Slide 01
Tax Deduction at Source (TDS)
Understanding Bangladesh's Comprehensive Withholding Tax System
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TDS Sections
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Income Tax Act
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Withholding Rules
TDS Collection Trend
What is TDS?
Tax Deduction at Source (TDS) is a mechanism where tax is deducted at the time of payment by the payer and deposited with the government. It ensures regular tax collection and reduces tax evasion.
Legal Framework
Governed by the Income Tax Act 2023 and Withholding Tax Rules 2024, TDS applies to various payments including salaries, professional fees, contracts, and financial instruments.
Key Benefits
• Regular revenue collection
• Reduced tax evasion
• Simplified compliance
• Advance tax payment
• Better tax administration
• Reduced tax evasion
• Simplified compliance
• Advance tax payment
• Better tax administration
Important Note
Every person responsible for deducting or collecting tax must obtain a Withholder Identification Number (WIN) from the National Board of Revenue (NBR).
Slide 02
Legal Framework & Requirements
Compliance Foundation for TDS Implementation
Income Tax Act 2023
Comprehensive legislation governing TDS across all payment categories and sectors in Bangladesh.
Withholding Tax Rules 2024
Detailed implementation rules, rate schedules, exemptions, and administrative procedures.
WIN Registration
Mandatory Withholder Identification Number for all entities responsible for tax deduction.
PSR Requirement
Proof of Submission of Return requirement with penalty provisions for non-compliance.
Income Tax Act 2023
The primary legislation governing TDS in Bangladesh, containing comprehensive provisions for withholding tax across various payment categories and sectors.
Withholding Tax Rules 2024
Detailed rules and procedures for implementing TDS provisions, including rate schedules, exemptions, and administrative requirements.
Withholder Identification Number (WIN)
Every person responsible to deduct or collect tax is required to obtain a WIN. This includes:
- Government entities
- Private companies
- Banks and financial institutions
- Individual employers
- Professional service providers
Proof of Submission of Return (PSR)
For residents, the TDS rate is increased by 50% of the applicable rate if the payee fails to submit PSR to the payer. This encourages tax return filing compliance.
| Requirement | Description | Penalty for Non-Compliance |
|---|---|---|
| WIN Registration | Mandatory for all withholders | Administrative penalties |
| TDS Deduction | At prescribed rates and times | Interest and penalties |
| TDS Deposit | Within specified timeframes | Interest on delayed payment |
| TDS Certificate | Issue to payees | Administrative action |
Slide 03
TDS Categories Overview
Major Classifications and Payment Types
TDS Rate Distribution by Category
Employment & Salary
Average Rate
Regular salaries, government salaries, participation funds, and welfare contributions.
Regular salaries, government salaries, participation funds, and welfare contributions.
Business Contracts
0.5% - 10%
Supply of goods, manufacturing, construction, and execution of contracts.
Supply of goods, manufacturing, construction, and execution of contracts.
Professional Services
5% - 15%
Consultancy, technical services, legal services, and professional fees.
Consultancy, technical services, legal services, and professional fees.
Financial Instruments
5% - 20%
Interest on deposits, securities, dividends, and insurance commissions.
Interest on deposits, securities, dividends, and insurance commissions.
Import & Export
0% - 20%
Import duties, export proceeds, and international trade services.
Import duties, export proceeds, and international trade services.
Special Categories
Variable
Real estate, mobile operators, shipping, and digital services.
Real estate, mobile operators, shipping, and digital services.
Resident vs Non-Resident
TDS rates and procedures differ significantly between resident and non-resident payees. Non-residents typically face higher withholding rates and different compliance requirements.
Slide 04
Salary & Employment TDS
Employment-Related Tax Deductions
Salary TDS Calculator
Salary Tax Brackets Visualization
| Category | Section | Rate | Description |
|---|---|---|---|
| Regular Salaries | Section 86 | Average Rate | Tax on total taxable salary divided by 12 months |
| Government Salaries | Section 86(3) | Average Rate | Special provisions for government employees |
| Participation Fund | Section 88 | 10% | Workers' Participation Fund contributions |
| Welfare Fund | Section 88 | 10% | Workers' Welfare Foundation Fund |
Average Rate Calculation
The average rate is calculated by dividing the total tax liability on annual taxable salary by 12 months. This ensures proportionate monthly deduction.
Exemptions & Allowances
Various allowances like house rent, medical, and conveyance may be exempt from TDS calculation up to prescribed limits.
Key Points for Employers
- Deduct TDS monthly from salary payments
- Issue TDS certificates to employees
- Deposit TDS within prescribed timeframes
- Maintain proper records and documentation
Slide 05
Business & Contract TDS
Supply Chain and Contract Execution
Contract TDS Calculator
Contract Value vs TDS Rate
0.5%
MS Billets & Scrap
1%
Essential Commodities
3%
Gas Transmission
7%
Manufacturing
10%
Tobacco Products
| Supply Category | TDS Rate | Section Reference |
|---|---|---|
| MS Billets & Scrap | 0.50% | Section 89 |
| Oil Marketing Companies | 0.60% | Section 89 |
| Oil Dealers/Agents | 1.00% | Section 89 |
| Essential Commodities | 1.00% | Section 89 |
| All Fruits | 2.00% | Section 89 |
| Cement, Iron Products | 2.00% | Section 89 |
| Gas Transmission | 3.00% | Section 89 |
| Manufacturing Services | 7.00% | Section 89 |
| Tobacco Products | 10.00% | Section 89 |
Contract Value Thresholds
Different rates apply based on contract values:
- Up to BDT 2 lac: Nil
- BDT 2-5 lac: 1%
- BDT 5-15 lac: 2.5%
- BDT 15-25 lac: 3.5%
- BDT 25 lac-3 crore: 4%
- Above BDT 3 crore: 5%
Slide 06
Professional Services TDS
Technical and Professional Service Payments
Professional Services TDS Rates
| Service Type | TDS Rate | Section | Special Conditions |
|---|---|---|---|
| Advisory/Consultancy | 10% | Section 90 | Professional advice services |
| Technical Services | 10% (e-TIN) / 15% (No e-TIN) | Section 90 | Technical assistance and support |
| Catering Service | 10% (commission) / 2% (gross) | Section 90 | Food and catering services |
| Cleaning Service | 10% | Section 90 | Cleaning and maintenance |
| Security Service | 10% | Section 90 | Private security services |
| Manpower Supply | 10% | Section 90 | Human resource services |
| Media Services | 10% (commission) / 0.65% (gross) | Section 90 | Media buying and creative |
| Transport Services | 5% | Section 90 | Vehicle rental and transport |
| Internet Service | 10% | Section 90 | Internet and connectivity |
| Mobile Network | 12% | Section 90 | Mobile operator services |
e-TIN Benefits
Service providers with e-TIN enjoy reduced TDS rates (10% vs 15%) for professional and technical services, encouraging tax registration.
Commission vs Gross
Some services have dual rates - higher percentage on commission/fees only, or lower percentage on gross bill amount including all costs.
Special Considerations
- Banks and financial institutions may have different rates
- Some services require specific documentation
- Cross-border services may have additional requirements
- Regular vs one-time service providers may be treated differently
Slide 07
Financial & Investment TDS
Banking, Securities, and Investment Income
Investment TDS Calculator
Financial Instruments TDS Comparison
| Financial Instrument | TDS Rate | Section | Payee Type |
|---|---|---|---|
| Interest on Securities | 5% | Section 106 | All payees |
| Interest on Savings | 10% | Section 105 | Individuals |
| Interest on Fixed Deposits | 10% / 20% | Section 102 | Individual / Company |
| Dividends (with e-TIN) | 10% | Section 117 | Individuals |
| Dividends (without e-TIN) | 15% | Section 117 | Individuals |
| Company Dividends | Company Rate | Section 117 | Companies |
| Insurance Commission | 5% | Section 100 | All payees |
| LC Commission | 5% | Section 96 | All payees |
| Bangladesh Bank Bills | Maximum Rate | Section 107 | All payees |
Deposit Interest Rates
Individual: 10%
Company/Trust/AoP: 20%
Educational Institutions: 10%
Company/Trust/AoP: 20%
Educational Institutions: 10%
Local LC Rates
Non-distributor financing: 3%
Distributor financing: 1%
Computers/accessories: 2%
Essential commodities: 1%
Distributor financing: 1%
Computers/accessories: 2%
Essential commodities: 1%
Special Exemptions
No withholding tax on interest on pensioners' savings certificate if cumulative investment doesn't exceed BDT 5 lakh at year-end.
Slide 08
Import/Export & International TDS
Cross-Border Trade and International Services
Import/Export TDS Distribution
| Transaction Type | TDS Rate | Section | Basis |
|---|---|---|---|
| Import of Goods | 0% - 20% | Section 120 | Based on HSN code |
| Export Proceeds | 1% | Section 123 | Total export value |
| Foreign Service Payments | 7.5% | Section 124 | Service charges/fees |
| Freight Forward (Commission) | 10% | Section 124 | Commission only |
| Freight Forward (Gross) | 2.5% | Section 124 | Total bill amount |
| Foreign Buyer Agent | 10% | Section 116 | Commission/remuneration |
| Export Cash Subsidy | 10% | Section 112 | Subsidy amount |
| International Gateway | 1.5% - 7.5% | Section 108 | Revenue/payments |
HSN Code Based Import
Import TDS varies from 0% to 20% based on the Harmonized System of Nomenclature (HSN) code of the imported product, encouraging specific imports.
Software & Digital Services
Exempted: Software sales under Para 21, Part I, Sixth Schedule
Regular Rate: 7.5% for other digital services
Regular Rate: 7.5% for other digital services
International Gateway Services
- 1.5% of total revenue received by IGW operator
- 7.5% of revenue paid to ICX, ANS, BTRC and others
- 7.5% on whole amount paid or credited
Exemptions for Bangladeshi Citizens
No tax on income earned by Bangladeshi citizens abroad and brought into Bangladesh as per foreign remittance laws (Para 17, Part I, Sixth Schedule).
Slide 09
Special Categories & Updates
Sector-Specific Rates and FY 2024-25 Changes
20%
Mobile Operators
15%
Real Estate
5%
Shipping Business
Special Category TDS Rates
| Special Category | TDS Rate | Section | Calculation Basis |
|---|---|---|---|
| Mobile Phone Operators | 20% | Section 98 | Payment amount |
| Real Estate to Land Owner | 15% | Section 115 | Payment to land owner |
| Real Estate Developer | BDT 1,600-6,500/sqm | Section 126 | Per square meter |
| Property Transfer | 15% | Section 134 | Gain on transfer |
| Shipping Business | 5% / 3% | Section 132 | Freight received |
| Lottery Income | 20% | Section 118 | Prize amount |
| Brick Manufacturer | BDT 80,000-220,000 | Section 130 | Based on brickfield size |
| Trade License Renewal | BDT 500-3,000 | Section 131 | Fixed amount by area |
FY 2024-25 Key Updates
• Updated rates based on Income Tax Act 2023
• New Withholding Tax Rules 2024
• Enhanced digital service provisions
• Revised real estate rates
• Updated mobile operator rates
• New Withholding Tax Rules 2024
• Enhanced digital service provisions
• Revised real estate rates
• Updated mobile operator rates
Digital Economy Focus
Special provisions for e-commerce, digital platforms, online advertising, and technology services reflecting Bangladesh's digital transformation.
Real Estate TDS Structure
- Residential: BDT 1,600 per square meter
- Non-residential: BDT 6,500 per square meter
- Land with building: 5% of deed value
- Property lease: 4% of lease amount
Slide 10
Compliance & Best Practices
Framework for Effective TDS Management
TDS Compliance Timeline
Filing Requirements
• Monthly TDS returns
• Annual withholding statements
• TDS certificate issuance
• Quarterly reconciliation
• Digital filing mandatory
• Annual withholding statements
• TDS certificate issuance
• Quarterly reconciliation
• Digital filing mandatory
Key Deadlines
• TDS deposit: Within 15 days
• Monthly returns: By 15th of next month
• TDS certificates: Within 2 months
• Annual statements: By June 30
• Penalty for delays applies
• Monthly returns: By 15th of next month
• TDS certificates: Within 2 months
• Annual statements: By June 30
• Penalty for delays applies
Common Mistakes
• Incorrect rate application
• Missing PSR verification
• Late deposit and filing
• Inadequate documentation
• Wrong payee classification
• Missing PSR verification
• Late deposit and filing
• Inadequate documentation
• Wrong payee classification
Best Practices
• Maintain updated rate charts
• Verify payee TIN status
• Use digital platforms
• Regular compliance audits
• Professional consultation
• Verify payee TIN status
• Use digital platforms
• Regular compliance audits
• Professional consultation
Compliance Checklist
Future Outlook
Bangladesh's TDS system continues to evolve with digitalization, expanded coverage, and enhanced compliance mechanisms. Stay updated with NBR circulars and professional guidance for optimal compliance.