Income Tax Ordinance

Chapter V

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20. Heads of income.-

                                    CHAPTER V
                        COMPUTATION OF INCOME

20. Heads of income.-

Save as otherwise provided in this Ordinance, all incomes shall, for the purpose of charge of income tax and computation of total income, be classified and computed under the following heads of income, namely:-

(a) Salaries.

(b) Interest on securities.

(c) Income from house property.

(d) Agricultural income.

(e) Income from business or profession.

(f) Capital gains.

(g) Income from other sources

21. Salaries.-

21. Salaries.-

(1) The following income of an assessee shall be classified and computed under the head "Salaries", namely:-

(a) any salary due from an employer to the assessee in the income year, whether paid or not;

(b) any salary paid or allowed to him in the income year, by or on behalf of an employer though not due or before it became due to him; and

(c)  any arrears of salary paid or allowed to him in the income year by or on behalf of an employer, if not charged to income-tax for any earlier income year.

(2)   Where any amount of salary of an assessee is once included in his total income of an income year on the basis that it had become due or that it had been paid in advance in that year, that amount shall not again be included in his income of any other year.

22. Interest on securities.-

22. Interest on securities.-

The following income of an assessee shall be classified and computed under the head "Interest on securities", namely:-

(a) interest receivable by the assessee on any security of 1[the Government or any security approved by Government]; and

(b) interest receivable by him on debentures or other securities of money issued by or on behalf of a local authority or a company

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1 Subs. for "the Government" by F. A. 2004.

 

 

23. Deductions from interest on securities.

23. Deductions from interest on securities.-

(1) In computing the income under the head "Interest on securities",  the following allowances and deduction shall be made, namely:-

(a) any sum deducted from interest by way of commission or   charges by a bank realising the interest on behalf of the assessee;

(b) any interest payable on money borrowed for the purpose of investment in the securities by the assessee:

    2[Provided that no allowance or deduction on account of any interest or commission paid under clause (a) or (b), as the case may be, in respect of, or allocable to the securities of Government which have been issued with the condition that interest thereon shall not be liable to tax, shall be made in computing the income under section 22;]

3[(c)] where the securities in respect of which any interest is receivable by an assessee consist of, or include, any securities to which paragraph 19 of Part B of the Sixth Schedule applies , no allowance or deduction on account of any interest or commission paid under clause (a) or (b), as the case may be, in respect of, or allocable to, the said securities shall be made in computing the income under section 22.]

(2) Notwithstanding anything contained in sub-section (1), no deduction shall be allowed under this section in respect of any interest payable outside Bangladesh on which tax has not been paid or deducted in accordance with the provisions of Chapter VII.

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1.Subs.for“the governmentby F.A.2004                                                    

2.Ins.byF.A.1995                                                                                  

3.Omitted by F.A. 1995

24. Income from house property.-

24. Income from house property.-

(1) Tax shall be payable by an assessee under the head "Income from house property" in respect of the annual value of any property, 1[whether used for commercial or residential purposes, consisting of any building, 2[ furniture, fixture, fittings etc.] and lands appurtenant thereto of which he is the owner, other than such portions of the property as he may occupy for the purposes of any business or profession carried on by him, the income from which is assessable to tax under this Ordinance.

(2)  Where any such property as is referred to in sub-section (1) is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not constitute and shall not be deemed to be, an association of persons; and for the purpose of computation of the income of an assessee in respect of that property, only such part of such income as is proportionate to the share of the assessee shall be reckoned as his income from that property.

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1 Ins. by F.A. 2002
2 Ins. by F.A. 2009

25. Deductions from income from house property.-

25. Deductions from income from house property.-

(1)   In computing the income under the head "Income from house property" the following allowances and deductions shall be made, namely:-

(a)  any sum payable to Government as land development tax or rent on account of the land comprised in the  property;

(b  the amount of any premium paid to insure the property against risk of damage or destruction;

1[(c)]     any sum spent to collect the rent from the property, not exceeding two and a half per cent of the annual value of the property;]

(d)   where the property is subject to mortgage or other capital charge for the purpose of extension or reconstruction or improvement, the amount of any interest payable on such mortgage or charge;

(e)   where the property is subject to an annual charge not being a capital charge, the amount of such charge;

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1 Omitted by F.A. 1992

                             

 

Explanation.- The expression "annual charge", as used in this clause, includes any tax leviable, in respect of property or income from property, by local authority or Government but does not include the tax leviable under this Ordinance;

(f)   where the property is subject to a ground rent, the amount of such rent;

(g) where the property has been acquired, constructed,repaired, renewed or reconstructed with borrowed capital,1[ from bank or financial institution], the amount of any interest payable on such capital 2[

3[Provided that where the property or a portion thereof is self occupied and acquired, constructed, renewed or reconstructed with borrowed capital, the amount of any interest, payable on such borrowed capital not exceeding taka twenty lakh, shall be deducted from total income;]

4[(gg) Where the property has been constructed with borrowed capital 5[from bank or financial institution]  and no income under section 24 was earned from that property during the period of such construction, the interest payable during that period on such capital, in three equal proportionate installments for subsequent first three years for which income is assessable from that property;

6[(h)     in respect of expenditure for repairs, collection of rent, water and sewerage, electricity and salary of darwan, security guard, pump-man, lift-man and caretaker and all other expenditure related to maintenance and provision of basic services;

(i)   an amount equal to one fourth of the annual value of the property where the property is used for residential perpose

(ii)    an amount equal to thirty per cent of the annual value of the property where the property is used for commercial purpose;]

7[(i) where the property is in the occupation of a tenant who has undertaken to bear the cost of repairs,a sum equal to the difference between the annual value of the property and the rent payable by the tenant subject to the maximum of 5[one-sixth] of such value];

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1 Ins.by F.A. 2014
2 Subs. "semi-colon" for "colon" and omitted proviso by F.A. 2012
3 Subs. "colon" for "semi-colon" and ins. new proviso by F.O. 2007
4 Ins. by F.A. 2002
5 Ins by F.A. 2014
6 Subs. by F.A. 2000 and again subs. by F.A. 2004
7 Omitted by F.A. 1992 

 

 

 

(j)   where, the whole of the property is let out and it was vacant during a part of the year, a sum equal to such portion of the annual value of the property as is proportionate to the period of the vacancy; and

(k)  where, the property is let out in parts, a sum equal to such portion of the annual value appropriate to the vacant part as is proportionate to the period of the vacancy of such part.

(2)  Notwithstanding anything contained in sub-section (1), no deduction shall be allowed under this section in respect of any interest or annual charge payable outside Bangladesh on which tax has not been paid or deducted in accordance with the provisions of Chapter VII.

 

1[(3)] )  The total amount deductible under sub-section (1) in respect of the property in the occupation of the owner for purpose of his own residence shall no exceed the annual value of such property as determined under section 2(3)]

 

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1Omitted by F.A. 1992

26. Agricultural income.-

26. Agricultural income.-

(1) The following income of an assessee shall be classified and computed under the head "Agricultural income", namely:-

(a)      any income derived by the assessee which comes within the meaning of "agricultural income" as defined in section 2(1);

 (b)       the excess amount referred to in section 19(17);

 (c)     the excess amount referred to in section 19(19).

(2) Agricultural income derived from the sale of tea grown and manufactured by the assessee shall be computed in the prescribed manner.

(3) Where the Board, by notification in the official Gazette, so directs, agricultural income from the sale of rubber, tobacco, sugar or any other produce grown and manufactured by the assessee may be computed in the manner prescribed for the purpose.

    

 

27. Deductions from agricultural income.-

27.   Deductions from agricultural income.- 

(1) In computing the income under the head "Agricultural income", the following allowances and deductions shall be made, namely:-

(a)    any land development tax or rent paid in respect of the  land used for agricultural purposes;

(b)  any tax, local rate or cess paid in respect of the land used for agricultural purposes, if such tax, rate or cess is not levied on the income arising or accruing, or deemed to accrue or arise, from agricultural operations or is not assessed at a proportion or on the basis of such income;

(c) (i) subject to sub-clauses (ii) and (iii), the cost of production, that is to say, the expenditure incurred for the following purposes, namely:-

(a)  for cultivating the land or raising livestock thereon;

(b) for performing any process ordinarily employed by a cultivator to render marketable the produce of the land;

(c)  for transporting the produce of the land or the livestock raised thereon to the market; and

(d) for maintaining agricultural implements and machinery in good repair and for providing upkeep of cattle for the purpose of cultivation, processing or transportation as aforesaid;

(ii) where books of accounts in respect of agricultural income derived from the land are not maintained, the cost of production to be deducted shall, instead of the expenditure mentioned in sub-clause (i). be sixty per cent of the market value of the produce of the land;

(iii) no deduction on account of cost of production shall be admissible under this clause if the agricultural income is derived by the owner of the land from the share of the produce raised through any system of sharing of crop generally known as adhi, barga or bhag;

(d) any sum paid as premium in order to effect any insurance against loss of, or damage to, the land or any crop to be raised from, or cattle to be reared on, the land;

(e) any sum paid in respect of the maintenance of any irrigation or protective work or other capital assets ; and such maintenance includes current repairs and, in the case of protective dykes and embankments, all such work as may be necessary from year to year for repairing any damage or destruction caused by flood or other natural causes;

(f)   a sum calculated at the rate as provided in the Third Schedule on account of depreciation in respect of irrigation or protective work or other capital assets constructed or acquired for the benefit of the land from which agricultural income is derived or for the purpose of deriving agricultural income from the land, if the required particulars are furnished by the assessee;

(g) where the land is subject to a mortgage or other capital charge for purposes of reclamation or improvement, the amount of any interest paid in respect of such mortgage or charge;

(h)where the land has been acquired, reclaimed or improved by the use of borrowed capital, the amount of any interest paid in respect of such capital;

(i) where any machinery or plant which has been used by the assessee exclusively for agricultural purposes has been discarded, demolished or destroyed in the income year, the amount actually written off on that account in the books of accounts of the assessee,-

(i)   subject to the maximum of the amount by which the written down value of the machinery or plant exceeds the scrap value thereof if no insurance, salvage or compensation money has been received in respect of such machinery or plant; and

(ii)  subject to the maximum of the amount by which the difference between the written down value and the scrap value exceeds the amount of insurance, salvage or compensation money received in respect of such machinery or plant;

(j) where any machinery or plant which has been used by the assessee exclusively for agricultural purposes has been sold or transferred by way of exchange in the income year, the amount actually written off on that account in the books of accounts of the assessee, subject to the maximum of the amount by which the written down value of the machinery or plant exceeds the amount for which it has been actually sold or transferred; and

(k) any other expenditure, not being in the nature of capital expenditure or personal expenditure, laid out wholly and exclusively for the purpose of deriving agricultural income from the land.

(2) Notwithstanding anything contained in sub-section (1), no deduction shall be allowed under this section in respect of any interest on which tax has not been paid or deducted in accordance with the provisions of Chapter VII.

28. Income from business or profession.-

28. Income from business or profession.-

(1) The following income of an assessee shall be classified and computed under the head "Income from business or profession", namely :-

(a) profits and gains of any business or profession carried on, or deemed to be carried on, by the assessee at any time during the income year;

(b) income derived from any trade or professional association or other association of like nature on account of specific services performed for its members;

(c)  value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;

(d) the amount, the value of the benefit and the trading liability referred to in section 19(15);

(e) the excess amount referred to in section 19(16);

(f) the excess amount referred to in section 19(18);

(g) the sale proceeds referred to in section 19(20);

1[(h) the amount of income under section 19(20);

Explanation.- Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as "speculation business") shall be deemed to be distinct and separate from any other business.

(2)  Notwithstanding anything contained in this Ordinance,-

(a) the profits and gains of any business of insurance and the tax payable thereon shall be computed in accordance with the provisions of the Fourth Schedule;

(b)  the profits and gains from the exploration and production of petroleum (including natural gas) and the tax payable thereon shall be computed in accordance with the provisions of Part A of the Fifth Schedule;

(c) the profits and gains of any business which consists of, or includes, the exploration and extraction of such mineral deposits of a wasting nature (not being petroleum and natural gas) as may be specified in this behalf by the Government, carried on by an assessee in Bangladesh shall be computed in accordance with the provisions of Part B of the Fifth Schedule.

2[(3)  Notwithstanding  anything  to  the  contrary  contained  in  any  other provisions of this Ordinance, in the case of 3[Bangladesh  Development Bank Ltd.] 4[,  Investment Corporation  of  Bangladesh] 5[,any financial institution] and  any  commercial  bank including the Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, the income  by  way  of  interest  in  relation  to  such  categories  of  bad  or  doubtful debts as the Bangladesh Bank may classify in the income year in which it is credited to its profit and loss account for that year or, as the case may be,  in which it is actually received, whichever is earlier.].

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1 Ins. by F.A. 1994
2 Ins. by F.A. 1996
3 Subs. for "Bangladesh Shilpa Bank or Bangladesh Shilpa Rin Sangstha" by F.A. 2014
4 Ins. by F.A. 1999

5 Ins by F. A. 2015

29. Deductions from income from business or profession.-

29. Deductions from income from business or profession.-

(1) In computing the income under the head "Income from business or profession", the following allowances and deductions shall be allowed, namely:-

(i)   the amount of any rent paid for the premises in which the business or profession is carried on:

Provided that if a substantial part of the premises is used by the assessee as a dwelling-house, the amount shall be a proportionate part of the rent having regard to the proportionate annual value of the part so used;

(ii)  the amount paid for the repair of the hired premises in which the business or profession is carried on if the assessee has undertaken to bear the cost of such repair;

Provided that if a substantial part of the premises is used by the assessee as a dwelling-house, the amount shall be a proportionate part of the sum paid for such repair having regard to the proportionate annual value of the part so used;

(iii) the amount of any interest paid or any profit shared with a bank run on Islamic principles in respect of capital borrowed for the purposes of the business or profession;

Provided that if any part of such capital relates to replenishing the cash or to any other asset transferred to 1[any other entity, when lending of money is not the business of transferor, the amount shall be proportionate part of the interest so paid or the profit so shared having regard to the proportion of such capital so used;

(iv) any sum paid or credited to any person maintaining a profit and loss sharing account or deposit with a bank run on Islamic principles by way of distribution of profits by the said bank in respect of the said account of deposit;

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1 Subs.  for  "a  newly  set  up  industrial  undertaking  or  to  an  extension  of  an  existing  industrial undertaking whose income is exempted from payment of tax" by F.O. 2007

 

 

(v)  an amount not exceeding 1[five percent] of the total income carried to any special reserve created by such financial institution and for such purposes as may be approved by the Government in this behalf, if the aggregate amount standing in such reserve does not exceed the paid up share capital of the institution;

(vi) the amount paid on account of current repairs to buildings, machinery, plant or furniture used for the purposes of the business or profession;                                                             

(vii) the whole or the proportionate part of the amount of any premium paid for insurance, against risk of damage, destruction or loss of buildings, machinery, plant or furniture, stocks or stores according as the whole or part thereof is used for the purposes of the business or profession;

(viii) in respect of depreciation of building, machinery, plant or furniture, being the property of the assessee 2[or bridge or road or fly over owned by a physical infrastructure undertaking] and used for the purposes of business or profession, the allowances as admissible under the Third Schedule;

3[(viiia) in respect of amortization of license fees as admissible under the Third Schedule;]

(ix) in the case of a ship, being a passenger vessel plying ordinarily on inland waters, or a fishing trawler, which is entitled to a special depreciation allowance under paragraph 8 of the Third Schedule, an investment allowance of an amount equivalent to twenty percent of the original cost to the assessee for the year in which the ship or the trawler is first put to use for public utility;

4[(x)] ) in the case of any machinery or plant (other than office appliances and road transport vehicles) which is entitled to accelerated depreciation under paragraph 7 of the Third sehedule,an investment allowance, for the year in which the undertaking starts commercial production, at the following rates,namely:-

(a)    if the undertaking is set up in areas specified in this behalf by   

       the Board,  -----   an amount equivalent to 25 percent of the actual cost to the assessee;

(b)   in other cases,  ---- an amount equivalent to 20 percent   of the actual cost to the assessee; ]

5[(xa)] where an assessee being a company registered under 6[the Companies Act, 1913 (VII of 1913) or কোম্পানী আইন, 1994 (1994 সনের 18 নং আইন)] invests any amount in the purchase of any new plant or machinery for installation in an industrial undertaking set up in Bangladesh and owned by it for the purpose of balancing, modernisation or replacement of the plant or machinery already installed therein, an investment invested allowance at the rate of twenty-five percent of the amount so invested;]

(xi) where any building , machinery  6[plant or any other fixed asset not being importe software] which, after having been used by the assessee for the purpose of his business, has been discarded, demolished or destroyed in any income year or any such asset has been sold, transferred by way of exchange or compulsorily acquired by a legally competent authority or

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1 Subs. for "ten percent" by F.O. 2007
2 Ins. by F.A. 2010
3 Ins.by F.A. 2013
4 Omitted by F.A. 2005
5 Ins. by F.A. 1989 and subsequently Omitted by F.A. 2004

6 Subs. for "or plant" by F.A. 2015

     

exported outside Bangladesh in any income year, an obsolescence allowance to the extent and computed in the manner specified in paragraph 10 of the Third Schedule;

(xii) in the case of any animal which has been used by the assessee for the purpose of business or profession otherwise than as stock-in-trade, has died or become permanently useless for such purpose, an amount equivalent to the difference between the original cost of the animal to the assessee and the sum, if any, realised by sale or other disposition of the carcass, as the case may be, of the animal

(xiii) any sum paid on account of land development tax or rent, local rates or municipal taxes in respect of such premises or part thereof as is used by the assessee for the purpose of business or profession;

(xiv) any sum paid in the income year to an employee as bonus or commission for services rendered where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission and is reasonable with reference, except in the case of payment of festival bonus, to                

(a) the general practice in similar business or profession,

(b) the profits of the business or profession in that year, and

(c) the pay and other conditions of service of the employee:

 1[provided that no deduction on account of bonus other than festival bonus, to its employees shall be allowed to a banking company under this clause if such banking company is allowed deduction from its income under clause (xviiiaa)]  

(xv) the amount of any debt or part thereof which is established to have become irrecoverable and has actually been written off as such in the books of accounts of the assessee for the income year if the debt or part thereof has been taken into account in computing the income of the assessee of that income year or an earlier income year and, in the case of the business of banking or money-lending carried on by the assessee, represents money lent in the ordinary course of business;

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  1.Ins. by F.A. 1993 and subsequently Omitted by F.A. 2002   

 

 

 

(xvi) where any amount of debt or part thereof which has actually been written off as irrecoverable in the books of accounts of the assessee in any income year but has not been allowed on the ground that it has not then become irrecoverable, so much of such debt or part thereof as has been established to have become irrecoverable in any subsequent income year shall be allowed as a deduction in that income year;

(xvii) where any such debt or part thereof is written off as irrecoverable in the books of accounts of the assessee for an income year and the Deputy Commissioner of Taxes is satisfied that such debt or part thereof became irrecoverable in an earlier income year not falling beyond a period of four years immediately preceding the income year in which it was written off, the Deputy Commissioner of Taxes may, notwithstanding anything contained in this Ordinance, allow such debt or part thereof as a deduction for such earlier income year if the assessee accepts such finding of the Deputy Commissioner of Taxes and re-compute the total income of the assessee for such earlier income year and make the necessary amendment; and the provisions of section 173 shall, so far as may be, apply thereto the period of four years referred to in sub- section 1[ the proviso of sub-section (1)] of that section being reckoned from the end of the year in which the assessment relating to the income year in which the debt or part thereof is written off was made;

2[(xviii) in respect of provision for bad and doubtful debt made by a bank for overdue agricultural or rural loan, a sum equal to one and a half per cent of such overdue loan or the amount of actual provision for such bad or doubtful debt in the books of the assessee, whichever is the less;

Provided that if any amount out of the amount so allowed is ultimately recovered, the same shall be deemed to be a profit or the year in which it is recovered];

3[(xviiia)  in  respect  of  provision  for  bad  and  doubtful  debt made by 4[,Bangladesh Development Bank Ltd.] for overdue loan,a some equal five per cent of such overdue loan of the amount of actual provision for such  bad  or  doubtful  debt  in  the  books  of  the Assessee, whichever is the less:

Provided that the deduction shall be allowed only in respect of the assesment years 1987-88, 1988-89, 1989-90 and 1990-91;

Provided further that if any amount out of the amount so allowed is ultimately recoverd, the same shall be deemed to be a profit of the year in which it is recovered.

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1Subs. by F.A. 2017

2Omitted by F.A. 1990
3 Ins. by F.A. 1987
4 Subs. by F.A. 2014

 

 

 

1[(xviiiaa)  in  respect  of  provision  for  bad  and  doubtful  debt and interest there on made by made by a Commercial Bank including the Bangladesh krishi Bank 2[, Karmo Shongsthan Bank] and the Rajshahi krisi Unnayan Bank,a sum equal to 3[one percent] of the total outstanding loan including interest thereon or the amount of actual provision for such  bad  or  doubtful  debt  nterest  thereon  in  the  books  of  the Assessee, whichever is less:

Provided that the provisions of this cluse shall apply only in respect of such loan as the Bangladesh Bank may, from time to time,classify as bad or doubtful debt;

 

4[Provided further that deduction shall be allowed only in respect of the assessment years 1987-88, 1988-89, 1989-90 and 1990-91; 1991-92, 1992-93, 1993-94, 1994-95,5[1995-96, 1996-97, 1997-98, 1998-99 6[ , 1999-2000, 2000-2001 7[, 2001-2002, 2002-2003, 2003-2004 8[, 2004-2005, 2005-2006 and 2006-2007];]]

9[Provided further that if any amount out of the amount so allowed isn ultimately recovered, the same shall be deemed to be a profit of the year in which it is recovered:]

10[Provided  further  that  no  deduction  under  this  clause  shall  be allowed in respect of-

(a)  any  amount  representing  grant  allowed  by  the Government in the form of 15-years Special Treasury Bonds;


(b) any loan advanced to any government  organization, body corporate,  local  authority,  autonomous  body,  or  any  other loan guaranteed by the Government; and

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1 Ins by F.A. 1990
2 Ins. by F.A. 2006
3 Subs. for "five per cent" by F.A. 1997, re-subs. for "three per cent" by F.A. 2003, re-subs. for "two per cent" by F.A. 2005
4 Subs. by F.A. 1993
5 Subs. by F.A. 1997 for "and 1995-96 or till the assessment year the actual provision in respect of which is equal to the bad and doubtful debts as per Bangladesh bank's guideline in this behalf" ins by F.A. 1995
6 Subs. for "and 1999-2000 by F.A. 1999
7 Subs. for "and 2001-2002" by F.A. 2002
8 Subs. for "and 2004-2005" by F.A. 2005
9 Ins. by F.A. 1995
10 Ins. by F.A. 1993

 

 

(c)  any  debt  representing  loans  advanced  to  any  director  of the bank, his nominees or dependants;]

1[Provided further that no deduction under this cluas shall be allowed to be an assesse if he availes himself of the computation of his income from interest on bad or doubtful debt under sub-section (3) of section 28;]

(xix) any expenditure, not being in the nature of capital expenditure, laid out or expended on scientific research in Bangladesh related to the business carried on by the assessee;

(xx) any expenditure of a capital nature laid out or expended on scientific research in Bangladesh related to the business carried on by the assessee:

Provided that where a deduction is allowed for any income year under this clause in respect of expenditure represented wholly or partly by any asset, no deduction shall be allowed under clause (viii) or (ix) for the same income year in respect of that asset;

 (xxi) any sum paid to a scientific research institute, association or other body having as its object the undertaking of scientific research, or to a University, College, Technical School or other Institution for the purpose of scientific research or technical training related to the class of business carried on by the assessee, if such Institute, association or body, or such University, College, Technical School or Institution is, for the time being, approved by the Board for the purpose of this clause.

Explanation- in this clause and in clauses (xix and (xx),-

 (a) "scientific research" means any activities in the field of natural or applied science for the extension of knowledge;

(b) references to expenditure incurred on scientific research do not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research, but save as aforesaid, include all expenditure incurred for the prosecution of, or the provision of facilities for the prosecution of, scientific research;

(c) reference to scientific research related to a business or class of business includes-

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1Ins. by F.A. 1996 and subsequently omitted by F.A. 1997

 

 

(i)   any scientific research which may lend to or facilitate an extension of that business or, as the case may be, all businesses of that class;

(ii)  any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or, as the case may be, business of that class;

(xxii) any expenditure, not being in the nature of capital expenditure, laid out or expended on any educational institution or hospital established for the benefit of the employees of the assessee, their families and dependents or on the training of industrial workers, if-

(a) no charge is made for services rendered by such institution or hospital or for the training of the workers; and

(b) no deduction or allowance is claimed for such expenditure under any other clause of this section;

(xxiii) any expenditure in the nature of capital expenditure laid out or expended on the construction and maintenance of any educational institution or hospital established by the assessee for the benefit of his employees, their families and dependents, or on any institute for the training of industrial workers, if-

(a)       no charge is made for the services rendered by such institution or hospital or for the training of the workers; and

(b)       no deduction or allowance is claimed under any other clause of this section for the same income year in respect of expenditure represented either wholly or partly by any asset;

(xxiv) any expenditure laid out or expended on the training of citizens of Bangladesh in connection with a scheme approved by the Board for purposes of this clause;

(xxv)       any expenditure, not being in the nature of capital expenditure or personal expenses, incurred by an assessee in connection with visits abroad as a member of a trade delegation sponsored by the Government;

 

(xxvi)      any sum paid on account of annual membership subscription to a registered trade organisation within the meaning of the Trade Organisations Ordinance, 1961(XLV of 1961), or to a professional institution recognised by the Board in this behalf;

(xxvii)     any expenditure, not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purpose of the business or profession of the assessee.

(2) Where any premises, building, machinery, plant or furniture is not wholly used for the purposes of business or profession, any allowance or deduction admissible under this section shall be restricted to the fair proportional part of the amount which would be allowable if such premises, building, machinery, plant or furniture was wholly so used.

Explanation.- For the purposes of this section, the expression "plant" includes ships, vehicles, books, scientific apparatus and surgical and other instruments or equipment's used for the purpose of business or profession.

30. Deduction not admissible in certain circumstances.-

30. Deduction not admissible in certain circumstances.-

Notwithstanding anything contained in section 29, no deduction on account of allowance from income from business or profession shall be admissible in respect of the following, namely:-

(a) any payment which is an income of the payee classifiable under the head "Salaries" if tax thereon has not been paid in accordance with provisions of Chapter VII;

  1[(aa) any payment made by an assessee to any person if tax thereon has not been deducted and credited in accordance with the provisions of Chapter VII and মূল্য সংযোজন কর আইন, (value-added tax) thereon has not been collected or deducted and credited in accordance with the provisions of মূল্য সংযোজন কর আইন, 1991 (1991 সনের 22 নং আইন);]

2[(aaa) any payment by way of salary to an employee if the employee is required to obtain a twelve-digit Taxpayer’s Identification Number under the provisions of this Ordinance but fails to obtain the same at the time of making such payment;]

3(aaaa)[ any payment made after the Tax Day by way of salary to an employee if the employee is required to file the return of income but fails to file the same on or before the Tax Day or obtain time extension, as the case may be];

(b) any payment by way of interest, salary, commission or remuneration made by a firm or an association of persons to any partner of the firm or any member of the association, as the case may be;

(c)    any payment by way of brokerage or commission made to a person who is   not a resident in Bangladesh unless tax has been deducted there from under section 56;

.................................................................................

1Ins. by F.A. 1993

Ins. by F.A. 2016
Ins. by F.A. 2017

 

(d)    any payment to a provident fund or other fund established for the benefit of the employees unless the employer has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund which are taxable being income falling under the head "Salaries";

1[(e) so much of the expenditure by an assessee on the provision of perquisites, as defined in clause (45) of section 2, to any employee as exceeds taka 2[[[four lakh and seventy five thousand and to any employee who is a person with disability, as exceeds taka twenty five lakh]

 Provided that the provision of this clause shall not be applicable to an employer where perquisites were paid to an employee in pursuance of any Government decision published in the official Gazette to implement the recommendation of a Wage Board constituted by the Government;]

(f) any expenditure in respect of the following as is in excess of the amount or rate prescribed in this behalf and as is not, in the cases of sales and services liable to excise duty, supported by excise stamp or seal, namely :-

(i) entertainment

(ii) foreign travels of employees and their dependents for holidaying and recreation ;

(iii) publicity and advertisement; and

(iv) distribution of free samples

3[(g) any expenditure exceeding ten percent of the 4[net profit disclosed in the statement of accounts]  under the head of Head Office expenses by a company not incorporated in Bangladesh under কোম্পানী আইন, 1994 (1994 সনের 18 নং আইন)

(h)  any  payment  by  way  of  royalty  ,  technical  services  fee,  technical  know how  fee  or  technical  assistance  fee  exceeding 5[eight  percent]  of  the 6[net profit disclosed in the statement of accounts] 7[;

...................................................................

1 Subs. by F.A. 2005
2 Ins. by F.A. 2016
3 Ins. by F.A. 2003
4 Subs. for "profit" by F.A. 2014
5 Subs. for “two and one-half per cent” by F.O. 2007 & “five percent” by F.A. 2009
6 Subs. by F.A. 2014
7 Ins. by F.A. 2006

 

 

(i) any payment by way of salary or remuneration made otherwise than by crossed cheque or bank transfer by a person to any employee having gross monthly salary of taka fifteen thousand or more;

(j) any expenditure by way of incentive bonus exceeding ten percent of the1[net profit disclosed in the statement of accounts];

(k) any expenditure by way of overseas traveling exceeding 2[one point two five percent (1.25%)] of the disclosed turnover] 3[;

          4[Provided that nothing of this clause shall apply to the overseas traveling expenses by an assessee engaged in providing any serviceto the Government                                               where overseas  traveling is a key requirement of that service;]


(l)  any  payment  by  way  of  commission  paid  or  discount  made  to  its shareholder director by a company;


(m)  any  payment  by  a  person  exceeding  taka  fifty  thousand  or  more, otherwise than by a crossed cheque or bank transfer excluding-


(i) payment for the purchase of raw materials;


(ii) salary or remuneration made to any employee, without prejudice to an obligation referred to in clause (i) ;


(iii) any payment for government obligation] 5[;


(n)  any  payment  by  way  of  any  rent  of  any  property,  whether  used  for commercial  or  residential  purposes,  otherwise than  by  a  crossed  cheque  or bank transfer.] 

(o) 6[any payment made to a person who is required to obtain a twelve-digit Taxpayer’s Identification Number under clauses (xxviii), (xxix) and (xxx) of sub-section (3) of section 184A but fails to hold the same at the time of payment.] 

-----------------------------------------------------------------------------------------------------------------

1 Subs. for disclosed net profit"  by F. A. 2014
2 Ins by F.A. 2016

3 Subs. "semi-colon" for "full-stop" and ins. new clause (l) and (m) by F.A. 2012

Ins by F.A. 2017
Subs. "semi-colon" for "full-stop" and ins. new clause (n) and (m) by F.A. 2014     

Ins by F.A. 2017                              

30A. Provision for disallowance-

1[30A. Provision for disallowance- [30A.  Provision  for  disallowance.  -  Notwithstanding  anything  contained  in sections 28, 29  and 30, the Deputy Commissioner of Taxes shall not make any  disallowance  or  deduction  for  any  year  from  any  claim  made  by  an assessee in the trading account or profit or loss account without specifying reason for such disallowance or deduction.]

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1 Ins. by F.A. 2002

31. Capital gains .-

31. Capital gains .-

Tax shall be payable by an assessee under the head "Capital gains" in respect of any profits and gains arising from the transfer of a capital asset and such profits and gains shall be deemed to be the income of the income year in which the transfer took place 1[.

2[Provided that no tax shall be payable by an assessee, being a non-resident, in respect of any profits and gains arising from the transfer of stocks or shares of a public company as defined in 3[†Kv¤úvbx AvBb, 1994 (1994 m‡bi 18bs AvBb)] subject to the condition that such assessee is entitled to similar exemption in the country in which he is a resident.]

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1Subs. full stop for "colon" and omitted proviso by F.A. 2011
2Omitted. by F.A. 2011

32. Computation of capital gains.-

32. Computation of capital gains.-

(1) The income under the head "Capital gains" shall be computed after making the following deduction from the full value of the consideration received or accruing from the transfer of the capital asset or the fair market value thereof, whichever is higher, namely:-

(a) any expenditure incurred solely in connection with the transfer of the capital asset; or

(b) the cost of acquisition of the capital asset and any capital expenditure incurred for any improvements thereto but excluding any expenditure in respect of which any allowance is admissible under any provisions of sections 23,29 and 34

1[(1A)]   No deduction in respect of cost of acquisition as contemplated in sub-section(1) shall be allowed for the purpose of computation of income under the head “Capital gains” on account of the transfer of any capital asset acquired by the assessee as a bonus share];

(2) For the purpose of this section, "cost of acquisition of the capital asset" means-

(i) where it was acquired by the assessee by purchase, the actual cost of acquisition; and

(ii) where it became the property of the assessee-

2[(a) by succession, inheritance or devolution; or];]

[(b) under a deed of gift, bequest or will; or];]

 3[(c) by succession, inheritance or devolution; or ];]

 4[(cc) under a deed of gift, bequest or will; or

(ccc) under a transfer on a revocable or irrevocable trust; or

(d) on any distribution of capital assets on the liquidation of a company; or     

........................................................................................................................

1 Ins. by F.A. 1995 and subsequently omitted by F.A. 1996
2 Omitted by F.O. 1986
3 Subs. by F.A. 1990 and subsequently omitted by F.A. 1993
4 Ins. by F.A. 1990

 

                                                                           

(e)   on any distribution of capital assets on the dissolution of a firm or other association of persons or the partition of a Hindu undivided family ;

the actual cost of acquisition to the previous owner of the capital asset as reduced by the amount of depreciation, if any, allowed to the previous owner; and where the actual cost of acquisition to the previous owner cannot be ascertained, the fair market value at the date on which the capital asset became the property of the previous owner:

Provided that where the capital asset is an asset in respect of which  the  assessee  has  obtained  depreciation  allowance  in any  year,  the  cost  of  acquisition  of  the  capital  asset  to  the assessee  shall  be  its  written  down  value  increased  or diminished,  as  the  case  may  be,  by  any  adjustment  made under section 19(16) or (17) or section 27 (1) (j) or section 29(1) (xi):


1[Provided  further  that  where  the  capital  asset  became  the property  of  the  assessee  by  succession,  inheritance  or devolution, the actual cost of acquisition of the capital asset to the assessee shall be the fair market value of the property prevailing at the time the assessee became the owner of such property.]

 (3) Where in the opinion of the Deputy Commissioner of Taxes the fair market value of a capital asset transferred by an assessee as on the date of transfer exceeds the full value of the consideration declared by the assessee by an amount of not less than fifteen per cent of the value so declared, the fair market value of the capital asset shall be determined with the previous approval of the Inspecting Joint Commissioner.

(4) Where in the opinion of the Deputy Commissioner of Taxes the fair market value of a capital asset transferred by an assessee as on the date of the transfer exceeds the declared value thereof by more than twenty five per cent of such declared value, the Government may offer to buy the said asset in such manner as may be prescribed.

(5) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of a capital asset which immediately before the date on which the transfer took place was being

...........................................................................................

1 Ins. by F.O. 1986, subsequently omitted by F.A. 1990 and restored by F.A. 1993

 

 

used by the assessee for the purposes of his business or profession and the assessee has, within a period of one year before or after that date, purchased a new capital asset for the 1[same] purposes of his business or profession, then, instead of the capital gain being charged to tax as income of the income year in which the transfer took place, it shall, if the assessee so elects in writing before the assessment is made, be dealt with in accordance with the following provisions of this sub-section, that is to say-

(a) if the amount of the capital gains is greater than the cost of acquisition of the new asset,-

(i) the difference between the amount of the capital gain and the cost of acquisition of the new asset shall be charged under section 31 as income of the income year, and

(ii) for the purposes of computing in respect of the new asset any allowance under the Third Schedule or the amount of any capital gain arising from its value, as the case may be, shall be nil, or

(b) if the amount of the capital gain is equal to or less than the cost of acquisition of the new asset,-

(i) the capital gain shall not be charged under section 31, and

(ii)  for the purposes of computing in respect of the new asset any allowance under the Third Schedule or any income under section 19(16) or the amount of any capital gain arising from its transfer, the cost of acquisition or the written down value, as the case may be, shall be reduced by the amount of the capital gain:

Provided that where in respect of the purchase of a new capital asset consisting of plant or machinery, the assessee satisfies the Deputy Commissioner of Taxes that despite the exercise of due diligence it has not been possible to make the purchase within the period specified in this sub-section, the Deputy Commissioner of Taxes may, with the prior approval of the Inspecting Joint Commissioner, extend the said period to such date as he considers reasonable.

................................................................................

1Omitted by F.A. 1995

 

 

1[(6) Notwithstanding anything contained in this section or section 31, where a capital asset being buildings or lands appurtenant thereto the income of which is chargeable under the head “Income from house property”, which in the two years immediately preceding the date on which the transfer took place was being used for the purpose of residence, and the assessee has within a period of one year before or after that date purchased, or has within a period of one year before or after that date purchased, or has within a period of two years after that date constructed, a house property for the purpose of residence then instead of the capital gain being charged to tax as income of the income year in which the transfer took place, it shall, if the assessee so elects in writing before the assessment is made, be dealt with in accordance with the following provisions of this sub-section, that is to say-

(a) if the amount of the capital gains is greater than the cost of acquisition of the new asset—

      (i) the difference between the amount of the capital gain charged under section 31 as income of the 2[income year],and

      (ii) for the purpose of computing in respect of the new asset any capital gain arising from its transfer, the cost of acquisition shall be nil,

 

(b) if the amount of the capital gain is equal to or less than the cost of acquisition of the new asset,--

      (i) the capital gain shall not be charged under section 31,and

      (ii) for the purpose of computing in respect of the new asset any capital gain arising from its transfer, the cost of acquisition shall be reduced by the amount of the capital gain:

Provided that where in respect of the purchase or construction of a new capital asset consisting of building for the purpose of residence ,the assessee satisfies the Deputy Commissioner of Taxes that despite the exercise of due diligence it has not been possible to make the purchase or construction within the period specified in this sub-section, the Deputy Commissioner of Taxes may, with the prior approval of the Inspecting Joint Commissioner , extend the said period to such date as he considers reasonable.].

3[(7) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of a capital asset being Government securities and 4[and stocks and shares of public companies listed with a stock exchange in Bangladesh], 5[other that bonus share of a company] then no tax shall be charged under this section 31.

6[(8)  Notwithstanding anything contained in this section or section 31 where a capital gain arises from the transfer of a capital asset being buildings or lands which, within a period of two years immediately following the date on which the transfer took place, is invested in the acquisition of capital asset of an industrial undertaking,7[or in the acquisition of a new apartment or apartments to be used for residence under an agreement used for residence] 8[or purchase of new shares of a company listed with a Stock Exchange in Bangladesh or purchase of National writing before the assessment is made, be dealt with in accordance with the following provisions of this sub-section, that is to say-

(a) if the amount of the capital gains is greater than the cost of acquisition of the new asset—            

 (i) the difference between the amount of the capital gain and the cost of acquisition of the new asset shall be charged under section 31 as income of the income year, and

(ii) for the purposes of computing in respect of the new asset, any allowance under the Third Schedule or the amount of any capital gains arising from its transfer, the cost of acquisition the written down value, as the case may be, shall be nil, or                  

 (b) if the amount of the capital gain is equal to or less than the cost of acquisition of the new asset,--

  (i) the capital gain shall not be charged under section 31, and

(ii) for the purposes of computing in respect of the new asset any allowance under the Third Schedule or any income under section 19( 16) or the amount of any capital gain arising from its transfer, the cost of acquisition or the written down value, as the case may be, shall be reduced by the amount of the capital gain:

 9[Provided that where in respect of the acquisition of the capital asset on an industrial undertaking, the assessee satisfies the Deputy Commissioner of Taxes that despite the exercise of due diligence it has not been possible to acquire the new asset within the period specified in this sub-section, the Deputy Commissioner of taxes may, with the prior approval of the Inspecting Joint Commissioner, extend the said period to such date as he considers reasonable]. ]

 10[11[(9) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of a capital asset being buildings or lands which, within a period of one year immediately following the date on which the transfer took place, 12[is invested in the acquisition, otherwise than by purchase, or transfer from previous holders, of stocks or shares of public limited companies listed with a stock exchange in Bangladesh] and the stocks or shares are held by the assessee for at least two years from the date of acquisition, the capital gain shall not be charged to tax as income of the year in which the transfer took place.].

(10) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of capital being buildings or lands to a new company registered under  13[the Companies Act, 1913 (VII of 1913) or কোম্পানী আ‌ইন, 1994 (1994 সনের 18 নং আ‌ইন)], for setting up of an industry, and if the whole amount of capital gain is invested in the equity of the said company, then the capital gain shall not be charged to tax as income of the year in which the transfer took place.

(11) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of capital asset of a firm to a new company registered under 14[the Companies Act, 1913 (VII of 1913) or কোম্পানী আ‌ইন, 1994 (1994 সনের 18 নং আইন), and if the whole amount of the capital gain is invested in theequity of the said company by the partners of the said firm, then the capital gain shall not be charged to tax as income of the year in which the transfer took place.

15[16[(11A)    Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of capital asset of an assessee to a new company registered under . †Kv¤úvbx AvBb, 1994 (1994 m‡bi 18bs AvBb), and if the whole amount of the capital gain is invested in the equity of the said company, then the capital gain shall not be charged to tax as income of the year in which the transfer took place:

Provided that for determining the capital gains arising from the transfer of stocks or shares of the said company, actual cost of acquisition of membership of a Stock Exchange in proportion to the stocks or shares shall be deducted from the full value of the consideration received or accruing from the transfer of stocks or shares or the fair market value thereof, whichever is higher .”] ]

17[(12) Notwithstanding anything contained in sub-sections 18[(5), (7), (10), and (11)], no exemption shall be allowed to any person on so much of profits and gains arising out of the transfer of a capital asset as is attributable to the cost of acquisition of such asset in respect of which any investment allowance referred to in paragraph 1, 2, 3, 4, 5, 6, 8, 9, 10 and 11 of PART B of the SIXTH SCHEDULE to this Ordinance was at any time allowed.

.......................................................................

1Omitted by F.A. 2000
2 Subs. for "previous year" by F.o. 1985

3 Subs by F. A. 1995
4 Omitted by F.A. 2010
5 Omitted by F.A.1996

6 Omitted by F.A. 2010

7 Ins by F. A. 1991

8 Ins by F. A. 1993

9 Proviso omitted by F. A. 1993


10 Ins. Sub-section (9), (10) and (11) by F.O.1985

11 Omitted by F.A. 2000

12 Subs. for "in the aqisition of stocks or share of public limited companies which fulfill the conditions laid down in paragraph 8 of part B of Sixth Scheedule" by F. A. 1995

13 Subs. for "the Companies Act. 1913 (VII of 1913)" by F.A. 1995
14 Subs. for "the Companies Act. 1913 (VII of 1913)" by F.A. 1995

15 Omitted by F.O. 2007

16 Ins. by F. A. 2006

17 Ins. by F.A. 1994
18 Subs. for "sub-sections (5), (6), (7), (8), (9),(10) and (11)" by F.A. 2000

 

33. Income from other sources.-

33. Income from other sources.-

The following income of an assessee shall be classified and computed under the head "Income from other sources", namely:-

(a) dividend and interest;

 (b) royalties and fees for technical services;

(c) income from letting of machinery, plants or furniture belonging to the assessee, and also of buildings belonging to him if the letting of buildings is inseparable from the letting of the machinery, plant or furniture;


1[(d) any income to which section 19 (1), (2), (3), (4), (5), (8), (9), (10), (11),(12), (13) 2[, (21), 3[(21A), (21B), (24), (26), (27) or 4[,(28), (29) or (31) applies]];]

(e) any other income of any kind or from any source which is not classifiable under any of the other heads specified in section 20.

.................................................................

1Subs. by F.A. 1994
2Subs. for "or 21" by F.A. 2002
3Subs. for "(21A) or (24) applies" by F.A. 2014

4 Subs. for "or (28)" by F. A. 2015

35. Method of accounting.-

35. Method of accounting.-

(1) All income classifiable under the head 1["Agricultural income"], "Income from business or profession" or "Income from other sources" shall be computed in accordance with the method of accounting regularly employed by the assessee.

2[(2) Notwithstanding anything contained in sub-section (1), the Board may, in the case of any business or profession, or class of business or profession, or any other source of income, or any class of persons, by a general or special order, direct that the accounts and other documents shall be maintained in such manner and form, and that payments of commercial transactions recorded in such manner, as may be prescribed or as may be specified in such direction ; and thereupon the income of the assessee shall be computed on the basis of the accounts maintained, payments made and transactions recorded accordingly.]

(3) Without prejudice to the preceding sub-sections, every public or private company as defined in 3[the Companies Act, 1913 (VII of 1913) or কোম্পানী আ‌ইন, 1994 (1994 সনের 18 নং আ‌ইন)]  4[and every registered firm whose capital on the last day of any income year was not less than five lakh taka,] shall, with the return of income required to be filed under this Ordinance for any income year, furnish a copy of the trading account, profit and loss account and the balance sheet in respect of that income year 5[certified by a chartered accountantto the effect that

6 [the accounts are maintained and the statements are prepared and reported in accordance with the Bangladesh Accounting Standards (BAS) and the Bangladesh Financial Reporting Standards (BFRS), and are audited in accordance with the Bangladesh Standards on Auditing (BSA)”]

(4) Where-

(a) no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Deputy Commissioner of Taxes, the income of the assessee cannot be properly deduced therefrom; or

(b)    in any case to which sub-section (2) applies, the assessee fails to maintain accounts, make payments or record transactions in the manner directed under that sub- section ; or

(c) a company 7[or a registered firm]] has not complied with the requirements of sub- section (3); the income of the assessee shall be computed on such basis and in such manner as the Deputy Commissioner of Taxes may think fit.

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1 Ins. by F.A. 1991
2 Subs. by F.A. 2014

3 Subs. for "the Companies Act. 1913 (VII of 1913)" by F.A. 1995
4 Omitted by F.A. 1996
5 Subs. by F.A. 2014

6 Subs F. A. 2016
7 Omitted by F.A. 1998

 

34. Deductions from income from other sources.-

34. Deductions from income from other sources.-

(1) The amount of interest paid in respect of money borrowed for the purpose of acquisition of shares of a company.

(2) Any expenditure, not being in the nature of capital expenditure or personal expenses of the assessee, incurred solely for the purpose of making or earning the relevant income.

(3) Where the income is derived from letting on hire of machinery, plant or furniture belonging to the assessee and also of building belonging to him if the letting of the building is inseparable from the letting of such machinery, plant or furniture, the same allowances as are admissible under section 29(1) (vi), (vii) and (xi) to an assessee in respect of income under the head "Income from business or profession" subject to the same conditions and limitations as if the income from such letting on hire were income from business or profession:

Provided that the provisions of section 19(16) shall also be applicable for the determination of any profits where the sale proceeds of such machinery, plant, furniture or building exceeds the written down value thereof.

(4) Notwithstanding anything contained in this section, no allowance shall be made on account of-

(a) any interest chargeable under this Ordinance which is payable outside Bangladesh on which tax has not been paid and from which tax has not been deducted at source under section 56; or

(b) any payment which is chargeable under the head "Salaries" if tax has not been paid thereon or deducted there from under section 50.

36. Allocation of income from royalties, literary works, etc.-

36. Allocation of income from royalties, literary works, etc.-

Where the time taken by the author of a literary or artistic work in the making thereof exceeds twelve months, the amount received or receivable by him during any income year in lump sum on account of royalties or copyright fees in respect of that work shall, if he so claims, be deemed to be the income of-

(a) the income year in which it is received and the immediately preceding income year if the time taken in making such work exceeds twelve months but does not exceed twenty-four months ; and

(b) the income year in which it is received and the two immediately preceding income years if the time taken in making such work exceeds twenty-four months, and shall be allocated in equal proportions to each such income year and the income of the assessee in respect of an income year shall be computed accordingly.

Explanation.- For the purposes of this section, the expression "author" includes a joint author and the expression "lump sum" in regard to royalties or copyright fees includes an advance payment on account of such royalties or copyright fees which is not returnable.

37. Set off of losses.-

37. Set off of losses.-

 

Where, in respect of any assessment year, the net result of computation of income under any head is a loss, the assessee shall, subject to the other provisions of this Ordinance, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head:

 

1[Provided that any loss in respect of any speculation business or any loss under the head "Capital gains" or any loss from any other source, income of which is exempted from tax shall not be so set off, but shall, excluding any loss from any other source, income of which is exempted from tax, in accordance with the provisions of this Ordinance, be set off, or be carried forward to succeeding assessment year or years for set off, against any income in respect of speculation business or any income under the head "Capital gains ":]

Provided further that for the purpose of this section the Deputy Commissioner of Taxes shall, in computing any loss, deduct any amount received in cash as subsidy from the Government 2[:]

3[Provided further that that any loss in respect of any income from business or profession shall not be so set off, or be carried forward to succeeding assessment year or years for set off, against any income from house property 4[:

5 [Provided further that any loss in respect of any income from any head shall not be so set off against any income from manufacturing of cigarette[bidi, zarda, chewing tobacco, gul or any other smokeless tobacco or tobacco products]

...............................................................................................

1 Subs. by F.A. 2005

2 Subs. "colon" for" fullstop" by F. A. 2015
3 Ins. by F,A. 2007

4 Subs. "colon" for" fullstop" and ins. new proviso by F. A. 2015

5 Added F. A. 2016.

 

38. Carry forward of business losses.-

38. Carry forward of business losses.-

Where, for any assessment year, the net result of the computation of income under the head "Income from business or profession" is a loss to the assessee, not being a loss sustained in a speculation business, and such loss has not been wholly set off under section 37, so much of the loss as has not been so set off, the whole of the loss, where the assessee has no income under any other head or has income only under the head "Capital gains", shall be carried forward to the next following assessment year, and-

(a) it shall be set off against the income, if any, from the business or profession for which the loss was originally computed if such business or profession is continued to be carried on by him in the income year; and

(b)  if the loss cannot be wholly so set off, the amount of the loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years.

39. Carry forward of loss in speculation business.-

39. Carry forward of loss in speculation business.-

(1) Where, for any assessment year, the result of computation of income in respect of any speculation business carried on by the assessee is a loss, it shall be set off only against the income, if any, from any other speculation business carried on by him and assessable for that assessment year.

 (2)  Where, for any assessment year, any loss computed in respect of a speculation business has not been wholly set off under sub-section (1), so much of the loss as has not been so set off, or the whole loss where the assessee has no income from any other speculation business, shall, subject to the provisions of this Ordinance, be carried forward to the next following assessment year, and-

(a)  it shall be set off against the income, if any, from any speculation business carried on by him and assessable for that assessment year; and

(b)  if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years

40. Carry forward of loss under the head "Capital gains".

40. Carry forward of loss under the head "Capital gains".-

(1)  Where, in respect of any assessment year, the net result of computation of income from any source under the head "Capital gains" is a loss, it shall be set off only against income from any other source falling under that head and assessable for that year.

(2)  Where, for any assessment year, any loss computed under the head "Capital gains" has not been wholly set off under sub-section (1), so much of the loss as has not been so set off, or the whole loss where the assessee has no income from any other source falling under that head, shall, subject to the provisions of this Ordinance, be carried forward to the next following assessment year, and-

(a) it shall be set off against income, if any, of the assessee    under that head and assessable for that year; and

(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years.

(3)  Where, in respect of any assessment year, the loss computed under the head "Capital gains" does not exceed five thousand taka it shall not be carried forward and where it exceeds five thousand taka only so much of such loss shall be carried forward as exceeds five thousand taka.

41. Carry forward of loss under the head "Agricultural income".-

41. Carry forward of loss under the head "Agricultural income".-

Where, for any assessment year, the net result of the computation of income under the head "Agricultural income" is a loss to the assessee, and such loss has not been wholly set off under section 37, so much of the loss as has not been so set off, or the whole of the loss, where the assessee has no income under any other head or has income only under the head "Capital gains", shall be carried forward to the next following assessment year, and-

(a) it shall be set off against agricultural income, if any, of the assessee assessable for that assessment year; and

(b) if the loss cannot be wholly so set off the amount not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years.

42. Conditions and limitations of carry forward of loss, etc.-

42. Conditions and limitations of carry forward of loss, etc.-

(1) The provisions of sections 37. 38, 39, 40 and 41 shall have effect subject to the conditions and limitations set out in this section.

1[(2) Where the assessee is a registered firm-].

(a) any loss under any head of income which cannot be set off against the income of the firm under any other head, shall be appointed amongst the partners of the firm and they alone shall be entitled to have the amount carried forward and set off; and

(b) any loss which has been appointed amongst the partners under clause (a) shall not be carried forward and set off. ]

 (3) In the case of 2[ a firm,-

(a) Where the assessee is the firm, the loss sustained by it under any head of income shall be set off under section 37 only against the income of the firm under any other head and not against the income of any of the partners of the firm; and

(b) where the assessee is a partner of the firm, he shall not be entitled to have any loss sustained by the firm carried forward and set off against his own income.

(4) Where any person carrying on any business or profession has been succeeded in such capacity by another person otherwise than by inheritance, no person, other than the person incurring the loss, shall be entitled to have the loss in such business or profession set off against his income under any other head.

(5) In the case of a firm in the constitution of which a change has occurred,-

(a) the firm shall not be entitled to set off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits, if any, of the income year in the firm; and

(b) a partner of the firm shall not be entitled to the benefit of any portion of the said loss as is not apportioned to him.

(6) Where, in making an assessment for any year, full effect cannot be given to the allowances referred to in section 29(1) (viii) owing to there being no profits or gains chargeable for that year or such profits or gains being less than the allowance then, subject to the provisions of sub-section (7), the allowance or part of the allowance to that allowance or if there is no such allowance for that year, be deemed to be the allowance for that year and so on for succeeding years.

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1 Omitted by F.A. 1995
2 Subs for "an unregistered firm" by F.A. 1995

43. Computation of total income.-

43. Computation of total income.-

(1)   For the purpose of charge of tax, the total income of an assessee    shall be computed in the manner provided in this Ordinance 

(2)  In computing the total income of an assessee, there shall be included any exemption or allowance specified in part B of the Sixth Schedule and any income deemed to be the income of the assessee under section 19, subject to the limits, conditions and qualifications laid down therein.

(3)  Where the assessee is a partner of a firm, then, whether the firm has made a profit or a loss, his share (whether a net profit or a net loss) shall be taken to be any salary, interest, commission or other remuneration payable to him by the firm in respect of the income year increased or decreased respectively by his share in the balance of the profit or loss of the firm after the deduction of any interest, salary, commission or other remuneration payable to any partner in respect of the income year 1[and also in the case of a registered firm, of the tax payable by it;] and such share shall be included in his total income:

Provided that if his share so computed is a loss, such loss may be set off or carried forward and set off in accordance with the provisions of section 42.

  (4)  In computing the total income of any individual for the purpose of   assessment, there shall be included –

(a)   so much of the income of the spouse or minor child of such individual as arises, directly or indirectly, -

(i) from the membership of the spouse in a firm of which such individual is a partner;

(ii) from the admission of the minor child to the benefits of partnership in a firm of which such individual is a partner;

(iii) from assets transferred directly or indirectly to the spouse otherwise than 2[by way of gift or] for adequate consideration,for adequate  consideration,  to  such  person  or  association  of  persons  by such individual for the benefit of the spouse or minor child or both. 

(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than 3[by way of gift or] for adequate consideration; and

(b) so much of the income of any person or association of persons as arises from assets transferred, otherwise than 4[by way of gift or] for adequate consideration, to such person or association of persons by such individual for the benefit of the spouse or minor child or both.

(5) All income arising to any person by virtue of a settlement or disposition whether revocable or not from assets remaining the property of the 5[settlor] or disponer, shall be deemed to be income of the 6[settler] or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor and shall be included in the total income of such person.

 (6)    For the purpose of sub-section (5),--

(a)   a settlement, disposition or transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the income or assets to the 2[settlor], disponer or transferor, or in any way gives the settlor, disponer or transferor a right to resume power directly over the income or assets;

(b)  the expression "settlement or disposition" shall include any disposition, trust, covenant, agreement or arrangement, and the expression 2[settlor] or disponer, in relation to a settlement or disposition, shall include any person by whom the settlement or disposition was made.

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1 Omitted by F.A. 1995  

2 Omitted the words "by way of gift or" by F.O. 1985, subsequently re-ins by F.A. 1990

3 Omitted the words "by way of gift or" by F.O. 1985, subsequently re-ins by F.A. 1990

4 Omitted the words "by way of gift or" by F.O. 1985, subsequently re-ins by F.A. 1990
5 Subs. for "settler" by F.A. 1989 and shall be deemed to have been always so substituted. 

6 Subs. for "settler" by F.A. 1989 and shall be deemed to have been always so substituted.