Bangladesh: Changes in Income Tax Law of Bangladesh: Income Tax Return filing under the Self-Assessment scheme

Bangladesh government has enacted Income Tax Act 2023 to replace the Income Tax Ordinance 1984 to meet the growing needs of the country and the people to modernize and update the taxation system in the country. The new Act has become effective from 1^st July 2023.

The Income Tax Act has brought in a major change in submission of income tax return by all taxpayers under self-assessment scheme with a view to expanding tax-base and maximize tax revenue collection to finance government expenditures. The new scheme has been made mandatory for all the tax payers such as individuals, corporate bodies and foreigners. It also provides filing of tax return for those who enjoy tax relief in various sectors of the economy in the form of tax holiday, tax exemption, reduced rate of tax. 

In the previous Ordinance there were two procedures for filing income tax return. One is filing of return under normal procedure and the other one was filing of return under universal self-assessment procedure. The Ordinance provided that no universal self-assessment return can be filed after the Tax Day. Under universal self-assessment procedure taxpayers were to pay tax payable on income shown in the tax return; but tax payment was not compulsory with the return under normal procedure. So, after the Tax Day the taxpayers had to submit tax return under normal procedure causing assessment of income and realization of tax complicated and delayed.

But in the new Act return filing has been made mandatory for the taxpayers under Self-Assessment procedure only. The present Act allows any tax payer to file income tax return within the Tax Day and even after the Tax Day under self-assessment procedure. Under this provision taxpayers are to pay total tax payable as per income disclosed in the return.

Under self-assessment procedure tax revenue collection will increase as there is no scope to avoid tax payment by the tax payers. The act also provides processing of self-assessment return to detect incorrect claims in the light of any information contained in the return. Under the return processing the taxpayers are given the opportunity to file amended return rectifying the mistakes in the original tax return. 

Further, the Act provides auditing of self-assessment return to detect tax evasion and tax avoidance under the guidance of National Board of Revenue (NBR), the apex body for income tax revenue collection for the government exchequer.  

The Act provides a separate section of law for submission of proof of filing return for certain services. If the proof of submission of return for the latest assessment year is no submitted then the taxpayers will not get any service from any government, non-government organizations and professional bodies. 

The Income Tax Act will bring more and more eligible persons under tax net and increase in number of taxpayers will result in increase of tax revenue to meet government expenditures for the benefit of the people and for economic development of the country. 

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Reference/ Citation

Income Tax Act 2023