THE THIRD SCHEDULE

THE THIRD SCHEDULE
¹[COMPUTATION OF DEPRECIATION ALLOWANCE
[See section 27 and 29]

1.      Depreciation allowance on assets used for agricultural purposes.--
For the purpose of section 27(1)(f), depreciation allowance at the rates specified in the Table below shall be made in respect of depreciation of any irrigation or protective work or other capital assets:

                                                                                      ²[TABLE

¹ Subs. for "COMPUTATION OF DEPRECIATION ALLOWANCE" by F. A. 2013

²  subs.TABLE  by F . A . 1987

2. Allowance for depreciation.-

(1)       In computing profits and gains from business or profession, an allowance for depreciation shall be made in the manner hereinafter provided in respect of any building, machinery, plant or furniture owned by an assessee or bridge or road ¹[or fly over of a physical infrastructure undertaking^{[F.A. 2010]} and used for the purposes of business or profession carried on by him.

(2)       Where any such building, machinery, plant or furniture or bridge or road or fly over of a physical infrastructure undertaking is not wholly used for the  of the business ²[or profession, the allowance under sub-paragraph (1) shall be restricted to the fair proportional part of the amount which would be admissible if such building, machinery, plant or furniture were wholly so used.

(3)       No allowance under this paragraph shall be made unless-

(a)       at the time of filing a return of total income such particulars as may be prescribed and such further information or documents as the Deputy Commissioner of Taxes may require, are furnished ; and

¹ Ins . by  F . A . 2010

² Ins . by  F . A . 2010

³ Ins . by  F . A . 2010

3. Normal depreciation allowance.-

(1)       The allowance for normal depreciation under paragraph 2 shall be computed at the rates specified in the table below :

¹[TABLE

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¹  subs . by   এস . আর. ও  নং ১৮০-আইন /৯৮,  তারিখঃ ৪/৫/১৪০৫বাং/১৯/৮/৯৮/ইং

²  subs . by F. A. 2021

³ Ins. by F. A. 2014

(2)       The Board may, from time to time, by notification in the official Gazette, make any amendment in the Table referred to in sub-paragraph (1)

²  Ins . by  F . A . 2008

³   Ins . by  F . A . 2009

⁴   Ins . by  F . A .  2015

⁵ Subs by F. A. 2014

⁶ Omitted by  F . O 2007 

¹[(4) No allowance under this paragraph shall be made for a leasing company on such machinery, plant, vehicle or furniture given to any leasee on financial lease.

²[4. Extra depreciation allowance:

(1) In the case of machinery and plant to which the general rate applies, an extra depreciation allowance, equal to fifty per cent of the normal depreciation allowance computed under paragraph 3(1) shall be allowance on account of double shift working and one hundred per cent of such allowance on account of triple shift working:

Provided that the assessee claims such allowance and satisfies the Deputy Commissioner of Taxes that the concern has actually worked double or triple shifts.

(2) The extra depreciation allowance under sub-paragraph (1) shall be proportionate to the number of days during which the double or triple shifts are worked; and for the purpose of computing this allowance, the normal number of working days throughout the year shall be taken as three hundred.

(3) The Provisions of paragraph 2(2) and (3) shall so far as may be, apply to this paragraph as they apply to the said paragraph. ]

5. Depreciation not to be allowed in cases where the cost of renewal or replacement is allowed.--

Notwithstanding anything contained in this Ordinance, no allowance under paragraph 2 ³[ or  4  ]shall be made in the case of any asset falling under the description "Machinery and Plant" the normal useful life of which does not exceed one year, but the cost of renewal or replacement thereof shall be allowed as a revenue expenditure.

⁴[5A. Initial depreciation allowance.-

(1) Where any building has been newly constructed or any machinery or plant has been installed in Bangladesh after the thirtieth day of June, 2002, an amount by way of initial depreciation allowance in respect of the year of construction or installation or the year in which such building, machinery or plant is used by the assessee for the first time for the purpose of his business or profession or the year in which commercial production is commenced, whichever is the later, shall be allowed at the following rates, namely:-

¹ Ins . by  F . A . 2007

² Omitted by  F . O 1998

³ Omitted by  F . O 1998

⁴ Ins. by F. A. 2002

(2) Nothing contained in sub-paragraph (1) shall apply in the case of-

(a) any motor vehicle not plying for hire, and

(b) any machinery or plant which has previously been used in Bangladesh.

(3)    The provisions of paragraph 2 and 3 shall, so far as may be, apply to this paragraph as they apply to the said paragraph.

¹[6. Extra depreciation allowance:

(1) In the case of machinery and plant to which the general rate applies, an extra depreciation allowance, equal to fifty per cent of the normal depreciation allowance computed under paragraph 3(1) shall be allowance on account of double shift working and one hundred per cent of such allowance on account of triple shift working:

Provided that the assessee claims such allowance and satisfies the Deputy Commissioner of Taxes that the concern has actually worked double or triple shifts.

(2) The extra depreciation allowance under sub-paragraph (1) shall be proportionate to the number of days during which the double or triple shifts are worked; and for the purpose of computing this allowance, the normal number of working days throughout the year shall be taken as three hundred.

(3) The Provisions of paragraph 2(2) and (3) shall so far as may be, apply to this paragraph as they apply to the said paragraph. ]

7. Accelerated depreciation allowance on machinery and plant.-

²(1)      In the case of any machinery or plant (other than office appliances and road transport vehicles) which, not having been previously used in Bangladesh, has been or is used in an industrial undertaking set up in Bangladesh between the first day of July, 1977 and the thirtieth day of June, ³[2012] (both days inclusive), an amount by way of accelerated depreciation allowance shall, subject to the conditions set out in sub-paragraph (2), be allowed and computed as follows, namely :-

(2) The industrial undertaking referred to in sub-paragraph (1) shall fulfil the following conditions, namely:-

(a) that the industrial undertaking is owned and managed by a Bangladeshi company, or a body corporate formed in pursuance of an Act of Parliament, having its registered office in Bangladesh;
(b) that it belongs to such class of industries as the Board may, by notification in the official Gazette, specify in this behalf;
(c) that the particulars required for the purpose of entitlement to, or claiming accelerated depreciation allowance under this paragraph have been furnished; and
(d) that the application in the prescribed form for accelerated depreciation allowance under this paragraph, as verified in the prescribed manner, is made to the Board within ⁴[six months] from the end of the month of commencement of commercial production; and the application is accompanied by a declaration in writing that the undertaking has not been approved for, and that no application in respect of the undertaking has been made or shall be made to the Board for approval of, exemption from payment of tax ⁵[under section] 45 or 46A or 46B of this Ordinance for any period.

(3) The machinery or plant on which accelerated depreciation has been allowed under this paragraph shall not be entitled to any other depreciation allowance under this Ordinance or the Income-tax Act,1922 (XI of 1922)

⁶[7A. Accelerated depreciation allowance on machinery and plant.-
(1) In the case of machinery or plant (other than office appliances and road transport vehicles) which not having been previously used in Bangladesh, has been or is used-
(a) in the expansion unit set-up between the first day of July, 1995 and the thirtieth day of June, ⁷[2005] (both days inclusive) in any existing undertaking enjoying exemption from tax under section 46A; or

(b) between the first day of July, 1995 and the thirtieth day of June, ⁸[2005] (both days inclusive) in the treatment and disposal of toxic and environmentally hazardous wastes or in the collection or processing of bio-degradable wastes or in the research and development in any industrial undertaking owned and managed by a company as defined in clause (20) of section 2, an amount by way of accelerated depreciation allowance shall, subject to the conditions set out in sub-paragraph (2), be allowed and computed as follows, namely:-

Explanation.- For the purposes of this paragraph, “expansion unit” means the expansion of an existing undertaking if such expansion constitutes-

(a) an identifiable unit for production or operation of similar or other goods or class of goods or services;

(b)       a similar unit carrying on an identifiable industrial process, but does not include

an undertaking which is formed by splitting up or reconstruction of an existing business or by transfer of machinery or plant of an existing business in Bangladesh to a new business.

(2)       The undertaking referred to in clause (a) or (b) of sub-paragraph (1) shall fulfill the following conditions, namely:-
(a) that the application in the prescribed form for accelerated depreciation allowance under this paragraph, as verified in the prescribed manner, is submitted to the Board within six months from the end of the month of commencement of commercial production or operation; and
(b) that the particulars required for the purpose of entitlement to, or claiming accelerated depreciation allowance under this paragraph have been furnished.

(3)       The Board shall give its decision on an application under sub-paragraph (2) (a)within three months from the date of receipt of the application by the Board, failing which accelerated depreciation shall be deemed to have been allowed by the Board for the purposes of this paragraph.

(4)       The machinery or plant on which accelerated depreciation is allowed under this paragraph shall not be entitled to any other depreciation allowance under this Ordinance.

(5)       The Board may, on an application by any person aggrieved by any decision or order passed under sub-paragraph (3), if the application is made within four months of the receipt of such decision or order, review the previous decision or order and pass such order in relation thereto as it thinks fit.

⁹[7B. Accelerated depreciation allowance on machinery and plant.-  (1) In the case  of  any  machinery  or  plant  (other  than  office  appliances  and  road transport vehicles) which, not having been previously used in Bangladesh, has been or is used in an industrial undertaking as referred to in section 46B of the Ordinance and set up in Bangladesh between the first day of July, 2014 and the  thirtieth  day  of  June,  2019  (both  days  inclusive),  an  amount  by  way  of accelerated depreciation allowance shall, subject to the  conditions set out in sub-paragraph (2), be allowed and computed as follows, namely :-

(a)  for  the  first  year  in  which  the
undertaking starts commercial
production                                                                                                                         -fifty per cent of the actual cost of plant and machinery to the assessee

(b) for the second year                                                                                                    --  thirty  per  cent  of  the  actual  cost  of
plant and machinery to the assessee
(c) for the third year                                                                                                        --  twenty  per  cent  of  the  actual  cost  of plant and machinery to the assessee.

(2) The industrial undertaking referred to in sub-paragraph (1) shall  fulfil  the following conditions, namely:-

(a)  that  the  industrial  undertaking  is  owned  and  managed  by  a Bangladeshi company, or a body corporate formed in pursuance of an Act of Parliament, having its registered office in Bangladesh;
(b)  that  it  belongs  to   the  industrial  undertaking  as  specified  in  sub section (2) of section 46B;
(c)  that  the  particulars  required  for  the  purpose  of  entitlement  to,  or claiming  accelerated  depreciation  allowance  under  this  paragraph have been furnished; and
(d) that the application in the prescribed form for accelerated depreciation allowance under this paragraph, as verified in the prescribed manner, is made to the Board within six months from the end of the month of commencement  of  commercial  production;  and  the  application  is accompanied by a declaration in writing that the undertaking has not been  approved  for,  and  that  no  application  in  respect  of  the undertaking  has  been  made  or  shall  be  made  to  the  Board  for approval  of,  exemption  from  payment  of  tax  under  section  46B  or 46C of this Ordinance for any period.

(3)  The  machinery  or  plant  on  which  accelerated  depreciation  has  been allowed  under this  paragraph  shall  not  be entitled to  any  other  depreciation allowance under this Ordinance.]

8. Special depreciation allowance on ships.-
(1) in the case of-

(a)       a ship, being a passenger vessel, plying ordinarily on inland waters, or a fishing trawler registered in Bangladesh, which has been or is brought into use in Bangladesh, for the first time on any day between the 1st day of July, 1982 and the thirtieth day of June, ¹⁰[1995 (both days inclusive), and is the property of the assessee, or

(b)       a ship registered in Bangladesh, not being a ship ordinarily plying on inland waters, which has been or is brought into use in Bangladesh for the first time on any day between the 1st day of July, 1982 and the thirtieth day of June, 1995 (both days inclusive), and is the property of the assessee, an amount by way of special depreciation allowance shall, subject to the conditions set out in sub-paragraph (2), be allowed and computed as follows, namely :-

(i) for the first year ... 40 per cent of the original cost;

(ii) for the second year ... 30 per cent of the original cost;

(iii) for the third year ... 30 per cent of the original cost.

(2)       For the purposes of special depreciation allowance under sub-paragraph (1), the following conditions shall be fulfilled, namely :-

(a) that the ship conforms to such specifications as the Government may, by notification in the official Gazette, specify in this behalf; and

(b)       that the particulars required for the purpose of entitlement to or claiming special depreciation allowance under this paragraph have been furnished.

(3)       Any ship including a passenger vessel or a fishing trawler on which special  depreciation allowance under this Ordinance or the Income-tax Act, 1922 (XI of 1922).

9. Limitation in respect of allowance for depreciation.-

(1)       The aggregate of the allowances for depreciation allowed under this Ordinance or the Income-tax Act, 1922 (XI of 1922), in respect of any asset, shall not exceed the original cost of the asset.

(2)       Where full effect cannot be given to depreciation allowances under this Schedule in the year in which it is admissible there being no income chargeable for that year or such income being less than the allowance admissible, then, subject first to carrying forward of the loss, if any, under section 38, the allowances or the part thereof to which effect has not been given shall be added to the amount of the allowance for the following year or, if no allowance is admissible for such following year, shall be deemed to be allowance admissible for such year and so on for succeeding years till such time as the entire allowance on this account is adjusted against the profits.

10. Disposal of assets and treatment of gains or losses thereof.--
Where in any income year any asset representing any building, machinery or plant is disposed of by an assessee-

(a) no allowance for depreciation under paragraph 3, 4, 6, 7, or 8 shall be allowed in respect thereof in that year;

(b)       where the sale-proceed exceed the written down value of such asset, so much of the excess as does not exceed the difference between the original cost and the written down value, shall be deemed to be income of the assessee of that income year chargeable under the head "Income from business or profession";

(c)        where the sales-proceeds are less than the written down value of such asset, the deficit shall be deemed to be an expenditure, deductible from the profits and gains of business or profession of that year; and the business or profession in which such building, machinery or plant was used before its disposal, shall be deemed to be carried on by the assessee during that year, and the provisions of this Ordinance shall apply accordingly :

Provided that the deficiency is actually written off in the books of accounts of the assessee.

¹¹[10A. Amortization of license fees.-

(1) Where an assessee, being a resident company, paid any sum as ¹²[license fees before  or after]  the first day of July, 2012 wholly and exclusively for the purpose of obtaining a permission from any authority authorised by the government applicable for two or more years to  run  a  business,  the  assessee  shall  be  allowed  a  deduction  of  an  amount proportionate to such years and such deduction shall continue till the last year of the period for whcih the license was granted.

(2)  For  the  purpose  of  this  paragraph,  ‗license  fees‘  means  Spectrum Assignment  fees ¹³[,  GSM  license  fees,  license   acquisition  fees  or  license renewal fees] paid by a cellular mobile phone operator ¹⁴[:

¹⁵[or any other licence fee, paid by any other company engaged in providing specialized services, if such licence is integral to the operation of the company]
Provided that the amortization of fees shall be allowed from assessment year 2013-2014.]

11. Definitions.-
For the purposes of this Schedule,-
(1) "furniture" includes fittings;

(2) "plant" includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purpose of business or profession;

(3) "sale-proceeds" means-

(a)       where the asset is actually sold, the sale prices thereof or the fair market value, whichever is the higher;

(b         where the asset is transferred by way of exchange, the fair market value of the asset acquired through such transfer;

(c)        where the asset is transferred otherwise than by sale or exchange, the consideration for such transfer;

(d)       where an asset is discarded, demolished, destroyed or lost, scrap value, or the amount realised by the disposal thereof together with any insurance, compensation or salvage money received or receivable in respect therefor;

(e)       where the asset is compulsorily acquired under any law for the time being in force in Bangladesh, the compensation paid thereof;

(f)         where the asset ceases to be used by the assessee for the purposes of his business or profession, the fair market value thereof at the time of such cessation;

(g)       where any machinery of plant, after having been used in Bangladesh in the execution of any contract or otherwise, is exported or transferred outside Bangladesh, the original cost thereof less ¹⁶[the “normal depreciation” allowed under paragraph 3 of this Schedule]; or the depreciation allowances allowed under section 10(2) (vi) of the Incometax Act, 1922 (XI of 1922), except the further sum referred to therein; and in each such case the asset shall for the purpose of paragraph 10, be deemed to have been disposed of by the assessee:

Provided that where the actual cost of a motor vehicle not plying for  ¹⁷[hire is subject to the maximum limit in accordance with clause (a) of sub-paragraph (6)] 

¹⁸[hire, is, in accordance with clause (6) (a), taken to be twenty lakh  taka]

the sale-proceeds thereof shall be taken to be a sum which bears to the amount for which the said vehicle is sold, together with any insurance, salvage or compensation money received or receivable, or as the case may be, scrap value in respect thereof, at the same proportion as the ¹⁹[the said maximum limit] said sum of ²⁰[ten lakh taka] bears to the actual cost of the said vehicle tothe assessee, had the said sub-clause not been applicable to such vehicle.

Explanation.-In the proviso, "sold" includes a transfer by way of exchange or otherwise or a compulsory acquisition under any law for the time being in force;

(4)       "Ship" includes a steamer, motor vessel, sail, tug boat, iron or steel flat for cargo, wooden cargo boat, motor launch and speed boat;

(5)       "written down value" means-

(a) where the assets were acquired in the income year, the actual cost thereof to the assessee;

(b)       where the assets were acquired before the income year, the actual cost thereof to the assessee as reduced by the aggregate of the allowances for depreciation allowed under this Ordinance, or the Income-tax Act, 1922 (XI of 1922), in respect of the assessments for earlier year or years;

(6) For the purposes of clause (5),-

(a)       in the case of motor vehicles, being passenger vehicles or sedan cars, not plying for hire, the actual cost to the assessee shall be deemed not to exceed ²¹[twenty five lakh taka] ²²[:Provided that nothing in this clause shall apply in the case of allowing depreciation of a bus or minibus transporting the students and teachers of the assessee being an educational institution or of the employees of the business or profession for which the depreciation is to be allowed;]

(b)       in computing the actual cost of an asset, the amount of any grant, subsidy, rebate or commission and the value of any assistance (not being in the nature of any loan repayable with or without interest) received by an assessee from Government or any other authority or person, and any deduction or allowance admissible under this Ordinance or the Incometax Act, 1922 (XI of 1922), shall be excluded;

(c)        where, before the date of acquisition by the assessee, any such asset had at any time been used by any person for the purposes of his business or profession, the actual cost to the assessee shall, except in any case where sub-clause (d) applies, be deemed not to exceed the fair market value thereof;

(d)       where any assessee has succeeded another person in business or profession by inheritance, or where the provisions of section 88 apply, the written down value of an asset shall be computed as if no succession had taken place;

(e)       where an assessee has acquired any plant or machinery (hereinafter referred to as "asset") from a country outside Bangladesh for installation in Bangladesh for the purposes of his business or profession and, in consequence of a change in the rate of exchange at any time after the acquisition of such asset and before full and final payment of any foreign loan, there is an increase or reduction in the liability of the assessee as expressed in Bangladesh currency for making payment towards the whole or a part of the money borrowed by him from any person, directly or indirectly, in any foreign currency specifically for the purposes of acquiring the asset (being in either case, the liability existing immediately before the date on which change in the rate of exchange takes effect), the amount by which the liability aforesaid is so increased or reduced during the income year shall be added to, or as the case may be, deducted from the actual cost of the assets, and the amount arrived at after such addition or deduction shall be taken to be the actual cost of the asset;

(f)         where the whole or any part of the liability aforesaid is met, not by the assessee, but, directly or indirectly, by any other person or authority, the liability so met shall not be taken into account for the purposes of clause (e); and

(g)       where the assessee has entered into a contract with an authorised dealer for providing him with a specified sum in a foreign currency on or after a stipulated future date at the rate of exchange specified in the contract to enable him to meet the whole or any part of the liability aforesaid, the amount, if any, to be added to, or deducted from the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset under this sub-clause shall, in respect of so much of the sum specified in the contract as is available for discharging the liability aforesaid, be computed with reference to the rate of exchange specified therein.

Explanation.- For the purposes of this clause-

(a)       "rate of exchange" means the rate of exchange determined or recognised by the Government for the conversion of Bangladesh currency into foreign currency or foreign currency into Bangladesh currency; and

(b)       "authorised dealer", "foreign currency" and "Bangladesh currency" have the same meaning as in the Foreign Exchange Regulation Act. 1947 (VII of 1947).

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¹ Omitted by F. A. 1998

² Subs. by F. A. 2002 again re-subs. by F. A. 2006

³ Subs. for “2010” by F. A. 2010

⁴ Subs. for “four months” by F. A. 2000

⁵ Subs. for “under section 45 or 46A” by F. O. 2008

⁶ Ins. by F. A. 1995

⁷ Subs. for “2000” by F. A. 2000

⁸ Subs. for “2000” by F. A. 2000

⁹ Ins. new paragraph B by F. A. 2014

¹⁰Subs. for “1990” by F. A. 1990

¹¹ Ins. by F.A. 2014

¹² Ins. sec (10A) by F.A. 2013

¹³ Subs.by F.A. 2014

¹⁴ Ins. by F.A. 2014

¹⁵ Added by F.A.2016

¹⁶ Subs. for “normal depreciation” and” “extra depreciation” in any, allowed under paragraph 3 and 4 of this Schedule” by F. A. 1990

¹⁷Added by F.A.2017

¹⁸ Subs. for “seven lakh fifty thousand taka” by F. A. 2000 again subs. for “ten lakh taka” by F. A. 2009

¹⁹Added by F.A.2017

²⁰Added by F.A.2017

²¹Subs. for “seven lakh fifty thousand taka” by F. A. 2000 again subs. for “ten lakh taka” by F. A. 2009 again subs. for “twenty lakh taka” by F. A. 2015

²²Added by F.A.2017

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