12. appeal and reference, ICAB, KL, Study Manual

Taxation- | Study Manual
Appeal and Reference
Contents
Introduction
Examination context
Chapter l2
Self-Assessment Questions
@The Instirute of Chanered Accountanrs of Bangladesh
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lntroduction
Learning objectives
. ldentif/ the conditions and procedures for different appeal and references..
. Mention the different orders of tax authorities for which an assessee may be aggrieved.
. Define various appeals to the different tax authorities in different situations'
. ldentify the decisions or results of appeal come from different stages of tax authorities.
Practical significance
An assessee not being a company or an assessee being a company in respect of certain cases
aggrieved by any order of a DCT or fC can appeal to the AJC or the Commissioner (Appeal)
against such order. Appeal can also be made to the AJC against the order of tax recovery officer.
An assessee may appeal to the Appellate Tribunal if he is aggrieved by an order of an AJC or the
Commissioner (Appeal) in respect of concealment of income or decision in appeal by them. The
Appellate Tribunal may, afcer giving both the parties to the appeal an opponunity of being heard,
pass such orders on the appeal as it thinks fit. The Appellate Tribunal may dispose the appeal if
the appellanr does not appear when the appeal is called for hearing. The assessee or the
Commissioner may refer any question of law arising out of the order of the Appellate Tribunal
communicated to him to High Coun Division. The High Court Division shall pass such orders as
are necessary to dispose of the case in conformity with the iudgement delivered by it.
For the appeal and reference, the appellant need to comply some conditions and maintain some
procedures to make his appeal valid.
Stop and think
The aggrieved parties in cerrain cases can appeal to the different tax authorities. Do you think
that the appeal and reference procedures are enough to get the proper iudgment by the
aggrieved parties under the Ordinancel
Working context
The appeal and reference procedures under tax law is the most complex and risky area for the
aggrieved parties. The assessee being a client is sometime very much required the service from
an accountant. Accountants being tax expert can provide the practical and useful advice and
service to their clients in such cases.
Detailed and reasonable knowledge on appeal and reference can help accountans to provide
practical seryice to their clients in this regard.
Syllabus links
You will be using this knowledge again when you tackle the Taxation paper later on in the
Professional Stage and it will also underpin the technical aspects at the Advanced Stage.
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Taxadon-l Study Manual
Examination context
Exam requirements
In the examination, candidates may be required to:
' ldentifr the conditions for appeal made by assessee against order of DCT.
' Recognise the procedures of appear before AJC or thi commissioner.
' Demonsrate the decision in appeal by the AJ-c on/or the commissioner.
. ldentiff the appeal against order of Tax Recovery Officer
. Define the appeal to the Appellate Tribunal.
. ldentifr the disposal of appeal by the Appellare Tribunal.
. Define the reference to the High Coun Division.
. Mention the decision of the High Court Division.
. ldendfr the appeal to the appellate division
Question practice
For question practice on these topics go to the suggested answers covering thls chaprer.
Examiner's comments on how students tackle questions
candidates have historically prepared well for this area of the syllabur. a"o"; prepared
candidates are able to perform well in the more difficult areas.

Taxation- | StudY Manual
I2.O APPEAL AND REFERENCE
Section Overview
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There are different orders of tax authorities by which an assessee may be aSSrieved'
The aggrieved assessee can appeal to aPProPriate tax authorities
The aggrieved tax authority can also appeal in certain cases'
Appuii."n be made to different tax authorities including Appellate Tribunal
Appeal can also be referred to High Court.
Tire.e are some methods for making appeal including time limitation and appeal fee.
Decision can be made by the AJC or the Commissioner (Appeal) or Appellate Tribunal'
Appellate Tribunal can also dispose the appeal if the appellant does not appear when the
appeal is called for hearing.
The High Court Division shall pass such orders as are necessary to dispose of the case in
conformity with the iudgement delivered by it.
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12. I First Appeal: Sec. | 53, | 54, 155 & 156
Appeals by an assessee not being a company against the order of the Deputy Commissioner of
Taxes shall be made to the Appellate additional4oint Commissioner of Taxes. An assessee being
a company may file appeal against the order of the Deputy Commissioner of Taxes or of an
Inspeciing Additional{oint Commissioner to the Commissioner (Appeals). Such appeal must be
filed within forty-five days of the receipt of the concerned order in the prescribed form
accompanied with appeal fee of Tk. 200/-. No appeal shall lie against order of assessment unless
the tax payable on ;he basis of return has been paid before filing the appeal. Time-limit for
disposal of'appeal has been prescribed at one hundred and fifty days from the end of the month
which the appeal was filed. if no order is made within the prescribed time-limit, aPPeal shall be
deemed to have been allowed. On disposal of an appeal the order shall be communicated within
thirty daYs of Passing such order.
Problem
Can the first appellate authority dismiss an appeal for non-aPPearance of the appellant on the
hearing date of aPPeall
Answer
The first appellate authority is not empowered to dismiss an appeal for having the appellant
absent on the appeal hearing date. The appellate authority should pass an appellate order on
merit after examination of the assessment records made available by the concerned DePuty
Commissioner of Taxes.
12,2 Appeal Against Order of Tax Recovery Officer: Sec 157
Any person aggrieved by an order of the Tax Recovery Officer under section 139 may, within 30
a"ys from the date of service of the order, appeal to the Inspecting Joint Commissioner to whom
the Tax Recovery Officer is subordinate, and decision of the Inspecting Joint Commissioner on
such appeal shall be final.
12.3 Second Appeal: Sec' 158 and 159
Appeals against the order of Appellate Additional{oint Commissioner of taxes or the
Commissioner (Appeals) as the case may be, lie with the Taxes Appellate Tribunal.
Such appeal by an assessee must be filed, within forty-five days of the communication of the
order,intheprescribedformaccompaniedbyappeal feeof Tk. 1000/-. lnthecaseof appeal filed
by an assessee the tax payable at 5% of the amount representinS difference between the tax
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Taxation-l Study Manual
determined on the basis of the order of the AJCT or the CT appeal and tax payable under
section 74 must be paid.
The Deputy Commissioner of Taxes can file an appeal to the Tribunal with the period approval
of the Commissioner of Taxes.
An appeal filed by an assessee to Appellate Tribunal shall be deemed to have been allowed if the
Appellate Tribunal fails to make an order thereon within a period of six months from end of the
month in which the appeal was filed. The time-limit of six months for disposal of appeal has been
extended to one year in respect of an appeal filed by an assessee before the l" July, 2002.
The Appellate Tribunal shall communicated its order on the appeal to the assessee and to the
Commissioner within thiny days from the date of such order.
Problem
Can the Appellate Tribunal pass an order ex-pane for non-appearance of the appellant on the
hearing date of appeal?
Answer
lf the appellant does not appear when the appeal is called for hearing, the Tribunal may dismiss
the appeal for defuult. lf the appellant makes on application within 30 days of such order of
dismissal, for restoration of the appeal on the ground that notice of the appeal was not seryed
on him or that the service was not valid in law or that he was prevented by sufficient cause from
appearing on the appointed day and the Tribunal if satisfied, the order of dismissal shall be
vacated and a fresh date of appeal hearing be fixed and disposed of on merit.
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a2.4 Reference application to the Supreme Cour* Sec. | 60, | 6 | and | 62
The assessee or the Commissioner may within ninety days from the date of receipt of the order
of the appellate Tribunal refer to the High Court Division in the prescribed form and manner,
question of law arising out of the order of the tribunal. Provided that no reference by an
assessee shall be entertained unless he has paid ten percent of the amount representing the
difference between the tax as determined on the basis of the order of the Appellate Joint
Commissioner or the Commissioner (Appeals), as the case, may be and the tax as determined
on the basis of the order of the Appellate Tribunal.
Provided that the Board may, on an application made in this behalf, modif oi waive, in any case,
the requirement of such payment"
An appeal shall lie to the Appellate division from a judgment of the High Courc Division if the
High Court certifies the order to be fit for appeal to the Appellate Division.
Provision of the Code of Civil Procedure, 1908 relating to the appeals to the Appellate Division
shall so far as may be, apply in regard to the appeals under Section 162 in the like manner as they
apply in the case of appeals from decrees of the High Court Division.
| 2.5 Revisional Power of the Commissioner of Taxes: Sec. | 2 | A
An assessee may also file revision petition before the Commissioner of Taxes within sixty days of
receipt of Order of the Deputy Commissioner of Taxes on payment of fees of taka 200/- along
with payment of admitted liability. Revision petition will be deemed to have been allowed the
commissioner fails to make an order within sixty days from the date of filing the application for
revision.
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2.
3.
Self-Assessment Questions
l. (.) What are the various Income Tax Appellate Authorities under l. T. Ordinance 1984?
(b) What are dre time limits and relaxation thereof, if any, in respect of the following matters under
the l. T. Ordinance 1984:
i) Filing of appeal to the Appellate Additional Joint Commissioner of Taxes u/s. 153;
iD Filing of appeal to the Commissioner of Taxes (Appeals) u/s. | 53;
iii) Filing of appeal to the Taxes Appellate Tribunal u/s. 158;
iv) Filing of reference application to the High Coun Division/Appellate Division of the
Supreme Court u/s. 160, 16l, and 162.
Discuss the provisions relating to service of notice u/s. 178 of the l. T. Ordinance.
(a) What do you undersand by a point of fact and a point of law?
(b) "Appellate Tribunal is the highest Appellate Authority for question of hct." Do you agree with
this statement?
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Taxation-l StudyManual
SOME SCHEDULES
The Sixth and First Schedules of the lncome Tax Ordinance 1984 are mentioned below:
t.l THE SIXTH SCHEDULE OF PART'A'AND'B'
I.I.I PART'A'OF THE SIXTH SCHEDULE
EXCLUSIONS FROM TOTAL INCOME
A. I Exclusions from lncome
Notwithstanding anything contained in the Ordinance, any income or class of the income of any
person or class of persons specified in Part A of the Sixth Schedule shall be exempt from the tax
payable under the Ordinance, subject to the limits, conditions and qualifications laid down
therein and shall be excluded from the computation of total income under the Ordinance.
[Section 44( | )].
A. 2 ltems of Exclusions from Total Income: [Part A of the Sixth Schedule]
Certain incomes are totally exempt from Tax. They are not includible with other income even
for rate purpose. lncomes specified in Part - A of the sixth schedule of the Income Tax
Ordinance 1984 are exempt and excluded from the compuhtion of the total income subiect r..
the limits, conditions and qualifications laid down therein.
Beside these specified items of income, the Government may make amendments by way ..
addition, omission, alteration or qualification in the Sixth Schedule. The Government may make
any exemption, reduction in rate or other modifications in respect of tax in favour of any class of
income or in regard to the whole or any part of the income of any class of persons [section
44(4)J
Following items of income as specified in Part'A' of the Sixth Schedule are exempted :
l. lncome from Property held under Trust :
l) Any income derived from house property held under trust or other legal obligation or from
operation of micro credit by such trust or obligation wholly for religious or charitable purposes,
and in the case of house property so held in part only for such purposes, the income applied, or
finally set apart for application, therero.
Explanation.-The provisions of paragraph I shall not apply in the case of a non-government
organisation registered with NGO Affairs Bureau.
(2) Where any income is not applied or is not deemed to have been applied to charitable or
religious purposes in Bangladesh during the income year but is accumulated, or finally set
apart, for application to such purposes in Bangladesh, such income shall not be included
in the total income of the income year of the person in receipt of the income, provided
the following conditions are complied with, namely-
(") such person specified, by notice in writinS given to the Deputy Commissioner of
Taxes, the purposes for which the income is being bccumulated or set aparg and the
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period for which the income is to be accumulated or set apaG which shrin no
case exceed ten years:
(b) the money so accumulated or set apart is-
(i) invested in any Governmenr security as defined in secrion 2(21 of public Debt
Act, 1944, or in any other security which may be approved by the
Government in this behalf. or
(ii) deposited in any account with the Post Office Savings Bank.
Where any income which-
(a) is applied to PurPoses other than charitable or religious purposes or ceases to be
accumulated or set apart for application thereto, or
(b) ceases to remain invested in any security or deposited in any account referred to
in paragraph l(2), or
is not utilized for the purpose for which it is so accumulated or set apan during
the period referred to in paragraph l(2) or in the year immediately following the
expiry thereof, shall be deemed to be the income of such person of the income
year in which it is so applied or ceases to be so accumulated or set apart or
ceases to remain so invested or deposited or, as the case may be, of the income
year immediately following the expiry of the period aforesaid. [Paragraph I of part
A of the Sixth Schedulel.
l. A lncome from Operation of Micro Credit
Any income derived from operation of micro credit by a non-government organisation registered
with NGO Affairs Qureau.
2. lncome of Religious or Charitable lnstitutions
Any income of a religious or charitable institution derived from voluntary contributions and
applicable solely to religious or charitable purposes However, nothing contained in paragraph I
or 2 shall oPerate to exempt from the provisions of the Ordinance that part of the total income
of a private religious trustwhich does not ensure for the benefit of the public.
lncome of Local Government :The income of local Government.
lncome of Provident and other Funds
(l) Any income accruing to, or derived by, a provident fund to which the Provident Fund
Act, 1925.
(2) Any income accruing to, or derived by, workers panicipation fund established under the
Companies profits (Workers Participation) Act, 1968, subiect to any such conditions
and limits as may be prescribed.
Special Allowance etc. :
Any special allowance, benefits or perquisite specifically granted to meer expenses wholly and
necessarily incurred in the performance of the duties of an of{ice or employment of profit.
(3)
(c)
3.
4.
5.
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lncome of Trustees :
Any income received by the trustees on behalf of a recognized provident fund, an approved
superannuation fund and an approved gratuity fund.
Income of the Personnet of the Foreign Missions : Any income received-
by any ambassador, high commissioner, envoy, minister, charge d'affairs, Commissioner,
counsellor, consul de carriere, secretary, adviser or attach6 of an embassy, high
comihission, legation or commission of a foreign State, as remuneration from such State
for service in such capacity;
by a trade commissioner or other official representative in Bangladesh of a foreign state
(not holding office as such in an honorary capacity) as his official salary, if the official
salary of the corresponding officials, if any , of the Governmeng resident for similar
purpose in the country concerned, enioy a similar exemption in that country;
by a member of the staff of any of the officials referred to in clauses(a) and (b), as his
official salary, when such member is not a citizen of Bangladesh and is either a subiect of
the country represented or a subiect of some other foreitn State and is not engaged in
any business or profession or employment in BanSladesh otherwise than as a member of
such staff, and the country represented has made corresponding provisions for similar
exemptions in the case of members of the staff of the corresponding officials of the
Government of the People's Republic of Bangladesh in that country.
Pension : Any pension due to, or received by an assessee.
Deleted
Deleted
Deleted
lnterest on Securities
Any income, not exceeding Tk 5,000, chargeable under the head "lnterest on securities"
received by an assessee, being an individual, from interest on any securities of the Government.
lnterest on Debenture
Any income, not exceeding Tk 20,000 received by an assessee, not being a company' from
interest on debentures approved by the Securities and Exchange Commission for the PurPoses
of this paragraph. However, the amount of exemption under this paragraph together with the
amount of any exemption underparagraph l2 shall not exceed Tk 20'000'
Salary of Foreign Technicians
(l) Any income chargeable under head'salaries'received by or due to any Person who is neither
a citizen of Bangladesh nor was resident in Bangladesh in any of the four years immediately
preceding the year in which he arrived in Bangladesh, for a period not exceeding three years
from the date of his arrival in Bangladesh, as remuneration for services rendered by him during
such period, as a technician under a contract of service approved before the commencement of
his services or within one year of such commencement by the Board for the purposes of this
paragraph, employed whether before or after the commencement of commercial production, the
employment before the commencement of commercial production being for the purpose of the
supervision of the erection of the factory building, the installation of plant and machinery, or the
trial production by an undertaking falling under any of the classes specified hereunder which has
been ser up or commenced in Bangladesh after the l4August 1947, and which employs (i) ten or
more persons in Bangladesh and involves the use of electrical enerSy or any other form of energy
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wtrich is mechanically transmitted and is not generated'by human or animal agency, or (ii) twenry
of more Persons in Bangladesh and does noiinvolve the use electrical
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or. any other form
of energr which is mechanically transmitted and is not generated by human Jr animat atency_
(")
(b)
(c)
(d)
(e)
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the manufacture of goods or materials or the subiection of goods or malerials to any such
Process;
ship-building;
electricity and hydraulic power undenaking;
the working of any mine, oil well or other iource of mineral deposits;
any- undertaking the profia and gains of which are liable to be computed in accordance
with rhe provisions conrained in part A of the Fifth Schedule:
tny. ol!"! undenaking to which the Board may decrare this paragraph to be
applicable.[Paragraph | 5(l) of pan A of the Sixth Schedule].
in the case of an undertaking the profits and gains of which are liable to be computed in
accordance with the provisions contained in part A of the Fifth schedule, after rhe
commencement of commercial production or the expiration of a period of 5 years from
the date of issue of the exploration license, whichever is earlier:
in the case of an undertaking, after the expiration of a period of five years from the date
ofthe setring up or commencement ofthe undertaking and
(iii) in respect of any remunerafion, or any pan thereof, as is subject to tax outside
Bangladesh, or in respect of which the technician does not get credit for the tax which
would, but for the exemption under this paragraph, have been payable in Bangladesh,
whichever is the less. [Proviso to Paragraph | 5( | ) of Part A of the Sixth Schedulei
For the PurPoses of the paragraph 15, "technician" means a person who possesses specialized
knowledge in industrial arts and science and has experience in industrial practice
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employment in Bangladesh irrespective of his designation, is in a capaciry in which such specialized
knowledge and experience are brought into play. [Explanation to paragiaph | 5( l) of pan A of the
Sixth Schedulel.
(2) An application, in the prescribed form for approval of conrracr of service under
paragraph l5(l) shall be submitted to the Board at any time before the commencemenr
of the service of the technician or within one year of such commencement and the
Board shall give its decision on such application within six months from the dare on
which the application was received by the Board, failing ;hich the approval shall be
deemed to have been accorded after the expiry of the said period.[Paiigraph | 5(2) of
Part A of the Sixth Schedule].
(3) An application under paragraph 15 of Part A of the Sixth Schedule of the Ordinance for
approval fol * exemption for foreign technician shall be made in the prescribed form,
[Rule seB(l)]
16. Tax Payable by Employer on remuneration payable to Foreign Technicians :
Any ux payable by an employer in respect of the remuneration payable by him for a period not
exceeding five years from the expiration of three years from the date of his arrival in Bangladesh
to any technician to whom paragraph 15 applies and who condnues to be employed by him in
Bangladesh as a technician after the expiration of the said period of three years.
(i)
(i i)
However, the paragraph | 5 shall not apply-
Remuneration of Foreign Technicians Employed by Firm of consultants and
Engineers
The provisions of paragraphs l5 and l6 shall, so far as may be, apply to a technician employed by
a Bangladeshi firm carrying on the business of consultants and engineers in Bangladesh, whether
by iaelf or in association with any foreign firm carrying on such business in Bangladesh.
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r9.
20.
24.
25.
Explanation: In paragraph | 7, "Bangladeshi firm" means a firm recognized as such by the Board.
Share of Capital Gains
Any income received by an assessee in respect of any share of income out of the capital gains on
which tax has been paid by the firm of which the assessee is a panner.
lncome of a Member of a Hindu Undivided Family
Any sum received by an assessee as a member of a Hindu undivided family where such sum has
been paid out of the income of the family.
Gratuity : Any income of an assessee rePresenting Payment received as gratuity.
Any payment received from provident and other funds
(a) A provident fund to which the provident Funds Act, 1925, applies; or
(b) a recognized provident fund, subject to any such conditions and limits as may be
prescribed; or
an approved superannuation fund, subiect to any such conditions and limits as may be
prescribed; or
(d) a workers parriciparion fund established under the companies Profit (Workers
Participation) Acq 1969, subjectto any such conditions and limits as may be prescribed.
Deleted by FA 2005
Exemption of Dividend from Mutual Fund or Unit Fund :
Any income from dividend of a mutual fund or a Unit Fund where such dividend does not exceed
Tk 25.000.
Deleted
lnterest on tax free Government Securities
Any interest classifiable under the head "lnterest on securities" receivable by an assessee on any
security of the Government, which is issued with the condition that interest thereon shall not be
liable to tax.
Interest on Recognised Provident Fund
Any sum representing interest credited on the accumulated balance of an employee in a
recognized provident fund, in so far as it does not exceed one-third of the salary of the
employee for the year concerned and in so far it is allowed at a rate not exceeding such rate
(4t12%) as the Board may, by notification in the official Gazette, fix in this behalf-
Payment received on voluntary retirement
Any amount received by an employee of a Government organization, a local authority, or an
autonomous or semi-autonomous body including the units or enterprises controlled by it, at the
time of his voluntary retirement in accordance with any scheme approved by the Government in
this behalf.
(c)
22.
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23.
26.
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28.
27. Income of lndigenous Hillman
Notwithstanding anything contained in any order or regulation for the time being in force, any
income of an individual, being an indigenous Hillman of any of the hill disric.t of R"ng".".1,
Bandarban and Khagrachari, which has been derived solely from economic activities undertaken
within the said hill districts.
lncome from Export Business
An amount equal to 50% of the income of an assessee, other than a company not registered in
Bangladesh, derived from the business of expon but it shall not apply in case of an assessee, who
is enioying exemption of tax or reduction in rate of tax by any notification made under the
Ordinance. For the purpose of paragraph 28-
(a) sale of locally manufactured machinery, equipments and other finished products within
the country to any agency against its procurement program in foreign exchange quota;
and
(b) supply of locally manutactured raw materials and orher inpus to expon-oriented
industry under internal back-to-back letter of credit, shall also be included in the
definition of 'business of export'. IEXPLANATION to paragraph 2g].
Income from Agriculture
Any income, not exceeding Tk 40,000, chargeable under the head 'Agricultural income' of an
assesseer being an individual, whose only source of income is agriculture.
Income from the Mutual Fund
Any income of the mutual fund of the person issuing such mutual fund.
3l. Deleted by FA 2005
3l A. Deleted by Finance Ordinance 2007
3l B. Exemption of Income from Savings Instrument
Any income not exceeding Tk 25,000 received from interest on savings insruments if tax is not
deductible at source under section 52D.
32. Repealed
33. Any income derived from the business of computer data entry, data processing, call centers or
comPuter software development for the period from rhe first day of July, 2009 to the thirrieth
day ofJune, 201 l.
34. Subiect to the condidons made hereunder any income from fisheries, poultry, producrion of
seeds, marketing of locally produced seeds, caule farming, dairy farming, honiculture, frog
farming, mushroom farming, floriculture, sericulrure for the period from the first day of July,
2008 to the rhirrieth day ofJune, 201 l-
(a) if such income exceeds taka | ,50,000/- an amounr not less than l0% of the income to be
invested in the purchase of bond or securities issued by the Government within six
monrh from the end of the income year;
(b) the person shall file return in accordance with the provisions of section 75(2)(c) of the
Ordinance: and
29.
30.
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(c) no such income shall be rransferred within five years from the end of the income year;
Provided that income from fisheries as mentioned in this paragraph shall not apply to a
company as defined in clause (20) of section (2) of the Ordinance.
Any income derived from the export of handicrafts for the period from the first day of July, 2008
to the thirtieth day ofJune, 201 l.
Any amount paid by the Government as tax on behalf of a petroleum exploration comPany
engaged in exploration of petroleum products in Bangladesh under Production Sharing Contract
(PSC) with the Government of Bangladesh.
Income of any private Agricultural College or private Agricultural University derived from
agricultural educational activities.
Any income derived from any building situated in any area of Bangladesh, not less than five
storied having at least ten flats, constructed at any time between the first day ofJuly,2009 and
the thirtieth day ofJune, 2014 (both days inclusive), for ten years from the date of completion of
construcrion of the building, except the buildings situated in any areas of City Corporation,
Cantonment Board, Tongi Upazila, Narayangani Paurashava, Gazipur Paurashava and any
Paurashava under Dhaka district,:";
Income derived from any Small and Medium Enterprise (SME) engaged in production of any
goods and having an annual turnover of not more than taka twenty four lakh:
Provided that the person shall have to file income tax return in accordance with the provisions
of section 75(2)(c) of the Odinance.
Any income derived from Zero Coupon Bond received by a person other than Bank, Insurance
or any Financial Institution, sublect to the following conditions:
(a) that the Zero Coupon Bond is issued by Bank, Insurance or any Financial Institution with
prior approval of Bangladesh Bank and Securities Exchange Commission.
(b) that the Zero Coupon Bond is issued by any institution other than Bank, Insurance or any
Financial Institution with prior approval of Securities Exchange Commission.
Any income received by an assessee as interest or profit from pensioners' savings certificate.
37.
38.
36.
39.
40.
B.l
I.I.2 PART'B'OF THE SIXTH SCHEDULE
EXEMPTIONS AND ALLOWANCES FOR ASSESSES BEING RESIDENT AND
NON RESIDENT BANGLADESHI
Investment eligible for tax rebate are the following :
subiect to the provisions of the ordinance and the limits, conditions and
qualifications laid down in Part B of the Sixth Schedule-[See 44(2)]
tax shall not be payable by an assessee in respect of any income or any sum specified in
paragraphs I 5 and | 6 of the said Part B; and
an assessee shall be entitled to a credit from the amount of tax payable on his total
income of an amount equal to l0% of the sums specified in all paragraphs excluding
paragraphs l5 & l6 of Pan B. [Section 44(2)].
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The aggregate of the allowances admissible under all paragraphs excluding
paragraphs I 5 & I 6 of Part B of the sixth schedule shall not exceeJrk. 2,5o,ooo/-
However. the amount admissible under section aze)@) and (b) shall not, under any
circumstances, exceed 20% of the total income of the assessee.
Note
Students should bear in mind that while calculating 20% of total income for admissible investmenr
allowance, employer's contribution to RPF included in the income of an assessee shall be
excluded (Proviso to Para 4 of the l " schedule. part
-B of the lro | 9g4)
lllustrations
l. An individual's total income was Tk. 1,125,000. He invested Tk.2OO,O0O in the purchase of
orher investments and rk. 25,000 in the purchase of stock listed shares.
In this case, 20% of total income is Tk. 225,000. He invested Tk. 2O0,OOO in other
investments and Tk. 25,000 in stock listed shares. So investmenr allowance of Tk. 225.000 is
admissible for rhe purpose of tax credit @ l5%.
2' An individual's Total Income was Tk. ll,25,OOO. He invested Tk. l75,OOO in the purchase of
other investments and rk. 5o,0oo in che purchase of stock listed shares.
In this case, 20% of Total Income is Tk 225,000 and he invesred in all Tk.225,000, he will get
investment allowance for the whole amount for the purpose of tax credit.
3. An individual's total income was Tk. ll,25,OOO. He invested Tk. 225,000 in the purchase of
ocher investmen$.
In this case, maximum allowable investment will be 20% of total income or Tk. 250,000
whichever is lower. So his approved investment will be Tk. 225,OOO for the purpose of ex
credit.
INVESTMENT ALLOWANCES
L Life lnsurance Premium Paid by lndividual
Any sum paid by an assessee, being an individual, to effect an insurance, or a contract for
deferred annuity, on the life of the assessee or on the life of a wife or husband or a minor child
of the assessee, subiect to the limit of such paymenq in the case of insurance, to ten per cent, of
the actual sum assured (excluding bonus or other benefits.) [Paragraph I of Part B of the Sixth
Schedulel.
2. Life lnsurance Premium Paid by Hindu Undivided Family
Any sum paid by an assessee, being a Hindu undivided family, to effect an insurance on the life of
any male member of the family or the wife of any such member. However, no exemption under
this paragraph or paragraph (l) shall be allowed unless the premium and the proceeds of the life
insurance policy or the contract for deferred annuity, as the case may be, are both payable in
Bangladesh. [Paragraph 2 of Parc B of the Sixth Schedulel.
3. Contribution to Deferred Annuity
Any sum deducted from salary payable by or on behalf of the Government to any individual,
being a sum deducted in accordance with the condidons of his service for the purpose of
securing to him a deferred annuity or of making provisions for his wife or children, provided that
the sum so deducted shall not exceed one-fifth of the saliry. [Paragraph 3 of Parr B of the Sixth
Schedulel.
i 208
|-, iv

7.
8.
Contribution to Provident Fund
Any sum paid by the assessee as a contribution to any provident fund to which Provident Fund
Act, 1925, applies. [Paragraph 4 of Part B of the Sixth Schedule].
Contribution to Recognised Provident Fund
Any sum representing the assessee's and the employer's contribution to a recognised provident
fund in which the assessee is a participant subject to the limits laid down in part B of the First
Schedule. [Paragraph 5 of Pan B of the Sixth Schedule].
Contribution to Superannuation Fund
Any sum paid by the assessee as ordinary annual contribution to approved superannuation fund
in which the assessee is a participant. [Paragraph 6 of Part B of the Sixth Schedule].
Deleted
lnvestment in Stocks and Shares
Any amount invested by an assessee, not being a company, in the acquisition of any stocks or
shares of a company or other body corporate which fulfills the following conditions, namely-
(") in the case of a company, it shall be a company listed with a Stock Exchange in
Bangladesh;
in the case of any other body corporate, it shall be established by or under any Act of
Parliament.
in the case of any stocks or shares acquired by purchase from a previous holder, if such
stocks or shares is transferred in the name of the transferee. [Paragraph 8 of Part B of
the Sixth Schedulel.
Investment in Debentures or Debenture Stocks
Any sum invested by the assessee, not being a company, in the purchase, otherwise than
from previous shareholders, of such debentures or debenture-stocks issued by a
company as the Securities and Exchange Commission may approve for the purpose of
this paragraph.
The maximum amount of deduction admissible under this paragraph shall be the lesser
of the following two amouns, namely--
the amount invested by the assessee in the income year (a) as reduced by the
amount of sale proceeds, if any, or the original cost to the assessee, whichever
is greater, of the debenture-stocks, purchased by the assessee in the income
year and the two immediately preceding income year and disposed of by him by
sale, transfer or otherwise in the income year (b), that is to say, the amount
arrived at after deducting (b) from (a);
the atgregate of the amount invested by the assessee in the income year and the
two immediately preceding income years (c), as reduced by the sale proceeds or
the original cost to the assessee, whichever is greater, of the debentures or
debenture-stocks disposed of by him by sale, transfer or otherwise, in the
income year and the two immediately preceding income years, (d), that is to say,
the amount arrived at after deducting (d) from (c). [Paragraph 9 of Pan B of the
Sixth Schedulel.
rrr.l| :i,-
(r)
(a)

lllustration
Mr. 'X's purchases and sale of debentures or debenture stocks during some years are shown as
below:
lncome year
Tk.
Purchase
Price
TK
Sale
Proceed
Tk.
Uost prrce ot
Debenture sold
Tk.
2004-05 20,000
2005-06 30.000 t0,000 9.000
2006-07 20,000 r0,000 t2.000
2007-08 25,m0 r5.000 t0,000
2008-09 40.000 * 20,000 2s,000
* These figures relate to the following income years
2005-06
2007-08
t2,000
8.000
_?0.000
r0,000
rs.000
_25J00
(a) Net investment in the income year 2008-09 under (a) is as follows:
Cost -
Less: Cost of purchase price of debenture sold
(being higher than sale proceeds)
relating to 200748 income year
Net investment in the income year 2008-09 under (b) is as follows:
Tk.
40,000
t5.000
25000
(b)
lrtolt__F
lncome year
Purchase
Less sale proceed or
cost price ofdebenture
sold which ever is hisher
Balance
TK Tk. Tk.
200647 20,m0 ( r2.00( 8,000
2007 -08 25,000 | 5,00( r0.000
2008 --09 40,000 2s,000) r5.000
33.000
Therefore, inveslment allowance of Tk. 25,000 under (a) above being lower is eligible for
claiming under paragraph 9 of Part B of the Sixth Schedule.
Note
sale proceed in the incomeyear 2008-09 of Tk 12,000 relates to purchase in the income
year 2005-06, which is beyond nrvo immediate proceeding years, hence will not be
considered for the purpose of deducrion as per provision in para (a) of this Section.

t0. lnvestment in Unit Certificates etc :
Subiect to the maximum laid down in paragraph l0(2), any sum invested by an assessee,
not being a company, in the purchase of the following, namely--
such savings certificates or instruments as the Board may specify in this behalf;
unit certificates and mutual fund certificates issued by the Investment
Corporation of Bangladesh and its subsidiaries;
such Government securities (including Development loans or Bonds) as the
Board may specify in this Behalf.
Shares of such investment companies as the Board may specify in this behalf.
Explanation: For the purpose of paragraph l0(lXd) 'investment companies' means
companies engaged principally or wholly in buying and selling securities of other
companies and includes a company eighty per cent. of whose paid up capital is employed
at any one time as investment in other companies, but does not include a bank or an
insurance company or a corporation which is a member of stock exchange.
Where any certificate, security or share (herein referred to as the certificate) to which
paragraphs (t) (a), (U), (c) and (d) of apply and in respect of which any credit in tax has
been allowed to the assessee, is disposed of by sale, transfer or in any other manner
within five years from the date of its purchase or before the maturity thereof, as the
case may be, then, notwithstanding anything contained in the Ordinance, the amount of
tax payable by the assessee under the other provisions of the Ordinance in respect of
the income year in which such certificate was so disposed of, shall be increased by an
amount equal to the credit in tax allowed to the assessee in respect of such certificate
(hereinafter referred to as the 'said amount') and the sum so arrived at or where no tax
is payable by the assessee under the other provisions of the Ordinance in respect of that
income year, the said amount shall deemed to be the tax payable in respect of that
income year and other provisions of the Ordinance shall, so far as may be, apply
accordingly. [Paragraph l0 of Part B of the Sixth Schedule].
Note
l. The National Board of Revenue vide SRO No. 170-U2006 dated 6'h July 2006 has specified
all savings cerrificates issued by the internal Revenue Division from time to time for the
purpose of this clause.
2. Sub clause 2 of clause l0 lays down that if any certificate in respect of which any tax credit
was allowed to rhe assessee and such certificate is disposed of within 5 years or before the
date of marurity thereof, the assessee's tax liability would be increased by the extent of tax
credit in the income year when the sale took place.
Examples:
(a) Mr.'A' purchased 8 years saving certificate of Tk.50,000 in the income year 1999-2000
and obtained tax credit @ 15% for Tk. 7,500. The said ceftificate was sold in the income
year 2004-05. As such, Mr. A's tax liability would be increased by Tk. 7,500 in
assessment relating to the income year 2004-05, relevant to the assessment year 2005-
06.
(b) In the above case if Mr. 'A' obtained tax credit for Tk. 6,000 (i.e. @ | 5% on Tk. 40,000
despite purchase cost of Tk. 50,000 (presumably due to investment allowance is
restricted to 20"/o on total income) his tax liability would be increased by TK. 5,000 in
the income year 2004-05.
(t)
(a)
(b)
(d)

I !.A
(c) Assuming that Mr. 'A' has no tax liability in the income year 2004-05, he would be liable
to Pay tax to the extent of tax credit obtained for disposal'of saving certificate within 5
years or before the date of maturity.
Contribution in any Deposit Pension Scheme : Any sum contributed by an individual in any
dePosit pension scheme sponsored by the Government or by a Scheduled Bank with the prior
approval of rhe Governmenc [Paragraph | | of Pan B of the Sixth Schedule].
Donation to a Charitable Hospital : Any sum paid as donation by an assessee to a charitable
hospital which is established out side the city corporation area one year before such payment
andisapprovedbytheBoardforthispurpose.[Paragraph llAof ParcBof theSixthSchedule].
Donation to organisation for the welfare of the Retarded people : Any sum paid as
donation by an assessee to an organization set up for the welfare of retarded people, established
at least one year before such payment and is approved by the Social Welfare Depanment and by
the Board for this purpose. [Paragraph I I B of Pan B of the Sixth Schedule].
Deleted
Donation to Zakat Fund : Any sum paid by an assessee as Zakat to rhe Zakat Fund or as
donation or contribution to a charitable fund established by or under the Zakat Fund Ordinance
I 982. [Paragraph l 3 of Part B of the Sixth Schedule].
Deleted
lnclusion of Income of an Association for Rebate: Any sum which the assessee is enritled
to receive out of the income of an association of persons (other than a Hindu undivided family,
comPany or a firm) on which tax has already been paid by the association. However, where
there is included in the total income of an assessee any income exempted under paragraph 15,
the tax payable by the assessee shall be an amount bearing to the toal amount of the tax which
would have been payable on the total income had no part of it been exempted, at the same
proponion as the unexempted portion of the toul income bears to the total income. [Paragraph
| 5 of Pan B of the Sixth Schedule].
Inclusion of lncome of a Firm for Rebate : Any sum being the share or porrion of the
share of the assessee in the income of a firm if tax on such income has already been paid by the
firm. However, where there is included in the total income of an assessee any income exempted
under paragraph 16, the tax payable by the assessee shall be an amount bearing to the total
amount of the tax which would have been payable on the total income had no pan of it been
exempted, at the same Proportion as the unexempted ponion of the total income bears to the
total income. [Paragraph | 6 of Part B of the Sixth Schedule].
contribution to Benevolent Fund etc. : Any sum paid by an assessee, in order to make
provision for his wife, children or other persons dependent on him, to a benevolenr fund or any
premium paid under a group insurance scheme if such fund or the scheme is approved by the
Board for this purpose. [Paragraph | 7 of Part B of the Sixth Schedule].
Deleted
Deleted
Deleted
12.
t3.
14.
t5.
t8.
t9.
20.
t6.
t7.
,;cItr' |

22.
21. Donation to an Institution of Aga Khan Development Network: Any sum paid by an
assessee as donation to any socio-economic or cultural development institution established in
Bangladesh by the Aga Khan Development Network. [Paragraph 2 | of Part B of the Sixth
Schedulel.
22.4
Donation to Philanthropic or Educational lnstitution: Any sum paid by an assessee as
donation to philanthropic or educational institution which is approved by the government for
this purpose [Paragraph 22 of Part B of the Sixth Schedule].
Donation td Dhaka lhsania Mission Cancer Hospital - As per SRO No. 202/AlN
/lT/2005 dated 6'h July 2005, any sum paid by an assessee will enioy the benefit of tax rebate as
per paragraph 27 ol Par. 'B' of the Sixth Schedule.
THE FIRST SCHEDULE - PART'B'AND'C'
I.2.I PART'B'OF THE FIRST SCHEDULE
RECOGNIZED PROVIDENT FUNDS
Recognized P.F. means a Provident Fund which has been or continues to be recognised by the
Commissioner in accordance with the provision of part B of the First Schedule.
The commissioner shall within 30 days from the date of receipt of the application by him accord
such recognition to the provident fund failing which the provident fund shall be deemed to have
been accorded recognition. .
A commissioner can withdraw recognition to the provident fund if in his opinion the provident
fund contravenes any of the conditions specified in paragraph 3 and the rules made by the Board
after the applicant is given a reasonable opportunity of being heard.
Conditions to be satisfied by recognised P.F'
(a) all employees shall be employed in Bangladesh or shall be employed by an employer
whose principal place of business is in Bangladesh.
The contribution of the employee in any year shall be a definite ProPoftion of his salary
for the year and shall be deducted by the employer from the employees salary
periodically from payment of salary.
The contribution of the employer to the individual account of an employee shall not
exceed the amount of contribution of the employee. However, the commissioner may
permit a larger contribution by the employer to the individual accounts of employees
who salaries do not in each case, exceed TK. 500 per month.
The fund shall consists of contribution of the employee and employer, interest on
investments and donation and any capital gains on sale of capital assets of the fund.
The fund shall be vested in two or more trustees, which shall not be revocable save with
the consent of all the beneficiaries. .
The employer shall not entitled to recover any sum from the fund excepting on account
of misconduct of an employee or an employee leaves voluntarily employment otherwise
than on ill health.
The accumulated balance due to an employee shall be payable on the date he ceases to
be an employee of the employer maintaining the fund.
t-,lt lIrv

Where an emPloyee ParliciPating in a recognized provident fund has rendered a continuous
service of not less than five years, the accumulated balance payable ro rhe employees shall be
exemPt from tax. However, the commissioner may allow such exemprion even if rie employee
rendered less than five years seryices if the services have been terminated by reaion' of
employees ill health or by contraction or due to discontinuance of the employer's business or
any cause beyond the control of the employee.
The accounts of a recognized provident fund shall be maintained by rhe trustees of the fund and
shall be in such form and for such periods and contain such particulars as the Board may
Drescribe.
For the PurPose of computing allowable investment limit @ 25% on total income of the assessee
[uh aa(3)], only employee's own contributions shall be included.
1.2.2 PART'C'OF THE FIRST SCHEDULE
t.
RECOGNIZED PROVIDENT FUNDS
Definitions
In this Part. unless the context otherwise requires, the expression "contribution", "employee",
"employer"' "regulations of a fund" and "salary" have, in relation to gratuity funds, the meaning
assigned to rhose expressions in paragraph I of part B in relation to provident funds.
Approval of Gratuity Funds
(l) The Board shall, within four months from the date of receipt of the applicarion by it for
according approval to any gratuity fund, accord such approval, failing which the gratuity
fund shall be deemed to have been accorded approval, and the Board may, ii in irs oplnion,
the tratuity fund contravenes any of the conditions specified in paragraph 3 and the rules
made by the Board in rhat behalf, withdraw such recognition ar any rime.
(2) An order according or withdrawing approval shall take effect from such date as the Board
may communicate in writing to trustees of rhe fund.
(3) The Board shall neither refuse nor withdraw approval to any gratuity fund unless it has
given the trustees of chat fund a reasonable opportunity of being heard.
3. Conditions for Approval
In ORDER THAT A Gratuity fund may receive and retain approval, it shall sarisfy the
conditions hereinafter specified and any other conditions which the Board may prescribe --
(a) the fund shall be a fund established under an irrevocable trust in connection with trade or
undercaking carried on in Bangladesh and not less than ninety percent of the employees
of such trade or undertaking shall be employed in Bangladesh.
(b) The fund shall have for its sole purpose the provision of a gratuity to employees in the
trade or undertaking on their retirement or after a specified age or on their becoming
incapacitated prior to such redrement, or on termination of their employment after i
minimum Period of service specified in the regulations of the fund or to the widows,
children or dependents of such employees on their death.
(c) The employer in the trade or undertaking shall be a contributor ro the fund; and
(d) All benefits granted by the fund shall be payable only in Bangladesh.
2.
; Ttq)
_-_J'
@The Institute of Chartered AccounranB of Bangladesh

4. Application for Approval
An application for approval of gratuity fund shall be made in writing by the trustees of the
fund to the Board and shall be accompanied by a copy of the instrument under which the
fund is established and by two copies of the rules and, where the fund has been in
existence during any year or years prior to the financial year in which the application for
approval is made, also two copies of the accounts of the fund relating to such prior year or
years (not being more than three years immediately preceding the year in which the said
application is made) for which such accounts have been made up the Board may require
such further information to be supplied as it thinks proper.
lf any alteration in the regulations, constitution, objects or conditions of the fund is made
at any time after the date of the application for approval, the trustees of the fund shall
forthwith communicate such alteration to the Deputy Commissioner of Taxes mentioned
in sub-paragraph (l), and in default of such communication, any approval given shall, unless
the Board otherwise orders. be deemed to have been withdrawn from the date on which
the alteration took effect.
Exemption of Income of Gratuity Fund from Tax
Income derived from investments or deposits of an approved gratuity fund and any capital gains
arising from the transfer of capital assets of such fund shall be exempt from payment of tax.
Treatment of Contribution by Employer
Any sum paid by an employer as contribution towards an approved gratuity fund shall be
deducted in computing his income, profits and gains for the purposes of assessment.
Contributions by Employer, when Deemed to be his Income
Where any contributions by an employer (including the interest thereon, if any) are repaid to
the employer, rhe amount so repaid shall be deemed for the purposes of tax to be the income
of the employer for the income year in which they are so repaid.
Particulars to be Furnished in Respect of Gratuity Funds
The trustees of an approved gratuity fund and any employer who contributes to an approved
gratuity fund shall, when required by notice from the Deputy Commissioner of Taxes, furnish,
within such period as may be specified in the notice, such return, statement, particulars or
information as the Deputy Commissioner of Taxes may require.
Provisions of this Part to Prevail Against Regulations of the Fund
Where there is a repugnance between any regulation of an approved gratuity fund and any
provision of this part or of the rules made thereunder, the said regulation shall, to the extent
of repugnance, be of no effect, and the Board may, at any time, require that such rePugnance
shall be removed from the regulations of the fund.
Provisions Relating to Rules
In Addition to any power conferred in this Pan, the Board may make rules -
prescribing the sutements and other information to be submitted along with an application
for approval.
limiting the ordinary, annual, and other contributions of an employer to the fund.
(2)
5.
6.
7.
8.
9.
t0.
(a)
(b)
[,i; ]
I :;'

(c)
(d)
regulating the invesrmenr or deposit ofthe money ofan approved gratuiry fund;
providing for withdrawal of the approval in the case of a fund which ceases ro sarisf the
requiremenc ofthis parC or rhe rules made thereunder; and
generally, to carry ow the PurPoses of this part and to secure such funher conrrol over
the approval of gratuity funds and the administration of gratuiry funds; as it may deem
requisite.
@The Institute of Chartered Accouncrnts of Bangladesh

12. appeal and reference, ICAB, KL, Study Manual

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12. appeal and reference, ICAB, KL, Study Manual