Introduction to personal income tax. History of personal income tax. History of Personal Income tax.

1. Battle Cruiser
1. Abdullah Al Meraz (Leader)
2. Shantanu Datta (Co-Leader)
3. Abdur Rahman
4. Shamima Akther Mou
5. Subas Joy
6. Mosharrof Hossain
7. Md. Kaium Hossain
8. Ruhul AminMd.
9. Redoy Hossian
10. Farhana Akter
11.Arnob Ahmad

2. 1. Introduction of personal income tax
2. History of personal income tax
3. Sources of personal income tax
4. Graphical representation of personal income tax
5. Objectives of personal income tax
6. Tax incentives
7. The rules of personal income tax
8. The effect of inflation and deflation of personal income
tax
9. Advantage and disadvantage of personal income tax
10.Penalties of not paying personal income tax
Personal Income tax

3. What
is

4. ?

5. 31 Tax regions in Bangladesh
659 Tax circles area
7 Tribunals
TIN holder persons are 38,16,000
Tax return payers are 17,00,000
Additional Information

6. Sources of
personal
income tax
Dividends
Interest
Labor
Assets
Rental
Income
Pensions
Figure: The sources of personal income tax

7. STATISTICS AND GRAPHICAL REPRESENTATION OF PERSONAL
INCOME TAX (PIN) IN BANGLADESH.
Tax Slabs
Fiscal year: 2019-20
Personal income tax
Slab of Total Income Rate of Income Tax
Up to Tk. 2,50,000 0%
Tk. 2,50,000-Tk. 6,50,000 10%
Tk 6,50,000- Tk. 11,50,000 15%
Tk.11,50,000-Tk. 17,50,000 20%
Tk.17,50,000- Tk. 47,50,000 25%
Tk. 47,50,000 (Above) 30%
- -
Calculation of Income tax to be paid can be obtained from below table:
Tax Free income limit for Amount
Women & 65+ years peoples 3,00,000Tk
Challenged people 4,00,000Tk
Wounded Freedom Fighters 4,25,000Tk

8. 22%
23%
24%
25%
26%
27%
28%
29%
30%
31%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Series 1
Series 1

9. The personal income tax rate in Bangladesh stands at 30%, Personal income tax rate-
data historical chart, and calendar of releases –was last updated on February 2020
from it’s official sources (Collected from ministry if finance -2020, peoples Re-public of
Bangladesh)
Variables Value
Total income Tk……
Less: Exclusion Tk…..
Gross income Tk…..
Less: exemptions Tk…..
Deductions Tk…..
Taxable Income Tk….
Multiply by tax rate % Tk….
Tax amount Tk….
Less: rebate Tk..
Tax payable Tk…
Calculation of personal income tax
Minimum tax Amount
Up to 250,000Tk 0%
Dhaka & Chattagram city
corporation
5,000tk
Other city corporation 4,000tk
Other areas 3,000tk

10. OBJECTIVE OF PERSONAL INCOME TAX
 The primary purpose of personal income tax is to raise revenue to make huge public
expenditure. Most governmental activities must be financed by personal income tax .
Truly specking , in modern world , personal income tax is used as an instrument of
economic policy.
 There are some basic/major objectives of personal income tax. These are given in the
following.
Economic Development
Full Employment
Price Stability
Control of cyclical fluctuation
Reduction of BOP difficulties
Non revenue objectives

11. 1. Economic Development: One of the most important objectives of personal income tax is
economic development. Economic development of any country is largely condition by the growth
of capital. It is the kingpin of economic development but LDCs usually suffer from shortage of
capital to overcome the scarcity of capital , government mobilize the resources so that a rapid
capital accumulation take place. Through proper tax planning , the ratio of savings to national
income can be raised.
2. Full employment: Second objectives of personal income tax is the full employment . Since the
level of employment depend on effectives demand. A country desirous of achieving the goal of full
employment must cut down the rate of taxes.
3. Price Stability: Thirdly, personal income tax can be used to ensure price stability – a short run
objective of personal income tax. Taxes are regarded raising as an effective means of controlling
inflation by raising the rate indirect tax but indirect taxes imposed on commodities fuel
inflationary tendencies.
4. Control of cyclical fluctuation: Fourthly, control of cyclical fluctuation periods of boom and
depression is considered to be another objective of taxation. During depression taxes are lowered
down while during boom taxes are increased so that cyclical fluctuation are tamed.
5. Reduction of BOP difficulties: Fifthly, taxes like custom duties are also used to control
imports of certain goods with the objective of reducing the intensity of balance payments
difficulties and encouraging domestic production of import substitutes.
6. Non revenue objectives: Finally, another extra revenue or non revenue objective of
personal income tax is the reduction of inequalities in income and wealth this can
be done by introducing a system of progressive personal income tax.

12. Method of tax avoidance
 Country of residence
 Double taxation
 Legal entity
 Legal vagueness
 Tax shelters
 Transfer mispricing
Tax avoidance is the use of legal methods to modify an individuals financial situation to lower the
amount of income tax owed. This is generally accomplished by claiming credits
Characteristic of tax avoidance
 It is the closely linked with price increase and decrease .
 It is redistribution of tax burdens among economy entities, and it is also a redistribution of
economy interest.
 It is the taxpayers proactive behavior
 It is hedging of tax
 It taking unfair advantage of the shortcoming in the tax laws
 It use of justified means and legal type of act.

13. Tax evasion is an illegal activity in which a person entity
deliberately avoids paying a true tax liabilities or it is an illegal
act made to escape from paying taxes is known as tax evasion
It has following also some characteristics
 It is concealment of tax
 Illegal and objectionable both in script and moral
 It use of such means that are forbidden by law
 It is a criminal type of act
 It happens after tax liability arises
 To reduce tax liability by exercising unfair means

15. The inflation tax: Inflation tax is not actual legal tax paid to a government; instead, “Inflation tax” refers
to the penalty for holding cash at a time of high inflation.
The effects of tax inflation: Suppose, Government need money for projects. Than central bank print
money and give it to government for projects because of this total money supply in the market increases
and price of goods/ service and commodities are increase. So, you will get less amount of good for same
amount of money because of inflation. So indirectly central bank took money as before but you can buy
less amount of goods than before by using that money. So it’s kind of tax which is called as inflation tax
very much.

17. Advantage of Personal Income Tax
• Equitable: The burden of personal income tax cannot be shifted.
 Economical: The cost of collection of personal income is very low.
 Certain: In the case of personal income tax the payers know how much due from then and when.
 Elastic: If the state suddenly stands is need of more funds in an emergency, personal income taxes can
well serve the purpose.
 Productive: Another virtue of personal income tax is that they are very productive. It can yield a large
revenue to the state.
 A means of developing civic Sense: In the case of personal income tax, a person knows that he
is paying a tax, he feels conscious of his rights.
Disadvantage of Personal Income Tax:
 Inconvenient: The great disadvantage if personal income tax is that it pinches the payer. Nobody can
help feeling the price.
 Evadable: The asses can submit a false return of income and thus evade the tax.
 Arbitrary: If taxes are progressive, the late of progressiveness has to be fixed arbitrary.
 Distinctive: If the taxes are too heavy, they discourage saving sand investment. It inflicts a lot of
damage on business and industry.

18. Personal tax incentives
Incentives includes deduction exemption and credits.
Specific example:
 The mortgage interest deduction
 Individual retirement account
 Hybrid tax credit
The model of this techniques are include:
 GMM estimation techniques
 Steady State Analysis
 Econometric Estimation
 This model shows:
 Tax holding provision diversity
 The response of employee and self-employee to adjust in the direct tax system

19. Rules of Personal Income Tax:
 Personal income tax is a tax levied on all income of individual employee by a business
or organization either public or private.
 Self-employed individuals are expected to file annual return annual and pay the taxes
due.
 A tax payer is required to file return for the preceding year within 90 days of the end
of the year. Personal income tax would be direct assessment tax, self- assessed tax.
Pay as you earn (PAYE) tax direct assessment is used to assess tax for self-employee
individuals from the personal income. However the self-assessed tax, a new tax payer
can assessed himself, pay the calculate tax at designed banks and get e TCC without
visiting any tax office.
Pay as you are (PAYE) taxes implies all employer are responsible for deducting earning
from employees pay.
Taxes deducted from earning are required to remitted to the appropriate tax office by
the tenth day of the month following the deduction. This depicts that monthly (PAYE).
Tax liabilities are to be made on or before 10th day of the month following the applicable
month.

20. Penalties of not paying personal income tax in Bangladesh:
• Common penalties include:
 Failure to file
 Failure to pay
 Failure to pay proper estimate tax
 Dishonored Check
The terrible things that could happen if we don’t do our taxes:
 To pay a penalty fee
 To pay interest
 To get notice from the IRS
 Forfeit our refund
 Give up our special security
 Receive a federal tax lien
 Lose ground on our credit report
 Have our property seized
 Declare bankruptcy

21. History of Personal Income Tax
At the early stage, first income tax
is generally attributed to Egypt. In
the early stage of Roman Republic,
public tax consist of modest
assessment on owned wealth and
property.
In the modern era, William Pit
Younger, introduced a progressive
personal income tax in 1798 at
Britain.
In USA the first income tax was
started in 1861 during the civil
war as a mechanism to finance the
war effort
William Pit Younger (1759 - 1806)