangladeshi company, i.e., formed and registered under
the Companies Act, 1913 (VII of 1913) or Companies Act, 1994 and includes a body
corporate established or constituted by or under any law for the time being in force in
Bangladesh having in either case its registered office in Bangladesh; or
2. Any other company the control and management of whose affairs are situated wholly
in Bangladesh in that year.
If any of the two conditions have not been fulfilled, the status of such a company will be nonresident.
Set-off and carry forward of losses
Where loss is assessed in any head of income, the company is entitled to set-off the loss
against its income assessed in other heads of that year. However, loss on speculation business
and loss on capital gain cannot be set-off against income from any other head. If there is no
income from other speculative business or capital gain from sale of other assets in the same
year; such loss can be set-off only against the income of respective speculative business or
capital gain in the coming years, if any. When loss cannot be wholly set-off, then the
unabsorbed loss shall be carried forward but for not more than six successive assessment years.
Unabsorbed depreciation loss can be carried forward for unlimited period. Loss so carried
forward is to be set-off against income of the respective head only. It is to be noted that loss
from the source of exempted income cannot be set-off against any source of income and loss
at any head cannot be set-off against income from tobacco manufacturing business.
Illustration
Xerox Machine Ltd. is a Private Limited Company registered in Bangladesh. Following
information are related to the income year 2019-20:
Net operating income
Interest income
Total income
Tk. 12,50,000
Tk. 2,50,000
Tk. 15,00,000
Sales revenue / turnover for the year is reported at Tk. 2,00,00,000. Applicable income tax rate
is 32.5%. Calculate tax liability of Xerox Machine Ltd. for the assessment year 2020-21.
Solution:
Income tax at regular rate i.e., 32.5% is Tk. 4,87,500 (15,00,000 X 32.5%).
Gross receipts of the company: (Tk. 2,00,00,000 + Tk. 250,000) = Tk. 2,02,50,000
Minimum tax = (Tk. 2,02,50,000 X 0.60%) = Tk. 1,21,500.
Since, the regular tax is greater than the minimum tax; the tax liability of Xerox Machine Ltd.
will be Tk. 4,87,500.

For the assessment year 2018-19, an assessee has latest assessed income of taka
1,000,000. But he wants to pay advance tax for the year on the basis of his own estimate
that amounts to taka 800,000. Regular tax rate is 40%. Regular assessment for the
assessment year 2018-19 was completed on February 28, 2019 resulting taka 1,200,000
profit including taka 80,000 from capital gain and taka 220,000 from agricultural income.
Calculate the amount of excess or shortfall and explain the consequences for the same.
Worked example 1
DCT did the assessment for the assessment year 2020-21 computing total income of Tk.
20,00,000. Assessee paid AIT Tk. 1,00,000. Last assessed income of the assessee for the
assessment year 2019-20 was Tk. 20,00,000. Compute remaining tax to be paid by the assessee
along with simple interest for short-payment of advance tax.
In what situation, government will pay interest to assessee?
Mr. Idris Mia calculated advance tax for the income year 2018-19 as per the latest assessed
income of taka 1,000,000. Regular assessment for the assessment year 2017- 18 was completed
on June 30, 2018 and profit assessed amounts to taka 700,000. Applicable tax rate is say 40%.
Calculate simple interest payable by the government (if any) on excess payment of advance
tax.
1. Discuss briefly the provisions of the Income Tax Ordinance 1984 with regard to the
following:
(a) The assessee who are required to pay advance tax and the nature of incomes which
are to be left out of consideration for this purpose;


An assessee, both old and new, may require to pay advance tax.
Advance taxes are paid on income excluding income from agriculture and capital gain.
(b) The basis on which advance payments of tax should be calculated for old assessee and
new assessee, and the due dates of payment thereof;
In case of existing assessee:
In case of existing assessee, advance tax is to be calculated on the basis of his last assessed
income. If his last assessed total income exceeds Tk. 600,000/ [excluding agricultural income
and capital gain (other than capital gain from sale of share)] he is required to pay advance tax.
(See-64)
In case of new assessee:
A new assessee who has not previously been assessed shall also require to pay advance tax if
his current year’s income [excluding agricultural income and capital gain (other than capital
gain from sale of share)] is likely to exceed Tk. 600,000/ (See.68)
Where, an assessee who is required to pay advance tax fails to pay any installment of such
tax, as originally computed or, as the case may be, estimated, on the due date, he shall be
deemed to be an assessee in default in respect of such installment.
(c) The interest payable by Government on excess payment and interest chargeable to
assessee on shortfall, in respect of advance payment of tax.
The Government shall pay simple interest at 10% per annum on the amount by which the
aggregate sum of advance tax paid during a financial year exceeds the amount of tax payable
by him as determined on regular assessment.
The period for which interest under section 72(1) shall be first day of July of the year of
assessment to the date of regular assessment in respect of the income of that year or a period
of two years from the said first day of July, whichever is shorter?
(a) Discuss the various types of income from which tax is required to be deducted or
collected at source under the provisions of the Income Tax Ordinance 1984.
Tax payable under the Ordinance shall be deducted or collected at source in respect of
the following income, namely(1) Salaries [Sec 49(1)(a)];
(2) income from discount on the real value
of Bangladesh Bank bills [Sec 49(1)(aa)];
(3) interest on securities [Sec 49(1)(b)];
(4) income derived on account of supply of
goods or execution of contracts [Sec
49(1)(c)];
(21) interest on saving instruments [Sec
49(1)(u)];
(22) brick field [Sec 49(1)(w)];
(23) services rendered by the doctors [Sec
49(1)(x)];
(24) L.C. commission [Sec 49(1)(z)];
(5) import [Sec 49(1)(d)];
(25) survey by a surveyor of general
insurance company [Sec 49(1)(za)];
(6) indenting commission [Sec 49(1)(e)];
(26) foreign buyer’s agent [Sec 49(1)(zc)];
(7) winnings from lottery or crossword
puzzles [Sec 49(1)(f)];
(27) cash dividend [Sec 49(1)(zd)];
(8) payment to non-resident [Sec 49(1)(g)];
(9) income from house property [Sec
49(1)(h)];
(28) certain services [Sec (49)(1)(ze)];
(29) shipping business of a resident [Sec
(49)(1)(zf)];
(10) export of manpower [Sec 49(1)(i)];
(30) real estate and land development
business [Sec (49)(1)(zg)];
(11) public auction [Sec 49(1)(j)];
(31) export [Sec (49)(1)(zh)];
(12) actors and actress [Sec 49(1)(k)];
(32) shareholder of stock exchange on
account of transaction of shares [Sec
(49)(1)(zi)];
(13) shipping agency commission [Sec
49(1)(m)];
(14) distributorship
49(1)(n)];
commission
[Sec
(15) interest on bank deposits [Sec
49(1)(o)];
(16) insurance commission [Sec 49(1)(p)];
(17) capital gain [Sec 49(1)(q)];
(18) fees for professional or technical
services [Sec 49(1)(r)];
(19) handmade cigarettes [Sec 49(1)(s)];
(20) compensation against acquisition of
property [Sec 49(1)(t)];
(33)
export
(49)(1)(zkk)];
(34) renewal
(49)(1)(zm)];
cash
of
trade
subsidy
license
[Sec
[Sec
(35) freight forward agency commission
[Sec (49)(1)(zo)];
(36) rental power [Sec (49)(1)(zp)];
(37) interest of Post Office Savings Bank
Account [Sec (49)(1)(zq)];
(38) rent of vacant land or plant or
machinery [Sec (49)(1)(zr)];
(39) direct advertisement [Sec (49)(1)(zs)];
(40) salary of foreign technician serving in
a diamond cutting industry [Sec
(49)(1)(zt)];
(41) transfer of
shareholders of
(49)(1)(zv)];
shares by sponsor
a company [Sec
(42) rent of convention hall, conference
centre, etc. [Sec (49)(1)(zw)];
(43) services provided by a resident to any
foreign person [Sec (49)(1)(zx)].
(44) international gateway service in case
of phone call [Sec (49)(1)(zy)].
(46) Insurance policy [Sec 49(1)(zza)]
(47) local L/C [Sec 49(1)(zzb)]
(48) license fees of mobile phone operator
company [Sec 49(1)(zzc)]
(49) transfer of shares of any stock
exchange [Sec 49(1)(zzd)]
(50) transfer of shares of companies listed
with stock exchange [Sec 49(1)(zze)]
(51) lease deed [Sec 49(1)(zzf)]
(52) Any sum paid by real estate developer
to land owner [49(1)(zzg)]
(45) travel agency commission [Sec 49(ii)]
(b) State the provisions regarding information to be furnished to the Tax Authorities in
connection with payment of salary, interest, dividend, collection of tax from property,
payment to nonresident, and other sources under the provisions of the Income Tax
Ordinance 1984.
(c) Mention the application for final payment of tax liability under section 82C.
The following 30 heads of deduction shall be deemed to be the minimum tax u/s 82C:
1) Contract, supply, manufacture, process,
conversion, printing, packaging & binding
(sec 52+Rule 16)
11) International gateway service (IGS)on
international phone call (section 52R)
2) Royalties (section 52A)
12) Import [other than raw-material import]
(section 53+Rule 17A)
3) Advisory and consultancy fee (section
52AA(1)
13) Shipping Agency commission (section
53AA)
4) C&F agency commission (section
52AAA)
14) Manpower export (section 53B+Rule
17C)
5) Band roll in case of Handmade cigarette
(section 52B)
15) Export (section 53BB + 53BBBB)
6) Compensation against acquisition of
property (section 52C)
7) Interest on all type of savings
instruments (section 52D)
8) Travel agent (section-53JJ)
16) Shareholder
(section-53BBB)
of
Stock
Exchange
17) Public auction (section 53C+Rule 17D)
18) Non-resident courier (section 53CCC)
19) Export cash subsidy (section 53DDD)
9) Rental power (section 52N)
20) Distributorship commission (section
53E)
10) Salary of foreign technicians serving in
a diamond cutting industry (sec-52 O)
21) Foreign buyer’s agent (section 53EE)
22) Bank interest of Public University,
MPO enlisted institution, ICAB, ICMAB,
ICSB and all funds [Sec. 53F]
23) Real Estate and Land Development
business (section-53FF)
24) Insurance commission (section 53G)
25) Surveyor of
(section-53GG)
General
Insurance
26) Sale of property (section-53H)
27) Capital gain from transfer of shares by
sponsor shareholders (section 53M)
28) Transfer of share of shareholder of
stock exchange (section 53N)
29) Signing money (section 53P)
30) Income from lottery (section 55)
(d) What are the consequences of failure of deducting taxes in time at prescribed rates or
failure of depositing deducted taxes within time?
Consequences of failure to deduct tax: section 57
Where a person required by or under the provisions of this Chapter to deduct, collect or pay to
the credit of the Government tax, and in the cases mentioned in section 54, the principal officer
and the company of which he is the principal officer, fails to pay the tax in accordance with the
provisions of this Chapter, he or it shall (a) without prejudice to any other consequences to which he or it may be liable, be
deemed to be an assessee in default in respect of the tax; and
(b) in addition to such tax, pay an amount at the rate of two percent per month of such
tax for the period commencing on the date following the expiry of the time within which
it is to be paid under section 59 and ending on the date of the actual payment of the tax.
Where the DCT in the course of any proceedings under the Ordinance finds any person,
required by or under the provisions of this chapter to deduct, collect or pay to the credit of the
Government tax, who has failed to deduct, collect or pay the tax in accordance with the
provisions of this chapter, shall, notwithstanding the provisions of section 137, take necessary
action for realization of such tax along with the additional amount payable under clause (b) of
sub-section (1) from the person deemed to be an assessee in default under clause (a) of that
sub-section.