Certificate Course on

“Corporate Tax”

Session -Five
Tax Deduction at Source

Md. Mohiman ACMA

CEO, MM & Co. Cost & Management Accountants
Tax-VAT-Audit-Accounting-Secretarial-Payroll-Consultancy

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Today’s content :

a. What is TDS?
b. Withholding entity
c. Objectives of tax withholding at source
d. Responsibilities of Withholding entities
e. Who has to file monthly Withholding tax return
f. Deadline for deposition of TDS
g. Base value determination for payment without TDS
h. TDS Deposition procedure
i. Return u/s 177
j. Penalty for non deduction of tax (section-143)
k. Penalty for non submission of return /177
l. Inadmissibility of expenses for non deduction of tax u/s 55(ka)
m. TDS computation for Common expenses
n. TDS form Income of Non-residents u/s 119
Withholding Entities

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 TDS
Tax is deducted at source from the
payments made to a taxpayer by a
withholding entities and deposited
to the government, which is later
adjusted against the taxpayers tax
liability.

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Objectives of TDS
To ease the burden of tax payment by paying
taxes as it is earned

Ensure effective collection of taxes

For timely mobilization of internal revenues

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Responsibilities of the withholding entity
1. Deduct tax at source before making payment
2. Deposit the tax deducted to the government exchequer
3. Issue a certificate of tax deduction to the person from whom tax
was deducted
4. Submit statement of tax deduction to the income tax authority
as prescribed in the ITA 2023
1. Monthly Statement u/s 177 (SRO 206)

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Who has to file Withholding tax return

WTH

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Who has to file Withholding tax return

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Who has to fileentity;
Withholding Withholding taxu/s
Company return
2(31) of ITA 2023

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Deadline for deposition of TDS

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Base value determination for payment without TDS
u/s 141

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 TDS Deposition procedure as per TDS
Rule
As per TDS rule:
https://ibas.finance.gov.bd/acs/ge
neral/sales#/home/dashboard

E-payment https://nbr.sblesheba.com/Incom
eTax/Payment

Prepare 3
Manual
Challan copies of
Disposition Challan

Challan receive
from bank after 3
days
Deposit to
Bank
A-challan

২১২২-০০০৫০৬৮-০৯৩২ 220,000
ABC Bangladesh
Ltd. Various Party

220,000

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TAX I VAT I Accounting I Audit I Consultancy
Return u/s 177
Return Name Frequency Deadline
Monthly Withholding Tax Return Monthly Within 15th day of following month
Attached with August monthly
তফসিল চ Yearly
return i.e., 15th Sep
Attached with March monthly
তফসিল ছ Yearly
return i.e., 15th April

Statement regarding Payment of salary

(তফসিল চ) shall have to be attached with
August Monthly withholding Tax Return
with 15th Sep 2023

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Penalty for non deduction of tax (section-143):

• Non-deducted Tax amount shall be collectible

INTEREST for non- from the withholding entity along-with 2% simple
deduction of Tax at interest charged on monthly basis (not exceeding
source or less deduction 24 months.
• The expense will be inadmissible

INTEREST for non-

• 2% simple interest for every month of delay,
deposition of Tax at
maximum of 24 months
source or less deposition

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Penalty for non submission of return
/177
• Tk 5,000 or 10% of imposed tax on last assessed income, whichever
is higher
Non submission of monthly
• Tk 1,000 per month for continuing default
withholding tax return (u/s • Tax return of may be selected for audit for non compliance of part
177) 7 of ITA 2023 and non-submission of return u/s 177 [ Section 182
(14)]

Non issuance of Tax

• Tk 5,000, or
deduction certificate (u/s
• Tk 1,000 per month for continuing default
145)

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Inadmissibility of expenses for non
deduction of tax u/s 55(ka)

▪ Tax needs to be deducted by assessee in accordance to Part- 7

▪ If not, then expense will be treated as inadmissible

▪ Corporate tax will be applied on the expense

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TDS computation for Common expenses
1. Salaries

2. Office rent

3. Internet bill

4. Utilities (electricity & water)

5. Stationary purchase

6. Security guard

7. Repair & Maintenance

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Salary (Secentity;
Withholding 86) Company u/s 2(31) of ITA 2023

Employment Deducting Authority

{Including Govt. salary}
=> Employer.
Employer will not deduct tax at
Govt. employee
himself will deduct tax Average rate source or will deduct tax at a lower
from his monthly pay rate/amount in case an employee
bill
can produce a certificate issued by
the DCT to do so.

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Tax deduction at source u/s 86 of ITA 2023
Salary (Secentity;
Withholding 86) Company u/s 2(31) of ITA 2023

Can we pay salary in cash?

Do we need to deduct 75% tax or 100% tax?

Can we adjust Tax paid through other section?

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Sec 88 - WPPF
Withholding for Taxable
entity; Employee
Company u/s 2(31) of ITA 2023

Any person responsible for making

payment from workers participation
fund to a beneficiary shall deduct
tax
10%
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52DD - WPPFentity;
Withholding for Non-taxable Employee
Company u/s 2(31) of ITA 2023

✓ No taxable income
✓ WPPF Tk. 25,000

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Section 89,
Withholding rule
entity; 3 u/s 2(31) of ITA 2023
Company
Where any payment is to be made by a
specified person to a resident on account
of-

(a) execution of a contract;

(b) supply of goods;

(c) manufacture, process or conversion;

(d) printing, packaging or binding;

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Section 90entity;
Withholding (Rule-4)
Company u/s 2(31) of ITA 2023
Sl. Description of service and Payment Rate of deduction of tax
No

1 Advisory or consultancy service 10%

2 Professional service, technical services fee, or technical 10%

assistance fee
3 (i) Catering service; (a) On commission or
(ii) Cleaning service; fee = 10%
(iii) Collection and recovery service; (b) On gross bill amount
(iv) Private security service; = 2.0%
(v) Manpower supply service;
(vi) Creative media service;
(vii) Public relations service;
(viii)Event management service;
(ix) Training, workshop, etc. organization and
management service;
(x) Courier service;
(xi) Packing and Shifting service;
(xii) any other service of similar nature
Continue

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Section 90entity;
Withholding (Rule-4)
Company u/s 2(31) of ITA 2023
Sl. No Description of service and Payment Rate of deduction of tax

4 Media buying agency service (a) On commission or fee = 10%

(b) On gross bill amount = 0.65%

5 Indenting commission 8%

6 Meeting fees, training fees or honorarium 10%

7 Mobile network operator, technical support service provider 12%

8 Credit rating service 10%

9 Motor garage or workshop 8%

Continue

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Section 90entity;
Withholding (Rule-4)
Company u/s 2(31) of ITA 2023
Sl. No Description of service and Payment Rate of deduction of tax

10 Private container port or dockyard service 8%

11 Shipping agency commission 8%

12 Stevedoring / berth operation - (a) On commission or fee = 10%

(b) On gross bill amount = 5%

13 (i) Transport service, carrying service, vehicle rental service; 5%

(ii) Any other service under any sharing economy platform including
ride sharing service, coworking space providing service and
accommodation providing service.;

14 Wheeling charge for electricity transmission 3%

15 Internet Service 10%

16 Service delivery agents engaged in mobile financial services or channel 10%

partners of mobile financial services

17 Any other service which is not mentioned in Chapter VII of this 10%
Ordinance and is not a service provided by any bank, insurance, mobile
financial services or financial institutions

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Section 90entity; Company u/s 2(31) of ITA 2023
Withholding

TDS u/s 90 (9) – Motor Garage :

6,000 x 8% = BDT 480

Proviso applicable
Withholding for Section
entity; Company u/s 90
2(31) of ITA 2023
No tax deduction if vendor provides exemption certificate

Where the Board, on an application made in this behalf, gives certificate

in writing that the person rendering such service is otherwise exempted
from tax under any provision of this Ordinance, the payment referred to
in this section shall be made without any deduction or with deduction at
a lesser rate for that income year

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Some Practical
Withholding Instances
entity; Company u/s 2(31) of ITA 2023

Always check the income year the

exemption certificate refers to!

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Proviso applicable
Withholding for
entity; Section u/s
Company 90 2(31) of ITA 2023

If the amount for services mentioned in SL No. 3 and 4 of the Table shows both
commission or fee and gross bill amount tax shall be the higher amount between (i)
and (ii) where-

(i) Tax calculated on commission or fee applying the relevant rate in the table; and

(ii) B x C x D, where-

B = Gross bill amount

C = 10% for Sl. 3 and 3.5% for Sl. 4, and

D = rate of tax applicable on commission or fee

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Example of Section
Withholding entity; 90 : Manpower
Company supply
u/s 2(31) of ITA 2023

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Example of Section
Withholding entity; 90 (continued)
Company u/s 2(31) of ITA 2023

TDS will be higher of

(i) Tax calculated on commission or fee = 47214 x 10% = 4721.4

(ii) B x C x D = gross bill x 10% x 10% = 721688 x 10% x 10% = 7216.88

Therefore, TDS will be = 7216.88

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Example 2 of entity;
Withholding Section 90
Company u/s 2(31) of ITA 2023
Sample Bill for Security Service Provider

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Example 2 of entity;
Withholding Section 90
Company u/s 2(31) of ITA 2023

Since there is no commission or service charge, TDS will be:

Gross Bill Amount x 2% =

50,820 x 2% =

BDT 1,016

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Section 91 (Intangible
Withholding Asset) u/s 2(31) of ITA 2023
entity; Company

• Royalties • Copyright
• Franchise fees for using • Trademark
• License • Trade Name
• Brand name 10%
• Literary, musical or artistic
If the base amount
• Patent does not exceed Tk. composition
• Invention 25,00,000 • Survey
• Formula • Study
• Process • Forecast
12%
• Method If the base amount • Estimate
• Design does exceed Tk. • Customer List
• Pattern 25,00,000
• Any Other Intangibles
• Know-how
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Section 92 - Advertisement
Withholding entity; Company u/s 2(31) of ITA 2023

Payment to newspaper or magazine or

private TV channel or private radio station or
any website for advertisement, tax should be
5%
deducted

Remember
Media Buying!

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Media buying entity;
Withholding vs Advertisement
Company u/s 2(31) of ITA 2023
XYZ Limited produces and sells chewing gum. The company wants to
advertise their product in a childrens publication. Mediacom Limited has
provided the following quotation:

Will this be considered as media buying or advertisement?

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Section 94 – Deduction
Withholding from Company
entity; commission, discount,
u/s 2(31)feesof ITA 2023
1. Any company making a payment or allowing an amount to a distributor, called by
whatever name, or to any other person by way of commission, discount, fees, incentive
or performance bonus or any other performance related incentive or any other payment
or benefit of the similar nature for distribution or marketing of goods, shall deduct or
collect tax at the time of payment or allowing the amount.

10%
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Section 94 – Deduction
Withholding from Company
entity; commission, discount,
u/s 2(31)feesof ITA 2023
2. Any company making a payment in relation to the promotion of the company or its
goods to any person engaged in the distribution or marketing of the goods of the
company shall, at the time of payment, deduct tax

1.5%
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Section 94 – Deduction
Withholding from Company
entity; commission, discount,
u/s 2(31)feesof ITA 2023
3. Any company, other than an oil marketing company, which sells goods to any
distributor, or any other person under a contract, at a price lower than the retail price
fixed by such company, shall collect tax from such distributor or such any other person
at the rate of five percent (5%) on the amount equal to B x C, where

B = the selling price of the company to the distributor or the other person;

C = 5%:

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Section 99
Withholding entity; Company u/s 2(31) of ITA 2023

Deduction from resident for any sum

in excess of premium paid on life
insurance policy
5%
No deduction on payment after death.

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Section 100 – Insurance
Withholding Commission
entity; Company u/s 2(31) of ITA 2023

5%
Payment of remuneration or reward
for soliciting / procuring insurance
business including business relating to
continuance, renewal or revival of
insurance policies.

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Section 101 – Surveyors of General Insurance
Withholding entity; Company u/s 2(31) of ITA 2023
Company

15%
Payment of remuneration or
fees for conducting surveys
regarding settlement of claim of
an insurance

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Section 109 – House
Withholding entity; Property
Company u/s 2(31) of ITA 2023

Where any specified person is a tenant

in respect of a house property or hotel
accommodation, the tenant shall deduct
5%
tax from the rent of such house property
or hotel accommodation.

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Some Practicalentity;
Withholding Instances
Company u/s 2(31) of ITA 2023
TDS @ 5% :

109,094 x 5% =

BDT 5,455
Reimbursement
Withholding entity; Company u/s 2(31) of ITA 2023
Mr. Rahman, the Supply Chain Manager of Zebra Ltd, has travelled to Khulna for site
visit to supplier. He stayed in Hotel City Inn Ltd. for 2 nights.

After coming back to Dhaka, he submitted the hotel bills to the Finance department,
and the Finance department reimbursed the payment made to the hotel by him.

Will withholding tax @ 5% u/s 110 be applicable here?

Submit bills to
Pay to
Reimburse to

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Reimbursement
Withholding entity; Company u/s 2(31) of ITA 2023

As per section 32(2):

“Any special allowance, benefits or perquisite specifically granted to meet expenses
wholly and necessarily incurred in the performance of the duties of an office or
employment of profit” is excluded from the total income of an employee.

It’s not practically possible to deduct TDS from the reimbursement to employee

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Section 110 – Deduction from Convention
Withholding
hall, entity;
conference Company
center etc. u/s 2(31) of ITA 2023

5%
Payment for renting or using space of:

1. Convention hall

2. Conference centre

3. Room

4. Hall

5. Hotel

6. Community centre

7. Restaurant
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Section 111 – Compensation paid against
Withholding
land entity; Company u/s 2(31) of ITA 2023
acquisition

6% of deed value at city corporation,

Pourashava and cantonment board area
3% of deed value in other area

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Section 113 – Freight forward agency
Withholding entity; Company u/s 2(31) of ITA 2023
commission

Person responsible for

15% on commission
making such payment.

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Section 117 - Dividend
Withholding entity; Company u/s 2(31) of ITA 2023

Payment of Dividend to individual: Payment of Dividend to Company:

With TIN = 10% Imposed Rate

Without TIN = 15%

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Section 118 – entity;
Withholding Lottery Company u/s 2(31) of ITA 2023

Person responsible for

20% on commission
making such payment.

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Section 119 – entity;
Withholding IncomeCompany
of Non-residents
u/s 2(31) of ITA 2023
No Description of Services or Payments Rate
1 Advisory or consultancy service 20.0%
2 Pre-shipment inspection service 20.0%

3 Professional service, technical services, technical know-how or technical assistance 20.0%

4 Architecture, interior design or landscape design, fashion design or process design 20.0%

5 Certification rating etc. 20.0%

6 Charge or rent for satellite, airtime or frequency, rent for channel broadcast 20.0%
7 Legal service 20.0%
8 Management service including event management 20.0%
9 Commission 20.0%
10 Royalty, license fee or payments related to intangibles 20.0%
11 Interest 20.0%
12 Advertisement broadcasting 20.0%
13 Advertisement making [or Digital marketing] 15.0%
Air transport or water transport [ not being the carrying services mentioned in
14 7.5%
sections 102 or 103A]
Contractor or sub-contractor of manufacturing, process or conversion, civil work,
15 7.5%
construction, engineering or works of similar nature.
16 Supplier 7.5%
17 Capital gain 15.0%

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Section 119 – entity;
Withholding IncomeCompany
of Non-residents
u/s 2(31) of ITA 2023
No Description of Services or Payments Rate
18 Insurance premium 10.0%

19 Rental of machinery, equipment etc. 15.0%

20 Dividend-

(a) company, fund and trust 20.0%

(b) any other person, not being a company, fund and trust 30.0%

21 Artist, singer or player 30.0%

22 Salary or remuneration 30.0%

23 Exploration or drilling in petroleum operations 5.25%

24 Survey for Coal, oil or gas exploration 5.25%

24A Fees, etc. of surveyors of general insurance company 20.00%

25 Any service for making connectivity between oil or gas field and its export point 5.25%

26 Any payments against any services not mentioned above 20.0%

27 Bandwidth payment 10.0%

28 Any other payments 20.0%

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Section 119(2) entity; Company u/s 2(31) of ITA 2023
Withholding
Where the Board, on an application made in this behalf, is satisfied
due to tax treaty or any other reason the non-resident is not liable
to pay any tax in Bangladesh, or is liable to pay tax at a reduced
rate in Bangladesh, the Board may issue a certificate to the effect
that the payment shall be made without any deduction or at a
reduced rate as mentioned in the certificate.

Tax deducted under this section shall be deemed to be the

minimum tax liability of the payee in respect of the income
for which the deduction is made, and shall not be subject of
refund or set off or an adjustment against a demand.

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Section 119 (cont.)
Withholding entity; Company u/s 2(31) of ITA 2023

A common mistake most

companies make, is that they treat
payment to branch office of a
foreign company as resident, and
deduct tax as per sections other
TDS for services taken from
than 119. branch office of foreign
companies will be u/s 119

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Section 120 - Importer
Withholding entity; Company u/s 2(31) of ITA 2023

The Commissioner of Customs shall

make collection of tax payable by
importers on account of import of
goods.

The method and rate of calculation

will be prescribed by NBR (TDS rules
2023)
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Section 127 – Commission on Govt. stamp,
Withholding
Court Company u/s 2(31) of ITA 2023
entity;paper
fee, Cartage

Person responsible for

10% on commission
making such payment.

Newly inserted at Income Tax Act 2023

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Section 131 – Collection during renewal of
Licenseentity; Company u/s 2(31) of ITA 2023
Withholding
Trade

Authority responsible for

Amount of Tax
deduction
Dhaka South City Corporation
Dhaka North City Corporation Taka 3,000
Chittagong City Corporation

Any other city corporation Taka 2,000

Any paurashava or any district headquarter Taka 1,000

Any other paurashava Taka 500

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Section 133 – entity;
Withholding PublicCompany
Auction u/s 2(31) of ITA 2023

10%
Person responsible for
(In case of tea auction
making such payment.
the rate is 1%)

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Section 134 – Capital gain from transfer of
Withholding
shares entity;
of private Company
limited u/s 2(31) of ITA 2023
companies

15% RJSC will ensure tax deduction

where applicable

Newly inserted at Income Tax Act 2023

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E-TDS
Withholding entity; Company u/s 2(31) of ITA 2023

Highlights of E-TDS
https://nbr.gov.bd/about-us/video-gallery/eng

https://etds.gov.bd/login
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Contact Details:

+88 01841 871775

[email protected], [email protected]

MM & Co. Cost & Management Accountants

House # KA-12/1, Level-3, Titas road, South Badda,
Dhaka-1212 (Behind Police Plaza Concord, Gulshan)

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