Who Must Submit Income Tax Returns in Bangladesh for FY 2024-25

Author: Shibli zaman | September 15, 2024

Income tax is a critical component of Bangladesh’s economy, contributing to the country’s development by providing resources for public services, infrastructure, and welfare programs. With increasing awareness and strict regulatory frameworks, the government mandates income tax return submissions for diverse individuals and entities. In Bangladesh, income tax regulations are overseen by the National Board of Revenue (NBR), which sets policies, rules, and deadlines for taxpayers, including individuals, businesses, and other specified entities.

At S. Rahman & Co., we recognize that navigating the complexities of income tax return submission can be daunting. This guide aims to clarify the requirements, processes, and nuances of income tax filing in Bangladesh. Whether you’re an individual taxpayer or a business owner, understanding these rules can help you remain compliant and avoid unnecessary penalties.

Mandatory Submission of Income Tax Returns in Bangladesh

Income tax return submission is legally required for a significant portion of the population. The NBR has outlined specific categories under which individuals or entities must submit their tax returns. While the requirements vary for general taxpayers, professionals, and businesses, non-compliance can lead to penalties, audits, and legal consequences. Below, we detail the requirements for Bangladesh’s main categories of taxpayers.

General Taxpayers:

General taxpayers include:

• Salaried employees.
• Individuals with rental income.
• Others have income streams unrelated to a business or professional practice.

The criteria for mandatory tax filing are as follows:

• Income Threshold: Individuals with annual income exceeding a certain threshold are required to file an income tax return. As of the latest NBR guidelines, the threshold is typically BDT 3,00,000 for individuals, BDT 4,00,000 for female and elderly individuals above 65, and higher for people with disabilities.
• Ownership of Taxable Assets: Individuals owning taxable assets such as property, land, or investments beyond specific values must file returns, regardless of their annual income. This requirement ensures that wealth and asset gains are accounted for and taxed accordingly.
• Professional License Holders: Certain professionals, including doctors, lawyers, and engineers, must file tax returns if they hold licenses or registrations with their respective professional bodies. This applies even if they don’t actively practice their profession or earn through other sources.
• Employment in the Public or Private Sector: Salaried employees, especially those working in public or private organizations, must file returns if they fall under the taxable income bracket. Employers often withhold taxes from salaries at source; however, individual filing remains mandatory to account for additional sources of income or deductions.
• Tax Identification Number (TIN) Requirement: Individuals requiring a TIN for specific activities, such as property registration, vehicle purchase, or obtaining a loan, must submit annual tax returns. This rule helps maintain a record of individuals with substantial financial activities, even if they don’t meet the income threshold directly.

Business and Professional Individual Taxpayer:

Business and professional taxpayers encompass sole proprietors, freelancers, contractors, and anyone engaged in economic activities beyond standard employment. This group’s tax return submission rules are more comprehensive due to the variable nature of business income.

• Self-Employed Individuals: Self-employed individuals, including freelancers, independent consultants, and small business owners, must file income tax returns. In Bangladesh, any self-employed individual with taxable income above the minimum threshold is subject to this rule. Additionally, they must register for a TIN and submit returns annually.
• Business Owners: Business owners, including those running small enterprises, must file returns if they have annual revenue exceeding BDT 3,00,000. Businesses are often subject to tax audits, which require accurate and timely submission of tax returns. Failure to comply may lead to penalties or legal consequences.
• Professional Services: Professionals offering services in a self-employed or partnership capacity, including doctors, lawyers, accountants, and architects, must file income tax returns based on their total income. This ensures that professionals contributing to high-value services are taxed proportionally.
• Partnership Firms: Partnerships are required to file tax returns at both the individual and firm levels. Each partner’s share of the income is declared individually, while the firm submits a collective return. This approach ensures transparency and compliance for all partners involved.
• Documentation for Business and Professional Returns: Business and professional taxpayers must maintain detailed records, including income statements, expense records, and any investments made. NBR requires clear documentation to ensure accurate tax assessments and to facilitate audits if necessary.

Other Mandatory Cases for Tax Return Submission

In addition to the above categories, Bangladesh mandates income tax return submission in other specific scenarios. These cases address diverse situations where individuals or entities engage in significant financial transactions or activities.

• Property Transactions: Individuals involved in property transactions, including purchases and sales, must file income tax returns. This rule is applicable to prevent illicit income generation and ensure that capital gains from property sales are accurately taxed.
• Vehicle Registration: Tax return submission is mandatory for individuals registering high-value assets, such as luxury vehicles. This provision ensures that asset purchases align with declared income levels, thereby preventing potential tax evasion.
• Investment in Stocks and Bonds: Individuals or entities investing in financial markets, including stocks, bonds, and mutual funds, must declare income and submit returns if they meet the minimum taxable threshold. This regulation aims to capture gains from financial assets and maintain compliance among active investors.
• Loan Applicants: Banks and financial institutions in Bangladesh require individuals applying for significant loans to submit tax returns. The NBR has enforced this rule to maintain accountability and reduce the likelihood of undisclosed income sources.
• Foreign Nationals Working in Bangladesh: Foreigners earning income in Bangladesh must file returns if they meet the income threshold. This includes expatriates and consultants employed under contract. The regulation ensures that individuals benefiting from the Bangladeshi economy contribute to its revenue structure.
• Foreign Income Earners: Bangladeshi nationals earning income from overseas are also mandated to file returns on foreign income, as per NBR regulations. This rule captures earnings outside of Bangladesh, preventing tax evasion among high-earning residents working abroad.
• Inheritance of High-Value Assets: Individuals who inherit significant assets must declare and submit tax returns, especially if the inheritance results in income generation. This requirement ensures that inherited assets are recorded and capital gains from them are taxed appropriately.

Services Requiring Mandatory Income Tax Return Submission

To avail of any of the following 51 services, an income tax return must be submitted:

• Loans exceeding BDT 2,000,000.
• Import/export registration certificate (obtaining or renewal).
• Trade license (issuance or renewal) in City Corporation or municipal areas.
• Cooperative society registration.
• Insurance company surveyor license (obtaining or renewal).
• Property transactions exceeding BDT 10,00,000 (buying, selling, leasing, or transferring land, buildings, or apartments) in City Corporation or municipal areas.
• Credit card (obtaining or maintaining).
• Marriage registrar license (obtaining or appointment).
• Membership in a business or professional organization.
• Drug or fire license (obtaining or renewal).
• Environmental clearance or BSTI license (obtaining or renewal).
• Gas connection (commercial or industrial) in any area.
• Residential gas connection (obtaining or maintaining) in City Corporation areas.
• Survey certificate for chartered water vessels like launches, steamers, or fishing trawlers.
• Approval for brick production (obtaining or renewal) from the Department of Environment or District Commissioner’s office.
• Child admission to English medium schools in City Corporation or district headquarters areas.
• Electricity connection (obtaining or maintaining) in City Corporation or Cantonment Board areas.
• Company agency or distributorship (obtaining or maintaining).
• Firearms license (obtaining or renewal).
• Import letter of credit (LC) (opening).
• Post office savings account exceeding BDT 5,00,000.
• Fixed deposit accounts exceeding BDT 10,00,000 (opening or maintaining).
• Savings certificates exceeding BDT 5,00,000.
• Participation in elections (union parishad, municipal, or national).
• Participation in shared economy services (e.g., ride-sharing or accommodation-sharing platforms).
• Managerial, administrative, or supervisory employees receiving salary or benefits.
• Commission earned from mobile banking or mobile phone recharge services.
• Income from domestic companies’ advisory, consultancy, catering, event management, workforce supply, or security services.
• MPO-listed individuals earning more than BDT 16,000.
• Insurance agent license (obtaining).
• Four-wheeler vehicle registration, ownership transfer, or fitness renewal.
• NGO Bureau or Micro Credit Regulatory Authority license (obtaining).
• Foreign donation release.
• Digital platforms for selling goods or services to Bangladeshi consumers.
• Membership in clubs registered under company or society law.
• Residents submit tenders for goods supply or service provision.
• Goods or service supply contracts with any company or institution.
• Submission of bill of entry for import/export transactions.
• Building design approval from RAJUK or similar authorities.
• Registration or license for a stamp, court fee, cartridge paper vendor, or deed writer.
• Bank accounts for trusts, funds, foundations, NGOs, microcredit, societies, or cooperatives (opening or maintaining).
• House or apartment rental in City Corporation areas.
• Hotel, restaurant, motel, hospital, clinic, or diagnostic center licenses (obtaining or renewal).
• Community center or convention hall services are available in City Corporation areas.
• Participation in shared economic activities through providing assets or services (e.g., ride-sharing, home rentals).
• License renewal for environmental clearance, fire licenses, and more.
• Shared asset or service operations (e.g., ride-sharing platforms).
• Participation in any business or organizational membership that involves financial transactions.
• Licenses for NGOs or microcredit organizations operating in Bangladesh.
• Commission income from service industries such as advisory and consultancy.
• Bank accounts exceeding financial thresholds for trusts, foundations, or other registered entities.

Submitting an income tax return is mandatory to avail of these services, regardless of your income level.

What You Need to Submit Your Income Tax Return for Fiscal Year 2024-2025

Your income tax filing return is an important responsibility that must be done accurately. For the Income year 2024-2025, you’ll need to gather certain income information and documents. Let’s take a look at what you’ll need:

Personal Information:

1. Photocopy of E-TIN Certificate – Your Tax Identification Number.
2. Photocopy of National ID (NID) – Proof of your identity.
3. 1 Copy of Passport Size Photo – A recent photograph is required.

Employment Information:

1. Salary Certificate – Proof of your total income.
2. Bank Statement (From 01-07-2023 to 30-06-2024) – Details of your income and expenses.
3. Provident Fund Information (if applicable) – Details of your provident fund during employment.

Business Information:

1. Trade License – Proof of your business’s legitimacy.
2. Annual Sales, Purchases, and Income Statements – Detailed report of your business profits.
3. Statement of Assets and Liabilities – A summary of the assets and tax liability under your business.
4. Bank Statement – Transaction details of your business bank account.

Investment Information:

1. DPS (if applicable) – Proof of your Deposit Pension Scheme.
2. Insurance Certificate (if applicable) – Information regarding your insurance policies.
3. Share Market Investment (if applicable) – Details of your stock market investments.
4. Savings Certificates (if applicable) – Proof of any savings certificates you may have.

Statement of Assets and Liabilities:

1. House, Apartment (if owned in your name) – Information about any property registered.
2. Land, Car, Furniture, Electronics, etc. (if owned in your name) – Details of your assets.
3. Bank Loan Information (if in your name) – Information about any loans taken in your name.
4. Other Loans (if in your name) – Information regarding other personal loans.

Conclusion:

Income tax return submission is essential for individuals and businesses to comply with Bangladeshi law. Non-compliance can lead to severe consequences, including fines, penalties, or audits. As tax regulations continue to evolve, taxpayers must stay informed of their obligations, particularly when significant financial transactions are involved.

At S. Rahman & Co., we provide expert assistance in tax planning, compliance, and filing to help our clients navigate the complexities of the tax landscape. Our team of seasoned professionals is dedicated to ensuring that your tax return submission is accurate, timely, and compliant with NBR regulations. Whether you’re an individual, a business owner, or a professional, we are here to simplify the tax return process and help you fulfill your tax obligations.

Note:

If you have filed a tax return previously, bring a photocopy.

The process of filing your tax return may vary depending on your income source. For any tax law and related advice, email or contact me directly.

Feel free to contact us with any queries or for assistance filing your income tax return. We are here to help you ensure compliance with the advance tax regulations and smoothly guide you through the process.

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