Among direct taxes, income tax is the main source of revenue. It is a progressive tax system. Income tax is imposed on the basis of ability to pay. “The more a taxpayer earns the more he should pay’’- is the basic principle of charging income tax. It aims at ensuring equity and social justice. In Bangladesh income tax is being administered under the tax legislations named as “THE INCOME TAX ORDINANCE, 1984 (XXXVI OF 1984) and INCOME TAX RULES, 1984.”

Who should submit Income Tax Return?

• If total income of any individual other than female taxpayers, senior male taxpayers of 65 years and above, retarded taxpayers and war wounded gazetted freedom fighter during the income year exceeds Tk 2,50,000/-.
• If total income of any female taxpayer, senior male taxpayer of 65 years and above during the income year exceeds Tk 3,00,000/-.
• If total income of any retarded taxpayer during the income year exceeds TK. 3,75,000.
• If total income of any gazetted war-wounded freedom fighter taxpayer during the income year exceeds Tk. 4,25.000/-.
• If any person was assessed for tax during any of the 3 years immediately preceding the income year.
• A person who lives in any city corporation/paurashava/divisional HQ/district HQ and owns motor car/owns membership of a club registered under VAT Law.
• If any person runs a business or profession having trade license and operates a bank account.
• Any professional registered as a doctor, lawyer, income tax practitioner, Chartered Accountant, Cost & Management Accountant, Engineer, Architect and Surveyor etc.
• Member of a Chamber of Commerce and Industries or a trade Association.
• Any person who participates in a tender.
• Candidate for Paurashava, City Corporation, Upazilla or Parliament elections.
• Any company registered under the Company Act, 1913 or 1994.
• Any Non-government organization (NGO) registered with NGO Affairs Bureau.

Consequences of Non-Submission of Return and Return of withholding tax:

• imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. 1,000/-
• in case of an individual assessee whose income was not assessed previously Tk. 5,000/-.
• in case of an individual assessee whose income was assessed previously, fifty per cent (50%) of the tax payable on the last assessed income or Tk. 1,000/-, whichever is higher.
• In case of a continuing default by any type of assessee, a further penalty of Tk. 50/- for every day of delay.

Assessment Procedures:

For a return submitted under normal scheme, assessment is made after giving an opportunity of hearing. For returns submitted under Universal Self Assessment Scheme, the acknowledgement slip is considered to be an assessment order of the Deputy Commissioner of Taxes. Universal Self Assessment may be subject to “process and audit”.

Provided that a return of income filed under universal self assessment scheme, shall not be selected for audit where such return shows at least twenty per cent higher income than the income assessed or shown in the return of the immediately preceding assessment year and such return- (a) is accompanied by corroborative evidence in support of income exempted from tax; (b) does not show receipt of gift during the year; (b) does not show any income chargeable to tax at a rate reduced under section 44; or (c) does not show or result any refund.

Tax Recovery System :

In case of non-payment of income tax demand, the following measures can be taken against a taxpayer for realization of tax:-

• Imposition of penalty.
• Attachment of bank accounts, salary or any other payment.
• Filing of Certificate case to the Special Magistrate/Collector of District.