CHAPTER 2

Residential Status under ITA 2023 (Bangladesh)

Residential status is very important in income tax law because whether a
person is resident or non-resident decides how much tax they have to
pay and on which income.

1. Who is a Resident? (Section 2(45) of ITA 2023)

A person (called an assessee) will be considered a resident in Bangladesh

for an income year if they fulfill any of the following conditions:

1. Individual (person): If he/she stays in Bangladesh for 183 days or

more during that income year.

○ Example: If you live in Bangladesh from July 1, 2023, to

January 15, 2024 (more than 183 days), you will be a resident.

2. Company (like ACI Ltd): If the control and management of the

company is situated wholly in Bangladesh during that income
year.

○ Example: If ACI Limited takes all major business decisions in

Bangladesh, the company is considered a resident.

2. Who is a Non-Resident? (Section 2(4) of ITA 2023)

If a person does not fulfill the above conditions, then he/she will be a
non-resident for that income year.
 ● Example: If someone stays in Bangladesh for only 120 days in a
year, he is non-resident.

Non-resident individuals are divided into two categories:

1. Non-resident Bangladeshi (NRB): A Bangladeshi citizen living

abroad.

2. Non-resident Foreigner: A foreign citizen who does not meet the

resident conditions.

3. Importance of Residential Status

Why does residential status matter? Because:

● Residents are taxed on their worldwide (global) income.

○ Example: If a Bangladeshi resident earns salary in

Bangladesh and rents from a house in the USA, both will be
taxed in Bangladesh.

● Non-residents are taxed only on income earned in Bangladesh.

○ Example: If a non-resident foreigner earns a salary in

Bangladesh, only that income is taxed. His foreign income is
not taxed.

4. Points to Remember while Determining Residential

Status
 1. Separate rules for different types of persons

○ The rules are different for individuals, companies, firms,

associations, etc.

○ Example: For an individual, we count days of stay. For a

company, we check control and management location.

2. Determined separately for each income year

○ Each year is judged independently.

○ Example: In 2022-23, you may be a resident. In 2023-24, you

may be non-resident if you stayed less than 183 days.

3. Residential status is always for the income year

Income Year vs Assessment Year

● Income Year = The year in which income is earned.

○ Example: If you earn a salary between 1 July 2023 – 30 June
2024, this is your Income Year 2023-24.

● Assessment Year = The year in which income of the previous

income year is assessed and taxed by the tax authority (NBR).

○ Example: Income earned in 2023-24 will be assessed and

taxed in 2024-25.

👉 So, there is always a 1-year gap between income year and assessment
year.

Why Residential Status is Always for the Income Year

 ● Your residential status depends on where you stayed or where
your company’s control was during the time you EARNED income
(income year).

● It doesn’t depend on where you are living in the assessment year

(when tax is calculated).

👉 Because tax is based on the income of a particular year, your status

must match that income year only.

Detailed Example

🔹 Suppose Mr. Rahim:

● He stays in Bangladesh from July 2023 – March 2024 (250 days) →

So, in Income Year 2023-24, he is a Resident.

● Later, he moves abroad in August 2024 and spends only 30 days in

Bangladesh in 2024-25 → So, in Income Year 2024-25, he becomes
Non-Resident.

Now let’s apply this:

● Income Year 2023-24 → He is Resident → Must pay tax on his

global income earned in that year.

● Assessment Year 2024-25 → NBR will calculate his tax for income
year 2023-24 → He will still be treated as Resident for 2023-24,
even though during 2024-25 he is living abroad.

✅ This proves residential status is only linked to the income year, not
the assessment year.
 Case Reference: Wallence Bros. & Co. Ltd. vs CIT (1948)

This case confirmed that:

● When deciding residential status, we should look at the income

year activities (days stayed, management control, etc.).

● It is not relevant where the assessee lives during the assessment

year.

Key Takeaway

● Always check residency during the year income is earned (Income

Year).

● Assessment year is only the time when tax is calculated, it doesn’t

affect residency.

○ The assessment year is not important for residential status.

○ Example: For income year 2023-24, your status will be

checked only for that year. Assessment year 2024-25 is not
relevant.

○ [Case reference: Wallence Bros. & Co. Ltd. vs CIT (1948)]

4. A person can be resident in more than one country

○ Being resident in Bangladesh doesn’t stop you from being

resident in another country for the same year.
 ○ Example: If you stayed 200 days in Bangladesh and also
satisfied resident rules in the UK, you can be resident in both.

5. Citizenship or domicile doesn’t matter

○ Being a citizen of Bangladesh doesn’t automatically make

you a resident.

○ Likewise, a foreigner can be a resident if he stays for 183+

days.

○ Example: A Bangladeshi citizen living in Dubai for 10 years is

non-resident. But an American staying in Dhaka for 200 days
is a resident.

✅ Summary in Simple Words:

● If you stay in Bangladesh for 183+ days in a year → you are

resident.

● If your company’s main control is in Bangladesh → company is

resident.

● If you don’t meet these → you are non-resident.

● Residents pay tax on all income (local + foreign).

● Non-residents pay tax only on Bangladeshi income.

● Residential status is checked separately each year, and citizenship

doesn’t decide it.
1 Burden of Proof
1️⃣

● The assessee (taxpayer) has to prove his residential status.

● This means if you claim to be a resident, you must show proper

evidence (passport, visa records, ticket stubs, etc.).

● The income tax authority will not assume it on their own.

● Case reference: V. Vr. N. M. Subbayya Chettiar vs. CIT (1951) – The

Supreme Court confirmed that the assessee must provide proof.

2️⃣Importance of Sections in ITA 2023

● Section 2(45): Defines Resident.

● Section 2(4): Defines Non-Resident.

👉 If someone does not qualify as “Resident” under Section 2(45),
he automatically becomes a “Non-Resident” under Section 2(4).

3️⃣Residential Status Categories

Based on ITA 2023, every assessee is either:

● Resident

● Non-Resident

How do we decide?
 ● For an Individual → Depends on how many days he stayed in
Bangladesh.

● For a Firm/Company → Depends on where its management and

control are located in that income year.

4️⃣Rules for Residential Status of an Individual

An individual will be considered Resident in Bangladesh in an income

year if he satisfies any one of the following two conditions (Section
2(45)(a)):

✅ Condition 1:

He stays in Bangladesh for 183 days or more during that income year.

● Example: Mr. Karim stayed in Bangladesh for 200 days in 2023-24

→ He is a Resident.

✅ Condition 2:

He stayed in Bangladesh for 90 days or more in that income year AND

he stayed in Bangladesh for 365 days or more in the 4 years just before
that year.

● Example: Mr. Rahim stayed 100 days in Bangladesh in 2023-24, and

in the past 4 years (2019-20 to 2022-23) he stayed 370 days in
total. → He is a resident.

If neither of these two conditions is satisfied → The individual is Non-

→
Resident under Section 2(4).
5️⃣Important Points to Remember while Calculating
Stay

(i) Relevant Year = Income Year

● Always check residency for the income year in which income is

earned, not for the assessment year.

(ii) Continuous Stay Not Required

● It doesn’t matter whether the stay is continuous or broken into

parts.

● What matters is the total number of days in Bangladesh during the

year.

Example:

● Mr. Ali stayed 60 days in Dhaka, left the country, then came back
and stayed 150 days in Rajshahi.

● Total = 210 days → He is a Resident.

(iii) Visits in Previous 4 Years Can Also Be Irregular

● For the “90 days + 365 days” rule, the earlier 4 years’ stay can be
regular or irregular.

● What matters is the total days in 4 years ≥ 365.

(iv) Stay in Different Places is Counted Together

 ● Doesn’t matter if you stayed in Dhaka, Rajshahi, Chittagong, etc.

● All days in Bangladesh are added together.

(v) Counting Entry and Exit Days

● Generally, both the day you arrive and the day you leave
Bangladesh are counted as days of stay.

What the Rule Says

When we calculate the number of days an individual stayed in

Bangladesh, we normally count both the day of arrival and the day of
departure as full days of stay.

🔹 Why is it Done?

Because:

1. Even if you arrive late at night or leave early in the morning, you
were still present in Bangladesh for part of that day.

2. To keep the rule simple and uniform, the tax authority counts both
arrival and departure days as stay days.

🔹 Example 1: Simple Case

● Mr. A arrives in Bangladesh on 1st January.

● He leaves Bangladesh on 10th January.

👉 How many days of stay?

 ● If we count only full days: 9 days.

● But as per the rule (count both arrival & departure days): 10 days.

🔹 Example 2: Multiple Visits in the Year

● Mr. B arrives on 1st March and leaves on 5th March → Count = 5

days.

● Later, he arrives again on 10th June and leaves on 15th June →

Count = 6 days.

👉 Total stay = 5 + 6 = 11 days, even though he wasn’t here continuously.

🔹 Example 3: Borderline Case Near 183 Days

Suppose:

● A person comes on 1st July 2023 and leaves on 31st December

2023.

● That’s 184 days if you count both arrival and exit days.

👉 This makes him Resident (since ≥183 days).

If we had not counted entry/exit days, it would have been only 182 days
→ Non-resident.

⚠️That’s why the rule is very important: it can change someone’s

residential status!

🔹 Special Note: Hourly Calculation in Close Cases

If the total is very close to 183 days, tax authorities may calculate based
on hours.

● 24 hours = 1 day.

● Example: If someone stayed 182 days and 12 hours, it will be

rounded into 183 days = Resident.

✅ In short:

● Both arrival and departure days are always counted.

● Multiple trips are added together.

● Even partial days are treated as full days, unless it’s a borderline
case where hours are checked.

(vi) Hourly Calculation in Borderline Cases

● If the total stay is very close to 183 days, then calculation may be
done on an hour basis.

● 24 hours = 1 day.

Example:

● A person stayed 82 days and 6 hours + later 20 days and 20 hours.

● Total = 82d 6h + 20d 20h = 103 days (approx).

Step 1: Write in Days + Hours

 ● First stay = 82 days 6 hours

● Second stay = 20 days 20 hours

🔹 Step 2: Add Days Separately & Hours Separately

● Days = 82 + 20 = 102 days

● Hours = 6 + 20 = 26 hours

🔹 Step 3: Convert Hours into Days

● 24 hours = 1 day

● 26 hours = 1 day + 2 hours

🔹 Step 4: Add Again

● 102 days + 1 day = 103 days

● Remaining hours = 2 hours

👉 So total stay = 103 days and 2 hours.

✅ Final Result: For tax purposes, since 24 hours = 1 day, his stay is
counted as 103 days.

⚠️That’s why the book/example wrote “103 days (approx)” — because

the extra 2 hours are usually ignored in normal tax calculation.

1️⃣If Entry & Exit Hours Are Not Given

 ● When a question doesn’t mention the exact hour of entry or exit,
then:
👉 We count both the day of entry and the day of exit as full days
of stay in Bangladesh.

● Case Reference: AAR (1997) 223 ITR 462 (Authority for Advance
Ruling) confirmed this.

✅ Example:
Mr. Karim entered Bangladesh on 1st May and left on 5th May.

● Even if he came at 11 PM on 1st May and left at 2 AM on 5th May,

both days are counted.

● Total stay = 5 days, not 3 or 4.

2️⃣Place & Purpose of Stay is Irrelevant

● It doesn’t matter where in Bangladesh you stayed (Dhaka,

Chittagong, village, etc.).

● It doesn’t matter why you stayed (business, study, vacation,

medical, etc.).
👉 What matters is only the number of days of physical presence.

✅ Example:

● If Mr. Ali stays in Dhaka for surgery for 100 days, it counts.
 ● If Mr. Rahim stays in Chittagong for vacation for 90 days, it also
counts.

3️⃣Presence in Territorial Waters Counts as Stay

● If a person is present in Bangladesh’s territorial waters (12

nautical miles from the coast), it will also be treated as staying
in Bangladesh.

✅ Example:

● A sailor working on a ship in Bangladesh waters is considered as

staying in Bangladesh for those days.

4️⃣Official Tours Abroad for Bangladeshi Employment

● If you work in Bangladesh but go on official tours abroad (e.g.,

for training, seminar, business meeting), it is not considered as
employment outside Bangladesh.
👉 You are still treated as if you were in Bangladesh for those
days.

✅ Example:

● Mr. Hasan works in a Dhaka office. His company sends him to

Malaysia for a 15-day official meeting.

● Those 15 days are still treated as Bangladeshi stay.

5️⃣A Person May Be Resident in More Than One
Country

● Residency is not exclusive.

● You can be a resident in Bangladesh and also in another country

at the same time if you meet both countries’ rules.

✅ Example:

● Mr. Y stays 190 days in Bangladesh (so resident here).

● But he also fulfills residency conditions in the UK.

👉 He will be resident in both Bangladesh and UK in the same
income year.

6️⃣Citizenship ≠ Residency

● Citizenship and residential status are two different things.

● You can be a Bangladeshi citizen but not a resident (if you live
abroad).

● You can also be a foreigner but resident in Bangladesh (if you

stayed 183+ days here).

✅ Examples:

● Mr. Z is a Bangladeshi citizen working in Dubai for 10 years → Non-

resident Bangladeshi (NRB).
 ● Mr. John, an American, lives in Dhaka for 200 days → Resident even
though not a Bangladeshi citizen.

7️⃣Residential Status of Entities (Other than

Individuals)

Residential status rules apply not only to individuals but also to

organizations like:

● Hindu Undivided Family (HUF)

● Firms

● Association of Persons (AOP)

● Bangladeshi Companies

● Any other Companies

● Trusts

● Funds

● Other Entities

✅ Rule:

They are Resident if their control and management are situated wholly
in Bangladesh during the income year.

They are Non-Resident if their control and management are wholly or

partly outside Bangladesh.
8️⃣Meaning of “Control and Management”

● “Control and management” = the head and brain of the

organization.
It means the place where major decisions about:

○ Policies

○ Finance

○ Profit distribution

○ Strategic management
are made.

● For a firm → Control is with the partners.

● For an AOP → Control is with the principal officer.

● For a company → Control is where the board of directors’

meetings are held.

✅ Example:

● If a Bangladeshi company has all board meetings in Dhaka →

Resident.

● If a foreign company manages its affairs from Singapore, even if it

has a branch in Bangladesh → Non-Resident.

9️⃣Flowchart for Residential Status of Individuals

Let’s rewrite the flowchart (step by step decision tree) in easy words:

1. Step 1: Is the person a Bangladeshi citizen?

○ If yes → He may be Resident Bangladeshi or Non-Resident

Bangladeshi (NRB).

○ If no → He is a Non-Resident Foreigner (NRF).

2. Step 2: Check days of stay in the income year:

○ If he stayed 183 days or more → Resident.

○ If not, check further.

3. Step 3: Did he stay 90 days or more in the current year AND 365
days or more in the previous 4 years combined?

○ If yes → Resident.

○ If no → Non-Resident.

To decide if a person is Resident (when they don’t stay full 183 days in
one year), we use this 90 + 365 rule:

👉 A person will be Resident if:

1. He stays in Bangladesh at least 90 days in the current year, AND

2. He stayed in Bangladesh for at least 365 days in total in the last 4

years.

If both are true → Resident.

If one is false → Non-Resident.
Super Simple Example

● This year (2023-24): stayed 100 days (✔ more than 90)

● Last 4 years (2019–2023): total 400 days (✔ more than 365)

Both conditions satisfied → Resident

→

Another Example

● This year: stayed 80 days (❌ less than 90)

● Last 4 years: 600 days (✔ more than 365)

Because this year is less than 90 days → Non-Resident

→

Easy to Remember

Think of it like this:

👉 If you don’t stay a full 183 days this year, you still get “Resident”
status if you pass the 90+365 test.

● 90 days this year = strong link with Bangladesh now.

● 365 days in 4 years = strong link with Bangladesh in the past.

Both together prove you are still connected to Bangladesh → so

Resident.

Tax Rules for Non-Residents in Bangladesh

1. Scope of Income

● Resident: Taxed on global income (Bangladesh + foreign).

● Non-Resident: Taxed only on income earned or received in

Bangladesh.
👉 Example: A foreigner working 3 months in Bangladesh pays tax
only on that Bangladesh salary.

2. Tax Rate

● Non-Residents do not get a minimum exemption limit (like

residents get Tk. 3,50,000).

● They pay tax from the first Taka of income.

● Minimum tax for a non-resident individual: Tk. 5,000 (even if

income is very small).

3. Applicable Tax Rates

Non-Resident individuals are taxed at:

● Flat 30% rate (highest slab rate), OR

● At the rate applicable to residents (whichever is higher, depending

on type of income).

👉 Practically, most Non-Resident individual income is taxed at 30% flat.

4. Special Cases
 ● Dividend income: 30% withholding tax.

● Royalty/technical service fees: 20% withholding tax.

● Non-resident foreign technician (in industrial sector): Exempt

from tax for the first 3 years.

● Non-resident Bangladeshis (NRBs): Special benefit — their foreign

remittance is fully exempt from tax.

5. Key Point to Remember

● Resident = worldwide income taxed.

● Non-Resident = only Bangladesh income taxed.

● Flat 30% rate applies, no basic exemption.

✅ So in exams:
👉 “Non-resident persons are taxed only on income arising in
Bangladesh, at a minimum of 30%, with no basic exemption limit.”

Residential Status Rules – Summary

1️⃣Rules to Be a Resident

For an Individual:

● Condition 1: Stayed in Bangladesh for 183 days or more in the

income year.
 ● Condition 2: Stayed in Bangladesh for 90 days or more in the
current year AND 365 days or more in the last 4 years combined.

For HUF, Firm, AOP, Company, Trust, Fund, Entity:

● Control and management of the entity is wholly in Bangladesh in

the income year.

2️⃣Rules to Be a Non-Resident

● Individual: If neither of the above two conditions is fulfilled.

● Entity: If control and management is wholly or partly outside

Bangladesh.

3 Effects of Residential Status on Tax

3️⃣

Your residential status affects how much tax you pay because it decides
which income is taxable in Bangladesh.

4️⃣Taxability of Income

Type of Income Reside Non-

nt Resident

Bangladeshi Income (received or deemed to be Taxabl Taxable

received in Bangladesh) e
Bangladeshi Income (accrued/arose or deemed to Taxabl Taxable
accrue/arise in Bangladesh) e

Foreign Income (income earned outside Taxabl Not

Bangladesh) e Taxable

511 Income received in Bangladesh is always taxable

51️⃣
5️⃣

● What it means:
If you get money in Bangladesh, you have to pay tax on it even if
you are not a resident.

● Example:

○ Mr. Ali lives in Dubai (Non-Resident), but he receives rent

from his house in Dhaka.

○ That rent is taxable in Bangladesh, because it is received in

Bangladesh.

2️⃣Income earned in Bangladesh is always taxable

● What it means:
If you earn money from work or business in Bangladesh, it is
taxable even if you are a Non-Resident.
 ● Example:

○ Ms. Sarah, a foreigner, works in Dhaka for 3 months.

○ Salary earned during these 3 months is taxable in

Bangladesh, because it was earned here.

3️⃣Resident Individuals/Entities: Tax on all income

● What it means:
If you are a Resident, you must pay tax on all income:

○ Income earned in Bangladesh

○ Income earned outside Bangladesh (foreign income)

● Example:

○ Mr. Karim lives in Dhaka for 200 days → Resident

○ He earns salary in Dubai + rent in Dhaka

○ Taxable in Bangladesh: both Dubai salary + Dhaka rent

4️⃣Non-Resident Individuals/Entities: Tax only on Bangladesh income

● What it means:
If you are a Non-Resident, you pay tax only on income that
 comes from Bangladesh.

● Foreign income is not taxed in Bangladesh.

● Example:

○ Mr. John, an American, stays in Bangladesh for 80 days →

Non-Resident

○ He earns salary in USA + rent in Dhaka

○ Taxable in Bangladesh: only the Dhaka rent

○ Salary from USA → not taxed in Bangladesh

✅ Easy Way to Remember

Status Taxable Income

Resident All income (Bangladesh +

Foreign)

Non- Only Bangladesh income

Resident

Rule:
 ● If money is in Bangladesh or earned in Bangladesh → always
taxed.

● Only foreign income outside Bangladesh is taxed for Residents, not

Non-Residents.

Effect of Residential Status on Tax Liability –

The residential status of a person or entity in Bangladesh is very

important because it changes how income tax is calculated.

1️⃣How Residential Status Affects Total Income

● Resident:

○ Must include all income from anywhere in the world

(Bangladesh + foreign) to calculate total income.

● Non-Resident:

○ Only includes income earned or received in Bangladesh.

Foreign income is ignored.

✅ Example:

● Resident Mr. Karim earns 200,000 in Dhaka + 100,000 from Dubai →

Total income = 300,000
 ● Non-Resident Mr. John earns 200,000 in Dhaka + 100,000 from
Dubai → Total income = 200,000 (Dubai salary ignored)

2️⃣Minimum Taxable Income Limit

● Resident and Non-Resident Bangladeshi:

○ Must pay tax if income > minimum threshold:

■ General: Tk. 350,000

■ Women & citizens >65 years: Tk. 400,000

■ Third gender & disabled persons: Tk. 475,000

■ Gazetted wounded freedom fighters: Tk. 500,000

● Non-Resident Foreigners:

○ No minimum limit. Even small income is taxed.

3️⃣Income Tax Rate

● Resident & Non-Resident Bangladeshi:

○ Taxed using progressive rates:

 ■ First Tk. 350,000 → 0%

■ Next Tk. 100,000 → 5%

■ And so on for higher income

● Non-Resident Foreigners:

○ Taxed at a flat maximum rate = 30%

○ They cannot use progressive rates

4️⃣Income Tax Rebate

● Resident & Non-Resident Bangladeshi:

○ Can get tax rebate for:

■ Investments

■ Tax-exempt income

● Non-Resident Foreigners:

○ No rebate is allowed

5️⃣Summary of Why Residential Status Matters

Residential status affects:

1. Total income → Residents include global income, Non-Residents

only Bangladesh income

2. Taxable income → Minimum limits apply to residents, not foreign

Non-Residents

3. Tax rate → Progressive for residents, flat 30% for foreign Non-
Residents

4. Rebate/allowances → Only residents get them

6️⃣Incidence of Tax on Non-Residents

● Non-Residents are taxed only on income earned or received in

Bangladesh.

● Non-Resident Foreigners:

○ Pay tax at flat 30%, no allowances or rebates

● Non-Resident Bangladeshi:

○ Pay tax like a resident (progressive rates, can get

allowances/rebates)

✅ Example:
 ● Foreign Non-Resident earns Tk. 500,000 in Dhaka → Tax = 30% of
500,000 = Tk. 150,000

● Non-Resident Bangladeshi earns Tk. 500,000 in Dhaka → Tax

calculated using normal progressive rates

7️⃣Quick Questions from Text

(a) State any two characteristics of residential status of an assessee

1. It decides whether the assessee pays tax on global income or only

Bangladesh income.

2. It determines the tax rate, minimum taxable limit, and rebates

applicable.

(b) How do you determine the residential status of a company?

● Look at control and management of the company during the

income year:

○ If wholly in Bangladesh → Resident

○ If wholly or partly outside Bangladesh → Non-Resident

● “Control and management” = place where major decisions about

finance, policies, and operations are made (board meetings,
partners, principal officers).
Determining Residential Status – Case
Examples

Rule Reminder:

For an Individual:

● Resident:

1. Stays 183 days or more in Bangladesh in the income year,

OR

2. Stays 90 days or more in the current year AND 365 days or

more in the last 4 years

● Non-Resident: If neither condition is satisfied.

Case 1: Mr. Jalil (Indian Citizen)

● Stayed in Bangladesh: 14 Aug – 31 Dec 2023

● Total days in Bangladesh during income year: 153 days

● Total days in previous 4 years: 0 days

✅ Analysis:

● Condition 1: 153 days < 183 → Not satisfied

 ● Condition 2: 153 days < 90 + 0 days < 365 → Not satisfied

Result:

● Mr. Jalil → Non-Resident Foreigner

Case 2: Mr. Hasan (Bangladeshi Citizen)

● Stayed in Bangladesh: 1 Jul – 31 Dec 2023

● Total days in Bangladesh during income year: 184 days

✅ Analysis:

● Condition 1: 184 days ≥ 183 → Satisfied

● Condition 2: Not needed (already satisfied condition 1)

Result:

● Mr. Hasan → Resident

Case 3: Mr. Mannan

● Stayed in Bangladesh: 1 Sep – 31 Dec 2023, left for Trinidad,

returned 1 May 2024 and stayed until end of income year
 ● Total days in Bangladesh during income year: 183 days

✅ Analysis:

● Condition 1: 183 days ≥ 183 → Satisfied

● Condition 2: Not needed

Result:

● Mr. Mannan → Resident

Case 4: Mr. Arman Hossain (Indian Citizen)

● Stayed in Bangladesh: 1 Jun – 31 Aug 2023 and 1 Apr – 31 Jul 2024

● Total days in Bangladesh during income year: 153 days

● Total days in previous 4 years: 0 days

✅ Analysis:

● Condition 1: 153 days < 183 → Not satisfied

● Condition 2: 153 days < 90 + 0 days < 365 → Not satisfied

Result:
 ● Mr. Arman Hossain → Non-Resident Foreigner

Case 5: Jafor Hossain (Born in India)

● Stayed in Bangladesh: 1 Jun – 30 Sep 2023 and 1 Apr – 31 Jul 2024

● Income year 2023-24: 1 Jul 2023 – 30 Jun 2024

Step 1: Count days in income year

● July 2023 → 31 days

● August 2023 → 31 days

● September 2023 → 30 days

● April 2024 → 30 days

● May 2024 → 31 days

● June 2024 → 30 days

Total = 31+31+30+30+31+30 = 183 days ✅

● Condition 1 satisfied → Resident

✅ Result: Resident
Case 6: Belal Hossain (Born in Bangladesh)

● Stayed in Bangladesh outside business periods: 1 Jun – 31 Aug 2023

and 1 Apr – 31 Jul 2024

● Count days in income year:

○ September 2023 → 30 days

○ October → 31

○ November → 30

○ December → 31

○ Jan 2024 → 31

○ Feb 2024 → 29

○ Mar 2024 → 31

○ Apr 2024 → 30

○ May 2024 → 31

○ June 2024 → 30
Total = 213 days ✅

● Condition 1 satisfied → Resident

✅ Result: Resident

Case 7: Abir Hossain

● Stayed in Bangladesh: 01 Jun – 30 Sep 2023 and 01 Mar – 31 Jul 2024

● Count days in income year: 152 days

● Count days in preceding 4 years: 1,461 days (365+365+365+366)

● Condition 1: 152 < 183 → Not satisfied

● Condition 2: 152 ≥ 90 AND 1,461 ≥ 365 → ✅ Satisfied

✅ Result: Resident

Case 8: Mr. Thomas (USA Citizen)

● Stayed in Bangladesh: 1 Jan – 16 Jul 2023, returned 1 Mar – 30 Jun

2024

● Count days in income year 2023-24:

 ○ July 2023 → 16 days

○ Mar 2024 → 31

○ Apr → 30

○ May → 31

○ Jun → 30

Total = 138 days ≥ 90 ✅

● Count days in preceding 4 years → More than 365 days

● Condition 2 satisfied → Resident

✅ Result: Resident

Case 9: Pat Cummins (Australian Cricketer)

● Visits Bangladesh 100 days every year since 2018-19

(a) If he comes for 90 days in income year 2023-24:

● Current year: 90 days ≥ 90 ✅

● Previous 4 years: 100 x 4 = 400 ≥ 365 ✅

Result → Resident
→

(b) If he comes 100 days every year:

● Current year: 100 ≥ 90 ✅

● Previous 4 years: 400 ≥ 365 ✅

Result → Resident
→

Key point: Stays don’t need to be continuous; they can be split across
months or visits.

Case 10: Selina Akter (Bangladeshi)

● Stayed in Bangladesh during 2023–24:

○ April → 30 days

○ May → 31 days

○ June → 30 days
Total = 91 days ✅

● Preceding 4 years:

○ 2022–23 → 115 days

○ 2021–22 → 68 days

○ 2020–21 → 90 days

○ 2019–20 → 93 days
Total = 366 days ✅

✅ Result: Resident (Condition 2 satisfied)

Case 11: Mr. Alex (Canadian)

 ● Days in 2023–24 = 100 ✅

● Preceding 4 years = 55 + 60 + 90 + 150 = 355 ❌

✅ Result: Non-Resident Foreigner

Even though he stayed more than 90 days in 2023–24, the

previous 4 years’ total is < 365 → Condition 2 not satisfied.

Case 12: Mr. Tanzi (Japanese)

● Days in 2023–24 = 29 + 31 + 30 + 31 + 30 = 151 ✅

● Preceding 4 years = 46 + 63 + 365 + 366 = 840 ✅

✅ Result: Resident (Condition 2 satisfied)

Case 13: Hanshi Tanaka (Japanese)

● Days in 2022–23 = 31 + 31 + 27 = 89 ❌

● Preceding 4 years = 365 + 365 + 366 + 365 = 1461 ✅

❌ Condition 1 not satisfied (89 < 90)

❌ Condition 2 not satisfied (current year < 90)

✅ Result: Non-Resident Foreigner

Case 14: Mr. X (Bangladeshi, World Bank)

● Days in 2023–24 = 31 + 31 + 30 + 31 + 30 + 22 = 175 ✅

● Preceding 4 years = 365 + 365 + 365 + 366 = 1461 ✅

✅ Result: Resident (both conditions satisfied)

Case 15: Mr. Hasan (Bangladeshi, abroad)
● Left Bangladesh 1 Aug 2022 → Returned 10 Jan 2024

● Days in 2023–24 = 10 Jan – 30 Jun = 172 days ✅

● Preceding 4 years = stayed abroad → total < 365 ❌

✅ Check conditions:

● Condition 1 = 172 < 183 ❌

● Condition 2 = 172 ≥ 90 ✅; preceding 4 years < 365 ❌

✅ Result: Non-Resident

Case 16: Mr. Bablu (Individual)

Rule Reminder for Individuals

● Resident if:

1. Stay ≥ 183 days in income year OR

2. Stay ≥ 90 days in income year AND total stay in previous 4

years ≥ 365 days.

Details

Year Days in
Bangladesh

2019– 40
20
2020– 55
21

2021– 182
22

2022– 200
23

2023– 94
24

●
Step 1: Current year (2023–24) = 94 days → ≥ 90 ✅

● Step 2: Preceding 4 years = 40 + 55 + 182 + 200 = 477 ≥ 365 ✅

✅ Result: Resident (Condition 2 satisfied)

Other Scenarios

1. Stay 85 days in 2023–24

○ Current year = 85 < 90 ❌

○ Preceding 4 years = 477 ≥ 365 ✅

❌ Result: Non-Resident (Condition 2 fails because current
 year < 90)

2. Stay 80 days in 2022–23

○ Current year 2023–24 = 94 ≥ 90 ✅

○ Preceding 4 years = 40 + 55 + 182 + 80 = 357 < 365 ❌

❌ Result: Non-Resident

3. Stay 185 days in 2023–24

○ Current year = 185 ≥ 183 ✅

❌ Preceding 4 years not required
✅ Result: Resident (Condition 1 satisfied)

Case 17: Veronica Deliveries (Partnership Firm)

Rule for Firms/Entities

● Resident if control and management is wholly in Bangladesh

● Non-Resident if control and management is partly or wholly

outside

Control & Residential

Management Status

Wholly in BD Resident
Partly in BD Non-Resident

Wholly outside BD Non-Resident

Case 18: DBL (Banking Company)

Same rule applies for companies:

Control & Residential

Management Status

Wholly in BD Resident

Partly outside BD Non-Resident

Wholly outside BD Non-Resident

Explanation: The “control and management” is like the brain

of the firm/company, deciding policies, finances, and
operations.
Case 19: Dr. Hasan Mahmood (Individual)

● Works in Australia, left Bangladesh in 2010.

● Visits Bangladesh every year from 2017 to 2024.

Residential status depends on:

1. Days stayed in current income year

2. Days stayed in preceding 4 years

If ≥ 183 days in current year → Resident

Else if ≥ 90 days current year AND total ≥ 365 previous 4
years → Resident
Otherwise → Non-Resident

Dr. Hasan Mahmood – Residential Status

Rule Recap:

1. Test 1 (183 days rule): Stay ≥ 183 days in current income year →
Resident

2. Test 2 (90 + 365 days rule): Stay ≥ 90 days in current income year
AND total stay in previous 4 years ≥ 365 → Resident

3. If neither condition is fulfilled → Non-Resident

Step-by-Step Stay Calculation

 Year Date of Date of Days
Entry Exit Stayed

2017– 16 Sep 28 Mar 194

18 2017 2018

2018– 12 Oct 19 Mar 159

19 2018 2019

2019– 11 Feb 14 Mar 33

20 2020 2020

2020– 09 Dec 01 Mar 83

21 2020 2021

2021– 01 Jul 2021 28 Sep 90

22 2021

2022– 28 Dec 15 Jul 183

23 2022 2023

2023– 12 Mar 28 Jun 242

24 2024 2024
 ●
Current income year (2023–24) → 242 days ≥ 183 →
→ Resident under
Test 1

● Check Test 2: Previous 4 years = 194 + 159 + 33 + 83 = 469 ≥ 365 ✅

✅ Residential Status: Resident

Key point: Even if Test 1 fails, Test 2 can make someone

resident.

Case 20 – Mr. Jalal: Total Income

Income sources:

Source Location/Control Reside Non-

nt Resident

Salary Bangladesh 100,000 100,000

Profit (London) Managed in 40,000 —

London

Profit (Singapore) Managed in 60,000 —

Singapore

Consultancy Fee Not yet brought 70,000 —

(Dubai) to BD

Total Income:

● Resident: 100,000 + 40,000 + 60,000 + 70,000 = 270,000 Tk

● Non-Resident: Only income earned in Bangladesh = 100,000 Tk

Explanation: Residents pay tax on worldwide income; non-

residents pay tax only on Bangladesh-sourced income.

Case 21 – Mr. Jalil: Total Income

Income sources:

Source Location/ Reside Non-

Control nt Resident

Rent (Dhaka, received in India) Bangladesh 40,000 40,000

Business (USA, controlled from BD) Bangladesh 150,00 150,000

0

Business (Dhaka, controlled from Bangladesh 180,00 180,000

Pakistan) 0
Rent (Canada, received there) Foreign 60,000 —

Interest (Bangladesh bank, Bangladesh 20,000 20,000

received in Canada)

Total Income:

● Resident: 40,000 + 150,000 + 180,000 + 60,000 + 20,000 = 450,000 Tk

● Non-Resident: 40,000 + 150,000 + 180,000 + 20,000 = 390,000 Tk

Note: Gifts from parents are not considered income.

✅ Summary of Rules for Easy Understanding

1. Individual:

○ Resident → Worldwide income taxed in BD

○ Non-Resident → Only Bangladesh-sourced income taxed

2. Firm/Company/Entity:

○ Resident → Control & management wholly in BD

○ Non-Resident → Control & management partly/wholly

outside BD

3. Days Calculation for Individuals:

○ ≥ 183 days in current year → Resident

 ○ ≥ 90 days in current year AND total ≥ 365 in previous 4 years
→ Resident

✅ Key Takeaways:

1. For individuals:

○ Condition 1: ≥ 183 days → Resident

○ Condition 2: ≥ 90 days current year + ≥ 365 days previous 4

years → Resident

○ Otherwise → Non-Resident

2. For firms/companies/entities:

○ Resident → Control & management wholly in Bangladesh

○ Non-Resident → Control & management partly/wholly

outside Bangladesh

3. Citizenship does not matter; only days of stay (for individuals) or

control location (for firms) matters.

Key Points from These Cases:

1. Condition 1 = 183 days in current year → Resident

 2. Condition 2 = 90+ days current year AND 365+ days in previous 4
years → Resident

3. If neither → Non-Resident

4. Only days physically present in Bangladesh count.

5. Citizenship does not matter, only days of stay.

Super Simple Tips:

1. Check condition 1 first: 183 days in income year → Resident

2. If not, check condition 2: 90+ days in income year AND 365+ days
in last 4 years → Resident

3. If neither → Non-Resident

4. Citizenship doesn’t matter; only days of stay count

5. Count only days inside the income yea

✅ Key Points from Cases

1. Always count total days stayed in Bangladesh during income

year.

2. If ≥183 days → Resident, no need to check previous 4 years.

3. If <183 days, check 90 + 365 rule:

 ○ 90 days in current year AND 365 days in previous 4 years →
Resident

4. If neither condition is satisfied → Non-Resident

5. Citizenship does not matter: a Bangladeshi can be Non-Resident, a

foreigner can be Resident if conditions met.

6️⃣Simple Way to Remember

● Resident = Tax on all income (local + foreign)

● Non-Resident = Tax only on Bangladesh income

✅ Summary in Simple Words:

● Always count both entry & exit days.

● Place & reason of stay don’t matter; even territorial waters count.

● Official foreign tours for Bangladeshi jobs are treated as

Bangladesh stay.

● One person may be resident in more than one country.

● Citizenship ≠ Residency.

● For firms/companies/entities, “control & management” location

decides residency.
 ● Flowchart:

○ 183+ days → Resident

○ OR 90+ days + 365 days in last 4 years → Resident

○ Otherwise → Non-Resident.

CHARGE OF SURCHARGE [SECTION 18(4)]

The government, through Parliament, can charge an extra tax called a
surcharge on top of regular income tax.

According to Section 18(4) of the Income Tax Act 2023 (ITA 2023):

● Any surcharge or other additional charge is collected, paid, and

enforced according to the rules made in Acts passed by
Parliament.

Finance Act, 2024 – Surcharge for Assessment Year 2024-25

The Finance Act 2024 has specified when surcharges will apply for the
year 2024-25.

1️⃣Surcharge on Individuals with High Net Worth [Section 167]

An individual must pay a surcharge on their income tax if their total net
worth is high.

● The surcharge is calculated as a percentage of the total tax

payable based on the individual's total wealth.

Here is the breakdown:

 Net Wealth Conditions Surcharge
(Total Assets) Rate

Up to Tk. 4 None Nil

crore

More than Tk. 4 Or if the individual has multiple cars 10%

crore to Tk. 10 under one name, or a house bigger than
crore 8,000 sq. ft. in city corporation area

More than Tk. — 20%

10 crore to Tk.
20 crore

More than Tk. — 30%

20 crore to Tk.
50 crore

More than Tk. — 35%

50 crore

Explanation:

● If your wealth is small (up to Tk. 4 crore), no surcharge.

● If you are rich (Tk. 4–10 crore), or have several cars or a very large
house, you pay 10% extra tax.
 ● The richer you are, the higher the surcharge, up to 35% for those
over Tk. 50 crore.

2️⃣Surcharge on Income from Tobacco Manufacturing

If a taxpayer earns income by making tobacco products like:

● Cigarettes, Biri, Jorda, Gul, or other tobacco products,

then an additional 2.5% surcharge will be applied on that income.

Explanation:

● This is meant to tax businesses making tobacco products more

heavily.

3️⃣Environmental Protection Surcharge for Owners of Multiple Cars

● People who own more than one motor vehicle may have to pay an
environmental protection surcharge starting from FY 2023-24.

● The goal is to reduce pollution and carbon emissions by

discouraging excessive car ownership.

Explanation:

● The surcharge depends on the engine capacity of the vehicles.

● Bigger engines usually mean higher surcharges, to push people to

own fewer or smaller cars.

Environmental Protection Surcharge on Motor Vehicles

The government charges an Environmental Protection Surcharge (EPS)
on people who own more than one car to reduce air pollution. The
amount depends on the engine size (cc) or power (KW) of the car.

Engine Capacity (cc) / Power EPS Amount

(KW) (Tk)

Up to 1500 cc or 75 KW 25,000

1501–2000 cc or 76–100 KW 50,000

2001–2500 cc or 101–125 KW 75,000

2501–3000 cc or 126–150 KW 150,000

3001–3500 cc or 151–175 KW 200,000

Above 3500 cc or 175 KW 350,000

Conditions for EPS

1. Car Selection:

○ If you own two or more cars, the surcharge is charged only

on the car with the highest engine capacity (cc).
 How EPS is Collected (Collection at Source)

● When you renew your car registration or fitness certificate at

BRTA, they will collect the Environmental Protection Surcharge
(EPS) from you.

● You don’t have to go anywhere else to pay it — it’s done at the

time of renewal.

If You Renew for Multiple Years (Multiple-Year Renewal)

● Sometimes people renew their car registration for 2 or more years

at once.

● In that case, the EPS is calculated based on the fiscal year ending
June 30 of the year when you do the renewal.

○ Example: If you renew in 2025 for 3 years, EPS will be

calculated using the 2024-25 rate, not the rates for 2026-27
or 2027-28.

● Important: EPS for future years is not automatically added — it is

only calculated when you do the renewal.

✅ In very simple words:

● BRTA collects EPS when you renew your car.

 ● If you renew for multiple years, EPS is based on the current year’s
rate, not future years.

2. Late Payment:

○ If EPS is not paid at the time of renewal, it will be

calculated later using a formula at the time of registration
or assessment.

○ Accrued EPS from previous years will be included when

payment is made.

3. Income Tax Filing:

○ If EPS is not paid before filing your income tax return, it

will be added by the tax authority (DCT) during the
assessment process.

4. No Refund or Adjustment:

○ EPS cannot be refunded or adjusted against other taxes.

5. Vehicle Definition:

○ “Motor Vehicle” for EPS purposes does not include:

■ Bus, Minibus, Prime Mover, Truck, Lorry, Tank Lorry,

Pickup Van, Human Hauler, Autorickshaw, Motorcycle.

Key Rules for Surcharge in Bangladesh

1. Net Wealth condition

 ○ If Net Wealth < Tk. 4 crore → No surcharge (except special
cases like multiple cars, cigarette business).

○ If Net Wealth ≥ Tk. 4 crore → Surcharge applies on the

income tax amount.

■ Tk. 4–10 crore → 10%

■ Tk. 10–20 crore → 20%

■ Tk. 20–50 crore → 30%

■ Tk. 50+ crore → 35%

2. Owning Multiple Cars

○ Even if net wealth < Tk. 4 crore, extra surcharge of 10% on

tax is charged.

○ Plus, Environmental Protection Surcharge (EPS) depending

on car engine capacity:

■ 1500cc–2000cc → Tk. 25,000

■ 2001cc–2500cc → Tk. 50,000

■ 2501cc–3000cc → Tk. 75,000

■ 3001cc–3500cc → Tk. 100,000

■ 3501cc–Above → Tk. 150,000

 3. Cigarette, bidi, zarda, gul, other tobacco business

○ An extra surcharge of 2.5% is charged on income from these

businesses, even if wealth is below Tk. 4 crore.

4. For Cigarette Manufacturing Companies

○ Normal corporate tax = 45%

○ Plus surcharge = 2.5% of income

🔹 Case 1

● Income: Tk. 13,00,000

● Net Wealth: Tk. 2.9 crore (< 4 crore)

● Tax Liability: Tk. 1,25,000

● Surcharge: ❌ None (because wealth < 4 crore and no car/tobacco

business).

● Total = 125,000

✅ Explanation: Since Mr. Sabbir’s net wealth is below Tk. 4 crore and no
special condition applies, no surcharge is payable.

🔹 Case 2
 ● Income: Tk. 5,50,000

● Net Wealth: Tk. 2.9 crore (< 4 crore)

● Tax Liability: Tk. 15,000

● Special Condition: Owns 2 motor cars.

● Surcharge: 10% of income tax = 1,500

● Total = 15,000 + 1,500 = 16,500

✅ Explanation: Even though his wealth is below Tk. 4 crore, surcharge

applies because he has multiple cars.

🔹 Case 3

● Income: Tk. 13,75,000

● Net Wealth: Tk. 4.6 crore (falls in 4–10 crore range)

● Tax Liability: Tk. 1,25,000

● Surcharge: 10% of 125,000 = 12,500

● Total = 125,000 + 12,500 = 137,500

✅ Explanation: Wealth > Tk. 4 crore, so surcharge applies at 10%.

🔹 Case 4

● Income: Tk. 13,75,000

● Net Wealth: Tk. 11 crore (falls in 10–20 crore range)

● Tax Liability: Tk. 1,25,000

● Surcharge: 20% of 125,000 = 25,000

● Total = 125,000 + 25,000 = 150,000

✅ Explanation: Higher wealth bracket = higher surcharge rate.

🔹 Case 5

● Income: Tk. 13,75,000

● Net Wealth: Tk. 51 crore (> 50 crore)

● Tax Liability: Tk. 1,25,000

● Surcharge: 35% of 125,000 = 43,750

● Total = 125,000 + 43,750 = 168,750

✅ Explanation: For very high wealth, surcharge is 35%.

🔹 Case 6
 ● Income: Tk. 13,75,000

● Net Wealth: Tk. 31 crore (falls in 20–50 crore range)

● Tax Liability: Tk. 1,25,000

● Surcharge: 30% of 125,000 = 37,500

● Special Condition: Owns 2 cars (1500cc + 2700cc)

○ Environmental Protection Surcharge (EPS) for 2700cc = Tk.

150,000

● Total = 125,000 + 37,500 + 150,000 = 312,500

✅ Explanation: Both wealth surcharge (30%) and car EPS apply here.

🔹 Case 7

● Income: Tk. 13,75,000 (includes Tk. 4,00,000 from cigarette

business)

● Net Wealth: Tk. 2.9 crore (< 4 crore)

● Tax Liability: Tk. 243,750

○ [Computed from slabs with 45% on cigarette income]

● Surcharge:
 ○ No wealth surcharge (wealth < 4 crore)

○ But tobacco surcharge = 2.5% of 400,000 = 10,000

● Total = 243,750 + 10,000 = 253,750

✅ Explanation: Even if wealth is below Tk. 4 crore, income from

cigarette business always attracts 2.5% surcharge.

🔹 Case 8

● Income: Tk. 13,75,000 (includes Tk. 4,00,000 from cigarette

business)

● Net Wealth: Tk. 4.1 crore (> 4 crore, falls in 4–10 cr range)

● Tax Liability: Tk. 243,750

● Surcharge:

○ Wealth surcharge = 10% of 243,750 = 24,375

○ Cigarette surcharge = 2.5% of 400,000 = 10,000

○ EPS for car (1800cc) = 50,000

● Total = 243,750 + 24,375 + 10,000 + 50,000 = 328,125

✅ Explanation: Here all three surcharges apply — wealth, cigarette, and

car EPS.
🔹 Case 9 (Company Case)

● Company: X Ltd (Cigarette manufacturing)

● Income: Tk. 30,00,000

● Tax Liability: 45% of 30,00,000 = 13,50,000

● Surcharge: 2.5% of 30,00,000 = 75,000

● Total = 13,50,000 + 75,000 = 14,25,000

✅ Explanation: For cigarette companies, corporate tax is 45%, plus 2.5%

surcharge on income.

📊 Final Table (Summary)

Cas Income Net Tax Surcharge(s) Total

e (Tk.) Wealth (Tk.) Liability
(Tk.)

1 13,00,00 2.9 cr 1,25,00 None 1,25,000

0 0

2 5,50,000 2.9 cr 15,000 Car surcharge = 1,500 16,500

3 13,75,00 4.6 cr 1,25,00 Wealth (10%) = 12,500 1,37,500

 0 0

4 13,75,00 11 cr 1,25,00 Wealth (20%) = 25,000 1,50,000

0 0

5 13,75,00 51 cr 1,25,00 Wealth (35%) = 43,750 1,68,750

0 0

6 13,75,00 31 cr 1,25,00 Wealth (30%) = 37,500 3,12,500

0 0 + EPS 1,50,000

7 13,75,00 2.9 cr 2,43,75 Cigarette surcharge = 2,53,750

0 0 10,000

8 13,75,00 4.1 cr 2,43,75 Wealth (24,375) + 3,28,125

0 0 Cigarette (10,000) +
EPS (50,000)

9 30,00,00 N/A 13,50,0 Cigarette 2.5% = 14,25,000

0 (Compan 00 75,000
y)

✅ In short:
 ● EPS is extra tax on multiple cars to fight pollution.

● Paid on the biggest car you own.

● Collected by BRTA during renewal.

● Late payment or non-payment gets added by the tax office.

● Only regular cars are considered, not buses, trucks, motorcycles, or

autorickshaws.

✅ Summary in simple words:

1. The government can charge extra taxes called surcharges on top

of income tax.

2. High-wealth individuals pay surcharge depending on how rich they

are or if they own many cars or a very large house.

3. People making tobacco products pay extra 2.5% tax.

4. People owning multiple cars pay an environmental surcharge

based on engine size, to help protect the environment.

📘 Bangladesh Income Tax – Example + Income Tax Rate

Structure (AY 2024–25)
🔹 Example: Additional Tax Liability Case

The situation is:

● A taxpayer has a regular tax liability of Tk. 825,000.

● But since the taxpayer did something without prior approval of

the appropriate authority (e.g., making certain expenses or
transactions), an additional tax applies.

👉 Rule: The additional tax will be the higher of:

1. 60% of payable tax, or

2. Tk. 500,000 (fixed minimum additional tax)

Step 1: Calculate 60% of payable tax

● 60% × 825,000 = Tk. 495,000

Step 2: Compare with Tk. 500,000

● Higher of (495,000 or 500,000) = Tk. 500,000

Step 3: Add with regular tax liability

● Regular tax = 825,000

● Additional tax = 500,000

● Total = 825,000 + 500,000 = Tk. 1,325,000

✅ Explanation in simple words:
If a taxpayer fails to get necessary approvals for certain transactions,
they must pay an extra tax penalty. This extra tax is whichever is
higher: 60% of their payable tax OR a minimum fixed Tk. 500,000. In
this example, the minimum amount (Tk. 500,000) was higher, so the total
liability became Tk. 1,325,000.

🔹 Income Tax Rate Structure for AY 2024–2025

(Finance Act 2024)

Every year, the Finance Minister presents a Finance Bill with the
national budget. This bill also includes the proposed income tax rates
for individuals and entities. Once Parliament passes it, it becomes the
Finance Act.

For Assessment Year 2024–2025, the following tax structure applies:

1. Tax Slabs for Individuals, Non-resident Bangladeshis, HUF, and

Firms

● On the first Tk. 350,000 → 0% (Nil tax)

● On the next Tk. 100,000 → 5%

● On the next Tk. 400,000 → 10%

● On the next Tk. 500,000 → 15%

● On the next Tk. 500,000 → 20%

 ● On the balance (any remaining income above this) → 25%

2. Minimum Non-Assessable Income Limits (Exemptions)

This means income up to a certain limit is tax-free depending on the

person’s status:

● General taxpayers (men under 65): Tk. 350,000

● Women and senior citizens (65 years or above): Tk. 400,000

● Third gender persons & persons with disabilities: Tk. 475,000

● Gazetted wounded freedom fighters (recognized by Ministry of

Liberation War Affairs): Tk. 500,000

● Parents/guardians of disabled children or dependents: An extra

Tk. 50,000 exemption per disabled child/dependent.

○ ⚠️If both father and mother are taxpayers, only one can
claim this benefit (not both).

3. Minimum Tax Payable

Even if your taxable income is low, you must pay at least this much:

● Tk. 5,000 → For taxpayers living in Dhaka North, Dhaka South,

and Chittagong City Corporation areas.

● Tk. 4,000 → For taxpayers living in other city corporation areas.

 ● Tk. 3,000 → For taxpayers living outside city corporation areas.

1. Minimum Tax Rules (Section 163)

Even if a taxpayer makes a low profit or even a loss, they still have to
pay a minimum tax. This is based on their gross receipts (turnover).

● For Individuals:

○ If gross receipts ≥ Tk. 3 crore → Minimum tax = 0.25% of

gross receipts.

○ If engaged in Cigarette, Bidi, Chewing tobacco, Smokeless

tobacco manufacturing → Minimum tax = 0.60% of gross
receipts.

● For Firms:

○ If gross receipts > Tk. 50 lakh → Minimum tax applies,

irrespective of profit or loss.

○ Special higher rates:

■ Mobile phone operators: 2% of gross receipts.

■ Cigarette, Bidi, Chewing tobacco, Smokeless tobacco

manufacturers: 3% of gross receipts.

■ Carbonated beverage manufacturers: 3% of gross

receipts.
✅ Explanation in easy words:
This rule ensures that big businesses always pay something, even if they
claim losses. Tobacco, beverage, and mobile sectors have higher
minimum tax rates because they are considered luxury/high-risk sectors.

🔹 2. Tax Rates for Special Categories (Other than

Company)

● Non-resident foreigner (individual): 30% flat rate.

● Co-operative Societies (registered under Co-operative Societies

Act 2001): 30% flat rate.

● Cigarette/tobacco business income (other than company): 45%

flat rate.

Who are we talking about?

● Trusts, Funds, Associations of Persons (AOPs), and other taxable

entities (not companies).
👉 Example: a charity trust, a community development fund, or a
group of people running an association that earns income.

Normal Tax Rate = 20%

These entities normally pay 20% income tax.

✅ But this 20% rate is only allowed if they follow certain banking rules.

📌 Banking Rules they must follow

1. All income and receipts must come through bank transfer.

○ Means: they cannot take cash directly; money must come

into their bank account.

○ Example: If a donor gives Tk. 5 lakh to a trust, the money

should be deposited to the trust’s bank account, not handed
in cash.

2. All expenses and investments must also go through bank transfer.

○ They cannot pay or invest in cash above certain limits.

○ Example: If the trust wants to buy land, it should pay via

bank transfer (cheque, online transfer, pay order), not with
cash.

3. Limits for cash transactions:

○ A single cash transaction cannot exceed Tk. 5 lakh.

○ Total cash transactions in a year cannot exceed Tk. 36 lakh.

○ This means:

■ If they pay rent of Tk. 4 lakh in cash → ✅ allowed (since

under 5 lakh).

■ If they try to pay Tk. 8 lakh in cash at once → ❌ not

allowed.

■ If they make several small cash payments and together

in a year those exceed Tk. 36 lakh → ❌ not allowed.
 📌 What happens if they break the rules?

● If any of these rules are not followed, then they lose the benefit
of 20% rate.

● Instead, they have to pay higher tax = 30%.

👉 Example:

● A trust earns Tk. 50 lakh in a year.

● If they followed all bank rules → Tax = 20% of 50 lakh = Tk. 10 lakh.

● If they broke the rules (say, received Tk. 10 lakh donation in cash
or paid Tk. 8 lakh in cash at once) → Tax = 30% of 50 lakh = Tk. 15
lakh.

✅ In short:

● These entities are encouraged to use banking channels for all

money-in and money-out.

● If they do → lower tax (20%).

● If they don’t → penalty in the form of higher tax (30%).

●
● Private universities, medical, dental, and engineering colleges
(where only IT-related subjects are taught): 15%.

✅ Explanation in easy words:

Some entities (like trusts, societies, universities) get lower tax rates if
they follow transparency rules (bank transfers). If they fail, the
government charges a higher rate (to discourage cash dealings).

🔹 3. Tax Rates for Companies (AY 2024–25)

● Publicly traded companies that transferred > 10% of paid-up

capital via IPO: 20%*
(except banks, insurance, financial institutions, merchant banks,
cigarette manufacturers, and mobile phone operators)

● Publicly traded companies that transferred ≤ 10% of paid-up

capital via IPO: 22.5%*
(same exclusions apply)

● Non-publicly traded companies (private companies, except

special sectors like banks, insurance, merchant banks, cigarette &
mobile companies): 25%*

● One Person Company (OPC): 20%*

(*indicates special incentive rates announced in the Finance Act 2024).

Tax Rates for Different Entities (AY 2024–25)

🔹 1. Merchant Banks

● Flat tax rate → 37.5% (whether public or not).

🔹 2. Banks, Insurance Companies, and Financial Institutions (excluding

Merchant Banks)
 ● Publicly traded (listed on stock exchange) → 37.5%

● Non-publicly traded (not listed) → 40%

👉 Example:

● A listed insurance company with taxable income of Tk. 1 crore →

Tax = 37.5 lakh.

● An unlisted bank with taxable income of Tk. 1 crore → Tax = 40

lakh.

🔹 3. Cigarette, Bidi, Tobacco Manufacturing Companies

● Publicly traded → 37.5%

● Non-publicly traded → 45%

👉 Example:

● A listed cigarette company earns Tk. 2 crore → Tax = 75 lakh.

● An unlisted bidi manufacturer earns Tk. 2 crore → Tax = 90 lakh.

🔹 4. Mobile Phone Operator Companies

● Not publicly traded → 45%

● Publicly traded (at least 10% shares issued through stock

exchange; Pre-IPO placement max 5%) → 40%
 ● If a non-public mobile operator transfers at least 20% shares
through IPO → They get a 10% rebate on income tax only in that
year of transfer.

👉 Example:

● A non-public operator earns Tk. 100 crore → Tax = 45 crore.

● A public operator earns Tk. 100 crore → Tax = 40 crore.

● If a non-public operator goes IPO and issues 20% shares in that

year → instead of Tk. 45 crore, it will get 10% rebate = 4.5 crore, so
tax = Tk. 40.5 crore.

🔹 5. Trusts, Funds, Associations of Persons (AOPs), and other entities

(not companies)

● Normal rate: 25%

● If banking transaction rules violated → extra 2.5% penalty (so

effective rate = 27.5%).

👉 Rules:

● All income & receipts must come through the banking channel.

● All expenses & investments over Tk. 5 lakh (per transaction) or Tk.
36 lakh (per year) must be via bank.

● If violated → tax rate goes up.

🔹 6. Minimum Tax (irrespective of profit or loss)

Even if a company shows loss or zero profit, they must pay a minimum
tax on gross receipts:

● Cigarette, bidi, tobacco companies → 3% of receipts

● Carbonated beverage producer → 3%

● Mobile phone operator → 2%

● Any other companies → 0.60%

● Industrial undertaking (new manufacturing, first 3 years of

production) → 0.10%

👉 Example:

● A beverage company has Tk. 50 crore sales but shows a loss. Still
must pay 3% of sales = Tk. 1.5 crore as minimum tax.

🔹 7. Special Rebate for Employment of Disabled/Third Gender

If a taxpayer employs:

● At least 10% of workforce, or

● More than 25 employees from physically challenged or third

gender groups,

They get a tax rebate, whichever is lower:

 ● 5% of tax payable, or

● 75% of salaries paid to those employees.

👉 Example:

● A company’s tax payable = Tk. 20 lakh.

● They pay Tk. 4 lakh salaries to 30 disabled employees.

● Rebate = lower of (5% of 20 lakh = 1 lakh) OR (75% of 4 lakh = 3

lakh).

● So rebate = Tk. 1 lakh. Final tax payable = Tk. 19 lakh.

✅ In short:

● Different industries and company types have different tax rates.

● Publicly traded (listed) companies usually get a lower rate than

non-public ones.

● Some sectors (tobacco, mobile, banks) have special higher rates.

● Everyone must pay a minimum tax, even if they claim losses.

● Socially responsible employers get rebates.

✅ Explanation in easy words:

 ● Companies that go public and offer more than 10% of their shares
to the public are rewarded with a lower tax rate (20%).

● If they offer less (≤ 10%), the tax is slightly higher (22.5%).

● Private companies (not listed on stock exchange) pay 25%.

● One-Man Companies (where one person owns 100%) pay 20%.

📊 Final Organized Summary

Minimum Tax

● Individuals (gross receipt ≥ 3 cr) → 0.25% of gross receipts

● Individuals in tobacco sector → 0.60% of gross receipts

● Firms (gross receipts > 50 lakh):

○ Mobile operators → 2%

○ Cigarette/tobacco → 3%

○ Carbonated beverage → 3%

Special Rates (non-company)

● Non-resident foreigners → 30%

● Co-operative societies → 30%

● Cigarette/tobacco business (non-company) → 45%

 ● Trusts/Funds/Associations → 20% (if bank rule followed) / 30% (if
not)

● Private universities/colleges (IT only) → 15%

Companies

● Public companies (IPO > 10%) → 20%

● Public companies (IPO ≤ 10%) → 22.5%

● Private companies (non-listed) → 25%

● One Person Company → 20%

✨ So, in short:

● Minimum tax ensures nobody escapes tax by showing fake losses.

● Special rates exist for risky or privileged sectors (tobacco =

higher, universities = lower).

● Companies are incentivized to go public with lower tax rates.

✅ Explanation in simple words:

● These are the lowest possible taxes you must pay, even if your
income is below taxable level.
 ● It is kind of like a minimum entry fee to the tax system,
depending on where you live.

📊 Final Summary (Easy Words)

1. Additional Tax Case:

○ If you don’t follow approval rules, you pay extra tax = higher
of (60% of tax) or Tk. 500,000).

○ Example: Regular tax 825,000 → Extra tax 500,000 → Total

1,325,000.

2. Tax Slabs (AY 2024–25):

○ First 3.5 lakh = No tax

○ Next 1 lakh = 5%

○ Next 4 lakh = 10%

○ Next 5 lakh = 15%

○ Next 5 lakh = 20%

○ Balance = 25%

3. Exemptions (Tax-free limits):

 ○ Men: Tk. 350,000

○ Women & Senior Citizens (65+): Tk. 400,000

○ Third gender & disabled: Tk. 475,000

○ Freedom fighters: Tk. 500,000

○ Parents/guardians of disabled dependents: Tk. 50,000 extra

per child

4. Minimum Tax:

○ Tk. 5,000 (Dhaka & Chattogram City Corp)

○ Tk. 4,000 (Other City Corp)

○ Tk. 3,000 (outside city corp)