BANGLADESH NATIONAL BUDGET 2016-17
Analysis on changes and impacts- A snapshot
by:
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Table of Contents Budget Size ............................................................................................... 3
Current Scenario ..................................................................................... 3
Macro-economic Scenario in the Global Context……………………4
Taxation .................................................................................................... 4
VAT ......................................................................................................... 12
Customs ................................................................................................. 13
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Budget Size
in Crore Tk
NBR Tax: 203,152
Non‐NBR Tax 7,250
Non Tax Receipt 32,350
Total Tax Revenue 242,752
a) Non Development Revenue Expenditure
b) Development Expenditure including annual
development programme
188,966
117,027
c) Other Expenditure 34,612
Total Expenditures 340,605
Budget Deficit (97,853)
External sources 36,305
Domestic sources including Banking loans 61,548
GDP 1,961,017
Current Scenario
GDP growth is expected to cross the 7% barriers this year with per capita income
increasing to $ 1,466.
United Nations Food and Agriculture Organization have acknowledged the floating
vegetable cultivation system of Bangladesh as „Globally Important Agricultural Heritage
System‟.
Bangladesh retains the 4th position in fresh water fish production.
Per capita power generation is 371 KW.
Completion of feasibility study and formulation of design for Dhaka-Chittagong
expressway, construction/reconstruction of 118 bridges in the eastern region, construction
of Sheikh Kamal, Sheikh Jamal and Sheikh Russel bridges in the southern region and
completion of the feasibility study and designing of proposed 4-lane highway from
Dhaka to Sylhet. Besides, construction of 2nd Kanchpur, 2nd Meghna, 2nd Gumti
bridges will start soon and that of Metro Rail-6 has started.
The number of mobile and internet subscribers has increased respectively to
approximately 13.20 crore and 6.20 crore by the end of April 2016. International internet
bandwidth has also been raised to 180 GBs.
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1,125 new primary schools have been established in the villages having no school.
The number of technical and vocational institutions has already been increased to 7,500.
The draft of „National Environmental Policy 2016‟ has been finalized.
Macro-economic Scenario in the Global Context
Government targeted a 7.0 percent GDP growth for the current fiscal year. Till April of current
fiscal year, 12-month average inflation rate stood at 6.00 percent compared to 6.6 percent over
the same period of last year. As of March, 2016, broad money (M2) growth stood at 13.6
percent, which was a bit lower than the target stipulated in Bangladesh Bank‟s Monetary Policy
Statement. On the other hand, reserve money growth stood at 15.8 percent, which was slightly
higher than the target. During the same period, private sector credit growth stood at 15.2 percent
which exceeded the target. During the first nine months of current fiscal year, current account
balance amounted to a surplus of USD 2.9 billion. As on 25 May 2016, Bangladesh‟s foreign
exchange reserve stood at USD 28.6 billion which is adequate to foot import bills for seven
months. Exchange rate of Tk. against US dollar has also remained fairly stable.
The Government has set GDP target at 7.2 percent for the next fiscal year and inflation target of
5.8% for the next year.
Taxation
Individual Income Tax:
The tax-exempted income-threshold for individual tax payers remains unchanged
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Surcharge
Tax Day Tax Day means the thirtieth day of October following the end of the income year. Next working
day if the said date is public holiday
Change in Investment Allowance Change has been proposed to the amount of credit for investment allowance reflecting the
progressive model of taxation in Bangladesh. Investment allowance credit is applicable for
resident and non-resident Bangladeshi only.
Perquisite for employees with disability To support employees with disability, extension of the perquisite limit for the employer of a
disabled employee to Tk. 25 lakh. Moreover, medical allowances up to Tk. 10 lakh are to be tax
exempted for a disabled employee.
Cannot adjust tax liability of Advance tax of owners of private motor car
Advance tax paid by an individual during yearly renewal/registration of private motor car shall
be deemed to be final and the individual will be deemed to have an income equivalent to tax of
the same amount.
Interest payable by the assessee on deficiency in payment of advance tax.-
Anyone who fails to pay advance tax shall have to pay an interest of 10% per annum on the
amount by which the tax so paid, deducted and collected falls short of the seventy five percent
(75%) of the assessed tax:
Provided that the rate of interest shall be fifty percent (50%) higher if the return is not filed on or
before the Tax Day.
Delay Interest for not filing return on or before the Tax Day.
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Where an assessee is required to file a return of income and fails to file the same before the
expiry of the Tax Day, the assessee shall be liable to, pay a delay interest at the rate of two
percent (2%) per month on the difference between the tax assessed on total income for the
assessment year and the tax paid in advance for the assessment year including the tax deducted
or collected at source.
Statements of assets, liabilities and life style.
Mandatory for individuals with the following:
Has, in the last date of the income year, a gross wealth exceeding taka twenty lakh;
Owns a motor car; or
Has made an investment in a house property or an apartment in the city corporation area:
Corporate income tax:
Harmonizing tax rates for all tobacco goods-manufacturing companies to be at the same
level of tax rate of the cigarette companies which is currently 45 percent. The following
are the corporate tax rates.
Tax day in the case of a company, the fifteenth day of the seventh month following the
end of the income year; Next working day if the day is a public holiday
RMG sector tax rate reduced from 35 percent to 20 percent.
If any foreign employee is appointed without prior approval of the Board of Investment
or any competent authority of the Government, such entity shall be charged additional tax
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at the rate of fifty percent (50%) of the tax payable on his income or taka five lakh,
whichever is higher in addition to tax payable under this Ordinance.
Excess profit tax of Banking Company has been abolished
Charge of minimum tax on gross receipts has been abolished
Any salary payment to an employee if the employee is required to obtain a twelve-digit
Taxpayer‟s Identification Number and fails to do so then such salary payment shall be
inadmissible for the company.
Allowable perquisites per employee: 4 lakh 75 thousand
Overseas travelling limit has been extended from 1 percent to 1.25% of turnover
Interest payable by the assessee on deficiency in payment of advance tax.-
Anyone who fails to pay advance tax shall have to pay an interest of 10% per annum on the
amount by which the tax so paid, deducted and collected falls short of the seventy five percent
(75%) of the assessed tax:
Provided that the rate of interest shall be fifty percent (50%) higher if the return is not filed on or
before the Tax Day.
Delay Interest for not filing return on or before the Tax Day.
Where an assessee is required to file a return of income and fails to file the same before the
expiry of the Tax Day, the assessee shall be liable to, pay a delay interest at the rate of two
percent (2%) per month on the difference between the tax assessed on total income for the
assessment year and the tax paid in advance for the assessment year including the tax deducted
or collected at source.
Return of withholding tax
To be filed half-yearly by the following dates-
(i) First return: by Thirty-first January of the year in which the deduction or collection
was made;
(ii) Second return: by Thirty-first July of the next year following the year in which the
deduction or collection was made:
Provided that the last date for the submission of a return as specified in this sub-section may be
extended by the Deputy Commissioner of Taxes up to fifteen days from the date so specified.
Audit of the return of withholding tax
Withholding tax return can be audited by the Deputy Commissioner of taxes up to four year next
following the submission of return
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Changes in TDS
1. Deduction from payment to contractors-ten percent (10%) of the base amount. Tax
shall be fifty percent (50%) higher if the payee does not have the twelve-digit Taxpayer‟s
Identification Number at the time of making the payment.
2. Deduction from payment of royalties etc.: Where base amount does not exceed taka
25 lakh- 10%, Where base amount exceeds taka 25 lakh-12%
3. Deduction from the payment of certain services:
Description of service and payment
Rate of deduction of tax
(% of base amount)
Where base
amount does not
exceed Tk. 25
lakh
Where base
amount
exceeds Tk.
25 lakh
Advisory or consultancy service 10% 12%
Professional service , technical services fee, or
technical assistance fee 10% 12%
Catering service
(a) on commission
(b) on gross amount
10%
1.5%
12%
2%
Cleaning service
(a) on commission
(b) on gross amount
10%
1.5%
12%
2%
Collection and recovery agency-
(a) on commission
(b) on gross amount
10%
1.5%
12%
2%
Management of events, training, workshops etc.
(a) on commission
(b) on gross amount
10%
1.5%
12%
2%
Private security service
(a) on commission
(b) on gross amount
10%
1.5%
12%
2%
Supply of manpower
(a) on commission
(b) on gross amount
10%
1.5%
12%
2%
Indenting commission 6% 8%
Meeting fees, training fees or honorarium 10% 12%
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Description of service and payment
Rate of deduction of tax
(% of base amount)
Where base
amount does not
exceed Tk. 25
lakh
Where base
amount
exceeds Tk.
25 lakh
Mobile network operator, technical support service
provider or service delivery agents engaged in
mobile banking operations
10% 12%
Credit rating agency 10% 12%
Motor garage or workshop 6% 8%
Private container port or dockyard service 6% 8%
Shipping agency commission 6% 8%
Stevedoring/berth operation commission 10% 12%
Transport service, car rental 3% 4%
Any other service which is not mentioned 10% 12%:
4. Collection of tax from travel agent:
TDS has been imposed separately on any incentive bonus, performance bonus or any
other benefits, which previously had no impact as depended on the total value of the
tickets or any charge for carrying cargo by air
TDS amount: (A/B) x C, where-
“A” is the amount of incentive bonus, performance bonus or any other benefits as
mentioned in sub-section (2),
“B” is the amount of commission or discount or any other benefits as mentioned
in sub-section (1), and
“C” is the amount of source tax on commission or discount or any other benefits
as mentioned in sub-section (1).
5. TDS from Export is now 1.5% from .8%
6. TDS from non-resident courier company: TDS to be deducted at source at 15% from
the agent company of a non-resident courier company
7. Deduction from income of non-residents
Description of services or payments Rate of
deduction
of tax
Advisory or consultancy service 20%
Pre-shipment inspection service 20%
Professional service, technical services, technical know-how or
technical assistance
20%
Architecture, interior design or landscape design, fashion design or
process design
20%
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Certification, rating etc. 20%
Charge or rent for satellite, airtime or frequency, rent for channel
broadcast
20%
Legal service 20%
Management service including even management 20%
Commission 20%
Royalty, license fee or payments related to intangibles 20%
Interest 20%
Advertisement broadcasting 20%
Advertisement making 15%
Air transport or water transport 7.5%
Contractor or sub-contractor of manufacturing, process or conversion 7.5%
Supplier 7.5%
Capital gain 15%
Insurance premium 10%
Rental of machinery, equipment etc. 15%
Dividend-
(a) company------
(b) any other person, not being a company-------
20%
30%
Artist, singer or player 30%
Salary or remuneration 30%
Exploration or drilling in petroleum operations 5.25%
Survey for oil or gas exploration 5.25%
Any service for making connectivity between oil or gas field and its
export point
5.25%
Any payments against any services not mentioned above 20%
Any other payments 30%.
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Consequences of failure to deduct collect Tax at Source
Where a person fails to deduct or collect tax at source as required or deducts or collects
tax at a lesser rate or in lesser amount or after deducting or collecting tax fails to pay the
same to the credit of the Government, or pays to the credit of the Government an amount
lower than the collected or deducted amount. Such person shall be personally liable to
pay –
the amount of tax that has not been deducted or collected; or
the amount which was required to be deducted or collected under this Chapter as
reduced by the amount that has been actually deducted or collected; or
the amount that, after being collected and deducted, has not been paid to the credit
of the Government.
In addition the person shall also be liable to pay an additional amount at the rate of two
percent (2%) per month.
No realisation of the amount shall be made if it is established that such amount has
meanwhile been paid by the person from whom the deduction or collection was due.
VAT
Value Added Tax and Supplementary Duty Act, 2012 shall be fully implemented from
1st July of 2017.
The Value Added Tax and Supplementary Duty Rules, 2016 has been vetted by the
Legislative and Parliamentary Affairs Division of the Ministry of Law, Justice and
Parliamentary Affairs.
VAT online Project (VoP), has already been approved by the Government. Under this
project, Online Registration and Online Return submission will begin soon.
Taxpayers will not be required to visit the VAT offices for obtaining price approval
Withdrawal of VAT exemption from the following items: Hand-made loaf, bun, similar
kinds of bread and cake and biscuit valuing up to Tk. 100 per kg; Shoes and slipper
made of rubber and plastic valuing up to Tk. 120 per pair; Locally manufactured hard
board and electric generator; Travel agents and meditation service; Fabrics woven by
power loom: and Classified advertisement except condolence messages.
Exemption of Jute goods procurement provider from the payment of VAT.
Withdrawal of VAT from locally produced RSS(Ribbed Smoked Sheets).
Ambulance services to be out of the scope of the VAT.
Withdrawal of VAT from the parts of the wheat crusher.
Withdrawal of VAT from dyeing, printing, finishing and calendaring of grey fabrics.
VAT incentive to the domestic heavy industry for local manufacturing of Refrigerator,
Freedger and Air Conditioner by providing VAT exemption facility extended up to 30
June, 2017.
Palm oil and soya bean oil to be VAT exempted up to 30 June, 2017.
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Withdrawal of VAT on the natural stone extracted from Maddhapara.
Increase in net VAT rate
Head Existing Proposed
Garage and workshop 7.5 10
Dockyard 7.5 10
Construction services 5.5 6.0
Transportation of petroleum
products and other transport
services
2.25
7.5
4.5
10
Immigration advisory
services
7.5 15
Rental of office space and
installations services
9.0 15
sponsorship services 7.5 15
CUSTOMS
Impose 25 percent Customs Duty on imported rice instead of present 10 percent Customs
Duty.
Supplementary Duty at the rate of 20 percent on stabilizer for milk, used for the
preparation of milk products, is proposed to be reduced to 10 percent.
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