Fundamentals of Taxation

Direct Tax :Income Tax

Guiding Law
During 1912, for the first time in the history, the Americans
imposed income tax to finance the repayment of war debt of US$
100 million which was repealed after the war. Few years later,
during early 20th century income tax has been made permanent.
The real fact is that income tax is a compulsory levy for a class of
people within a certain level of income being classified as taxable
individuals.
Income tax is categorized as personal income tax and corporate
income tax.
The taxable individuals are liable to pay personal income tax , and
business entities ,having separate legal entity, that earn any
amount of income from their business activities are liable for
corporate income tax.
Fundamentals of Taxation
Direct Tax :Income Tax
Guiding Law

From the date of the inception of Bangladesh,

income taxing activities was guided by Income
Tax Act 1922 (Act XI of 1922) until 1984.
In pursuance of the proclamation of 24th March,
1982 and in exercising of all his powers, the then
President of the Peoples’ Republic of Bangladesh
made and promulgate Ordinance No.XXXVI of
1984 known as Income Tax Ordinance 1984 came
into force from 1st July, 1984
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Income-Tax Authorities Sec.3
The following classes of income-tax authorities is considered to be
the lawful authorities as per Sec. 3 of the Income Tax Ordinance
1984.
The National Board of Revenue, Chief Commissioner of Taxes; Directors
General of Inspection (Taxes), Commissioner of Taxes (Appeals),
Commissioner of Taxes (Large Taxpayer Unit), Director General (Training)
Director General, Central Intelligence Cell, Commissioners of Taxes,
Additional Commissioners of Taxes who may be either Appellate Additional
Commissioners of Taxes or Inspecting Additional Commissioners of Taxes,
Joint Commissioner of Taxes who may be either Appellate Joint
Commissioner of Taxes or Inspecting Joint Commissioner of Taxes, Deputy
Commissioners of Taxes, Tax Recovery Officers nominated by the
Commissioner of Taxes among the Deputy Commissioner of Taxes within
his jurisdiction; Assistant Commissioners of Taxes, Extra Assistant
Commissioners of Taxes, and Inspectors of Taxes.
  
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Appointment of Income-Tax Authorities Sec.4

Subject to the rules and orders of the Government regulating the

terms and conditions of service of persons in public services and
posts, appointment of income-tax authorities shall be made in
accordance with the provisions of this Ordinance.

The Board may appoint as many Directors-General of Inspection,

Commissioners (Appeals),] Commissioners, Joint Commissioners of
Taxes, Deputy Commissioners of Taxes, Tax Recovery Officers and
Assistant Commissioners of Taxes and such other executive or
ministerial officers and staff as it may think fit.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Appointment of Income-Tax Authorities-Sec-4
Notwithstanding anything contained in this Ordinance, the Board
may, with the approval of the Government, appoint one or more
person having appropriate professional skill and experience to
perform such function as may be specified by an order issued in
this behalf, and the person or persons so appointed shall be
deemed to be an income-tax authority for the purposes of this
Ordinance.

Subject to such orders or instructions as the Board may, from time

to time, issue in this behalf, any other income-tax authority may
appoint any income-tax authority subordinate thereto and such
other executive or ministerial officers and staff as may be
necessary for assistance in the execution of its functions.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Delegation of Powers Sec 4A

The Board may, by notification in the official Gazette, and

subject to such limitations or conditions, if any, as may be
specified therein, empower by name or designation,-
(a) any Inspecting Additional Commissioner of Taxes to
exercise the powers of a Commissioner of Taxes ;

(b) any Appellate Additional Commissioner of Taxes to

exercise the powers of a Commissioner of Taxes (Appeal)  ;
and

(c) any Additional Director General or Joint Director General

of Central Intelligence Cell to exercise the powers of Director
General, Central Intelligence Cell.
  
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Subordination and Control of Income-Tax Authorities : Sec.5

The Chief Commissioner of Taxes, Director General of Inspection, Commissioners

(Appeals), and Commissioners shall be subordinate to the Board.

The Additional Commissioners of Taxes, Joint Commissioners of Taxes, Deputy

Commissioners of Taxes and Inspectors shall be subordinate to the
Commissioners  or the Commissioner (Appeals), as the case may be, within whose
jurisdiction they are appointed to perform their function:

Provided that no order, direction or instruction shall be given so as to interfere with

the discretion of the Appellate Joint Commissioners  or the Commissioners
(Appeals)] in the exercise of their appellate functions.

The Deputy Commissioners of Taxes and Inspectors shall be subordinate to the

Inspecting Joint Commissioner within whose jurisdiction they perform their functions.

The Inspectors shall be subordinate to the Deputy Commissioners of Taxes within

whose jurisdiction they perform their functions.
 
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Jurisdiction of income-tax authorities Sec. 6

Subject to the provisions of this Ordinance,

The Directors-General of Inspection shall perform the following
functions, namely:-
(i) carry out inspection of income tax cases;
(ii) investigate or cause investigation to be carried out in respect
of cases involving leakage of revenue or evasion of taxes;
(iii) carry out audit of cases or offices involving income tax
revenues only;
(iv) furnish annual report about the working of income tax offices
dealing with revenue matters to the Board by the thirty first
day of December following the end of the financial year to
which it relates; and
(v) such other functions as may be assigned to them by the Board
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Jurisdiction of income-tax authorities Sec. 6
Subject to the provisions of this Ordinance,
The Director General of Central Intelligence Cell shall perform the following
functions, namely:-
(i) carry out intelligence works to gather information about taxpayers;

(ii) analyse information gathered through intelligence work vis-a-vis

concerned income tax records;
(iii) detect tax evasions, concealments of income and offences as described
in chapter XXI of Income Tax Ordinance, 1984;
(iv) carry out investigations to prove tax evasion or concealment or any
other irregularities relating to taxes and to collect evidences in support
of tax offences or tax frauds for recovery of tax with penalty and to
suggest prosecutions in fit cases;
(v) to carry out functions as authorised by any other law.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Jurisdiction of income-tax authorities Sec. 6

The Commissioners , the Commissioners (Appeals) and the

Appellate Joint Commissioners shall perform their functions
in respect of such areas, or such persons or classes of
persons, or such cases or classes of cases, or such incomes
or classes of incomes, as the Board may assign to them;

The Commissioner (Large Taxpayer Unit) shall perform his

functions in respect of such areas, or such persons or
classes of persons, or such cases or classes of cases or such
incomes or classes of incomes, as the Board may assign to
Him;
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Jurisdiction of income-tax authorities Sec. 6

The Inspecting Joint Commissioners and the Deputy

Commissioners of Taxes shall perform their functions in
respect of such areas, or such persons or classes of persons,
or such cases or classes of cases, or such incomes or classes
of incomes as the Commissioner to whom they are
subordinate may assign to them; and

Other income-tax authorities shall perform such functions as

may be assigned to them by the income-tax authority to
whom they are subordinate.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Jurisdiction of income-tax authorities Sec. 6

Any area or other jurisdiction or function assigned to an

income-tax authority under sub-section (1) may be modified
or varied, or may be transferred to any other income-tax
authority with respect to areas, persons or classes of
persons, or cases or classes of cases, or proceeding or
classes of proceedings;

Any such transfer as is referred to in clause (a) may be

made at any stage of the proceedings and further
proceedings may be commenced from the stage at which
such transfer takes place.

(3)
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Jurisdiction of income-tax authorities Sec. 6
Where more income-tax authorities than one have been
assigned the same functions in respect of any area, or
persons or classes of persons, or cases or classes of cases,
or incomes or classes of incomes, they shall perform those
functions in accordance with such allocation or distribution of
work as the authority assigning the functions may make.
The powers of the Board, Commissioners and Deputy
Commissioners of Taxes, to assign any case to any authority, or to
transfer any case from one authority to another, or to perform any
function or functions under this section, shall include the power in
respect of all or any proceedings relating to such case; and except
as provided in sub-section (5), no such assignment, transfer or
performance of functions shall be called in question by or before
any court or other authority.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Jurisdiction of income-tax authorities Sec. 6

Any person aggrieved by any order passed under this

section may, within thirty days of such order, make a
representation-
(a) to the Inspecting Joint Commissioner if the order was
passed by a Deputy Commissioner of Taxes;
(b) to the Commissioner the Commissioners (Appeals) if the
order was passed by an Inspecting Joint Commissioner;
and
(c) to the Board if the order was passed by a Commissioner;
and any order passed on such representation shall be
final.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Exercise of Jurisdiction by Successor Sec.7

Where, in respect of any proceeding

under this Ordinance, an income-tax
authority is succeeded by another, the
income-tax authority so succeeding may
continue the proceeding from the stage
at which it was left by his predecessor.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Officers, etc to follow Instructions of the Board Sec.8

All officers and other persons engaged in the

performance of any functions under this
Ordinance shall, in the matter of discharging
those functions, observe and follow such orders,
directions or instructions as the Board may issue
from time to time provided that no order,
direction or instruction shall be given so as to
interfere with the discretion of the Appellate Joint
Commissioners or the Commissioners (Appeals) in
the exercise of their appellate functions.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Guidance to the Deputy Commissioner of Taxes, etc Sec.9

In the course of any proceedings under

this Ordinance , the Deputy Commissioner
of Taxes may be assisted, guided or
instructed by any income-tax authority
to whom he is subordinate or any other
person authorised in this behalf by the
Board.
Fundamentals of Taxation
Direct Tax :Income Tax Administration
Exercise of Assessment functions by the Inspecting Joint
Commissioners and the Inspecting Additional Commissioners Sec.10

The Commissioner may, with prior approval of the Board, by general or a

special order in writing, direct that in respect of all or any proceedings
relating to specified cases or classes of cases or specified persons of classes
of persons within his jurisdiction, the powers and functions of the Deputy
Commissioner of Taxes, Inspecting Joint Commissioner, the Inspecting
Additional Commissioner and the Commissioner under this Ordinance shall
be exercised by Inspecting Joint Commissioner, the Inspecting Additional
Commissioner, the Commissioner and the Board, respectively and for the
purpose of any proceedings in respect of such cases or persons reference in
this Ordinance or the rules made there under to the Deputy Commissioner
of Taxes, Inspecting Joint Commissioner, the Inspecting Additional
Commissioner or the Commissioner shall be deemed to be references
to  Inspecting Joint Commissioner, the Inspecting Additional Commissioner,

the Commissioner and the Board, respectively .

Fundamentals of Taxation
Direct Tax :Income Tax
Who will Pay Income Tax Sec2(7)

Assessee", means a person by whom any tax or other sum of

money is payable under this Ordinance, and includes-
(a) every person in respect of whom any proceeding under this
Ordinance has been taken for the assessment of his income or
the income of any other person in respect of which he is
assessable, or of the amount of refund due to him or to such
other person;
(b) every person who is required to file a return under section 75,
section 89 or section 91;
(c) every person who desires to be assessed and submits his
return of income under this Ordinance; and
(d) every person who is deemed to be an assessee, or an
assessee in default, under any provision of this Ordinance;
Fundamentals of Taxation
Direct Tax :Income Tax
Definition of Assessee

The definition covers two categories: first persons by whom

any tax, penalty or interest is payable under the Ordinance,
whether any proceeding under the Ordinance has been
actually taken against them or not, and secondly, persons
against whom any of the proceedings under the act has
been taken, whether he is or is not liable to pay any tax,
penalty or interest.
The definition makes explicit that ”assessee” includes a
person who is assessable in respect of the income or loss ,
or who is deemed to be an assessee or an assesee in default
under any provision of the ordinance.
Fundamentals of Taxation
Definition Deemed Assessee
As per the provisions of the Ordinance, the following
persons
will be considered as an “Assessee” (Respective of Income)
1. Individuals(male) upto age of 65 years having yearly
income exceeding Tk.2,50,000.00
2. Individuals(female and male aged above 65 years)
having yearly income exceeding Tk. 3,00,000.00,
3. Disabled individuals having yearly income exceeding
Tk.3,75,000.00
4. Gazetted Liberation War wound Freedom Fighters having
income exceeding 4,25,000.00
Fundamentals of Taxation
Definition Deemed Assessee
As per the provisions of the Ordinance, the following person(s)
will be considered as an “Assessee” (Irrespective of Income)
1. Having income exceeding Tax free limit during Current
Assessment Year
2. Being Assessed or having Taxable Income during any of last
three Assessment Years.
3. - A Share holding Director or Share holding employee of any
company
- A Partner of any Firm
- If received Tk. 16,000.00 or more at any period of an
Income Year as Employee of the Government, or of any
Authority , Corporation, Entity or Unit established out of any
Law, Order or any Document of the Government .
Fundamentals of Taxation
Definition Deemed Assessee
4. Having Tax Free income exceeding the amount
of Income liable to be assessed having Income
liable to be assessed at reduced rate.
5. Having ownership of Motor vehicle (Motor
vehicle will include Car, Jeep, Microbus)
6. Having Membership of any club registered under
VAT act, 1991
7. Continuing Business and of Profession having
Trade License from any City Corporation,
Municipal Corporation, Municipality, or Union
Parishad.
Fundamentals of Taxation
Definition Deemed Assessee
8. Doctors, Dentists, Lawyers, Chartered Accountants, Cost
and Management Accountants, Engineers, Architects,
Surveyors or professionals of same disciplines having
registration with recognised professional body.
9. Income Tax Practioner having registration with National
Board of Revenue.
10. Member of any Chamber of Commerce and Industry or
of any Trade Body.
11. Participants in the Election of any City Corporation,
Municipal Corporation, Municipality of Parliament.
Fundamentals of Taxation
Definition Deemed Assessee
12. Participants in any Tender of Government, Semi
Government, or Autonomous bodies or of any Local
Government.
13. Member of the Board of Directors of any Company or
group of Companies.

Should there be any person or body which cannot properly

be placed in any of these groups can not be made liable to
tax even though it may have income. Because of this the
Government was absolved from Income Tax.