Formula For Calculating Taxable Income In Bangladesh 2023
People in Bangladesh do not like to pay taxes. The majority of people who are tax-paying citizens wish to avoid paying income tax. The taxpayer believes that they must pay a huge sum of money in order to pay their bills.
Many people believe that the payment mechanism is overly complicated. They refuse to pay as a result of this. It cannot be denied that the taxation system is rather complicated. This does not, however, imply that the taxpayers will be unaware of the tax computation mechanism.
A survey shows that 45% of taxpayers are going on travel because of their short knowledge of tax calculation. For that , they are not interested in taxation.
Income Tax Calculation Formula In Bangladesh
The income of a person is used to calculate the taxable income system. That is why it is easy to understand. A taxpayer will quickly comprehend the entire taxation method after reading this text. For the most part, finding a source of money is not difficult. The monthly gross compensation is split in a variety of ways that are all too familiar.
Tax Calculation Formula
+ Special Allowance
+ Transport Allowance
+ any other allowance
Gross income from salary
(Tax calculated according to the income tax slab)
The source of some revenue is complex in the fields of certain facts. They should speak with an income tax return adviser if they have income from a difficult source and want an uncomplicated way to pay income tax return. The majority of Bangladeshis can determine their tax burden and taxable income. TDS based on pay is simple to calculate.
The Salary Sheet Is Designed In Bangladesh
- BDT 60,000 monthly base salary
- House rent is 40% of the basic salary.
- Medical expense payment of 10%
- 10% provision for conveyance
- Two festival bonuses equal to one month’s basic pay
The Income Tax Calculating In Bangladesh
Limit Of Taxation
|Minimum taxable income||300000|
|Max allowed investment||0|
|Total taxable income||0|
|Rebate from investment||0|
|From 0 to 300000||0%||0||0|
|For remaining next 100000||5%||0||0|
|For remaining next 300000||10%||0||0|
|For remaining next 400000||15%||0||0|
|For remaining next 500000||20%||0||0|
|For remaining everything else||25%||0||0|
|Net Tax liability||0|
The Taxable Income Level For A Single Person
Our BPO services will assist you in payroll taxation issues. You may be aware that in general, the minimum taxable income level has been BDT 300,000. However, there are rare circumstances where this limit fluctuates. In unusual instances, the following is the minimum taxable threshold:
|Types of person||Total taxable income (BDT)|
|Third gender, woman and 65 years or more old taxpayers||350,000|
|Person with disability||450,000|
|Gazette wound freedom fighter||475,000|
If a taxpayer is the father or legal guardian of disabled children, his or her minimum taxable income level for each disabled kid will be BDT 50,000 greater than his or her usual minimum taxable income threshold.
However, if both the father and mother of a disabled kid are taxation payers, then any of them will be eligible for this payment.
So now we have the minimum income tax return threshold, and if this exceeds a person’s income, he or she will be required to pay taxation to the National Board of Revenue in Bangladesh.
Minimum Tax Ceiling
If a taxpayer’s taxable income exceeds the specified taxable threshold set out in the preceding paragraph, the taxpayer should be required to pay the following minimum taxation:
|Location||Minimum Tax (BDT)|
|North City Corporation of Dhaka, South City Corporation of Dhaka and Chittagong City Corporation||5,000|
|Any other city corporation||4,000|
|Outside city corporation||3,000|
It indicates that if a taxpayer’s taxable revenue increases BDT 300,000 but his or her computed tax due is less than the amount shown in the table, he or she must pay above that amount as taxes to NBR for the taxpayer in question.
Mr Rahim, for example, if his total taxable income is BDT 320,000 and the minimum tax threshold is BDT 300,000, his tax due will be BDT 1,000 (BDT 320,000-300,000)X5%.
However, even though his real tax burden on his taxable income is BDT 1,000, he is required to pay BDT 5,000 as a minimum taxation.
The tax refund is not taken into account here. The taxpayer is eligible for a tax break on his investment allowance if he meets the NBR’s requirements.
The Final Settlement Of Tax Treatment
Section 82C deductions from any of six provisions shall be regarded as final settlement.
If you have a BDT 300,000 investment in saving instruments and have earned BDT 300,000 in interest, you will get BDT 270,000 after deducting taxation of BDT 30,000 at source at a rate of 10%, which comes under final settlement.
Your overall taxable income from other sources is BDT 580,000.
So, how much will be your liability in taxes?
BDT 880,000 (580,000+300,000) is your entire taxable income. However, you must put aside the earnings from savings instrument interest when calculating your taxation due since it comes within the final settlement.
So, disregarding interest on savings instruments, your tax liability would be BDT 33,000 ((880,000-300,000)X10%).
As a result, your investment cap will be BDT 145,000. (580,000X25 percent ). And there will be a tax refund of BDT 21,750 on this amount (145,000X15 percent ).
The tax amount would be BDT 11,250 after subtracting the tax rebate from the ordinary tax liability (33,000-21,750).
As a result, you must now add BDT 30,000, which is deducted as a final settlement, to your ordinary tax due, resulting in a total tax liability of BDT 41,250 (BDT 11,250+30,000).
You just have to pay BDT 11,250 because you previously paid BDT 30,000 as final payment at source. This is the amount owed to NBR in taxes.
If any taxes are deducted from your income by a responsible person, you must obtain a challan from that respectable citizen before submitting your income tax return to the NBR. Because you must include copies of your challans with your income tax return as proof of payment.
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