As of 1 July 2023, Bangladesh’s Income Tax Act (ITA) 2023 is in effect. The new act aims to create a more centralized and uniform legal framework that conforms to global taxation best practices and ensures compliance with international standards.
According to the National Board of Revenue (NBR), it presents significant changes for individuals, companies, as well as startups.
Some highlights:
- The act is published in Bengali for the first time instead of in English.
- Increased utilization of international accounting and reporting standards (IAS and IFRS).
- Inclusion of clauses like share-based compensation, General Anti-Avoidance Rules (GAAR), and thin capitalization.
- Schedule-8 provides guidelines and provisions for mergers and acquisitions (M&A), amalgamation, demergers, business restructuring, and startups.
- Tax refunds are now facilitated directly into the taxpayer’s bank account through electronic transfers within 60 days of tax return processing, subject to any adjustments and dues the taxpayer owes.
- Standard annual income tax brackets/rates
| Tax bracket | Tax rate | Remarks |
| up to BDT 350,000 | 0% | – |
| over BDT 350,000 up to 450,000 | 5% | next BDT 100,000 |
| over BDT 450,000 up to 750,000 | 10% | next BDT 300,000 |
| over BDT 750,000 up to 1,150,000 | 15% | next BDT 400,000 |
| over BDT 1,150,000 up to 1,650,000 | 20% | next BDT 500,000 |
| over BDT 1,650,000 | 25% | – |
| Taxpayer category | Annual non-taxable income (ITA 2023) |
| Women and taxpayers older than 65 | BDT 400,000 |
| Physically challenged | BDT 475,000 |
| Third gender | BDT 475,000 |
| Wounded freedom fighter | BDT 500,000 |
- Medical, house rent and conveyance allowance have been consolidated into a single tax exemption. This exemption can be claimed either up to BDT 450,000 or one-third of their annual salary, whichever is lower. Remainder after this deduction is taxable income.
- The minimum tax of BDT 2,000 for all e-Tax Identification Number (TIN) holders has been retracted. However, the minimum tax of up to BDT 5,000 remains for individuals with taxable income exceeding BDT 350,000.
If you are concerned about how Income Tax Act 2023 may affect your business, let Eos help you navigate this new tax landscape. Contact Us now.
