Taxation Course

WELCOME
To The Presentation On
INDIRECT TAXES (VAT & CUSTOMS)

Academic Course under Course A 408 : Taxation
for the BBA students of 19th Batch 8th Semester
IBA ,Dhaka University
Organized by
Institute of Business Administration ( IBA )
Dhaka University
August 2014 January 2015

INTRODUCTION TO THE COURSE TEACHER
MD. ABDUL KAFI

COMMISSIONER
LARGE TAXPAYERS UNIT, VAT
Course Schedule
(A) Value Added Tax System in Bangladesh
Date & Time
Course Contents
(1)
(2)
November 23,
26, 30 and
December 03,
07, 10, 17, 21 &
24 ( 2014 )
08.30 - 10.00 AM
Brief history on introduction of VAT system in Bangladesh.
Organizational structure and manpower of Bangladesh VAT
Contribution of VAT in the NBR Revenue
Basic concepts & determination of VAT
The Act and the Rules
Rate of VAT
Taxes under VAT system
Supplementary Duty
Turnover Tax
Applicable area of VAT
Exemption of VAT and SD.
Exemption benefits for Cottage Industries
Input tax credit mechanism.
How does the tax credit / rebate system work at different level of a business
supply chain under the VAT system
Importance and procedure of valuation under VAT system
Continued
Date & Time
Course Contents
(1)
(2)
- Do -
Truncated base system for services and tariff value for goods
VAT at trade level and ATV
Business process under VAT system

(a) Responsibilities and duty-cycle of a taxable person
(b) VAT Registration
(c) When VAT is payable
(d) Who will pay VAT and other related taxes
(e) VAT payment procedure and time frame
(f) Procedure to be maintained for delivery of goods and services.
(g) Record Keeping by the Taxpayer
(i) Tax invoice
(ii) Other documents
(iii) Submission of VAT Return
Deduction of VAT at source
Dispute resolution and Alternative Dispute Resolution (ADR)
Export incentives, duty drawback
Refund in VAT System
Enforcement and Audit management
Factors and constraints in VAT management of Bangladesh
Reference Books
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gvt gvndzRvi ingvb AvK`
Tolleys Value Added Tax Rhianon Davies & David Rudling
The Modern VAT International Monetary Fund (IMF)

Value Added Tax : Concept and Practice Alan A. Tait
Value Added Tax (VAT) in Bangladesh M. A. Baree
The VAT Guide (Notice 700 March 1996, HM Customs and Excise, U.K)
New Zealand Goods and Services Tax Legislation
Key issues in Tax Reform Edited by Cedric Sandford (Article: Issues in
Adopting and Designing A Value Added Tax by Sijbren Cnossen)
Administrative and compliance costs of Taxation by Cedric Sandford
and Michael Godwin
Value Added Tax System of Bangladesh : Act, Rules & Procedure
Dr. Md. Abdur Rouf.
4
Continued .. .
(B) Customs Management and Formalities

Date & Time
Course Contents
(1)
(2)
December 28,
31 (2014) &
January 04,
07 & 11
( 2015 )
08.30- 10.00 AM
Organizational structure and manpower of Bangladesh Customs
Revenue performance of customs
Duties and Taxes under Customs Management
Tariff regime in Bangladesh
Prohibitions & Restrictions on Import & Export
Imposition of Duty
Exemptions
Valuation, Transaction value method, PSI system
Bill of Entry, Clearance procedure
Bill of Export, Export procedure
H. S. Code, Assessment of duty
Bonded warehouse
Auction
Reference Books
(B) Customs Management and Formalities :
The Customs Act, 1969
Customs Act, 1969 Najib A. Choudhry
Aspect of Customs Law Abdul Latif Sikder
Valuation Considerations for Bangladesh Customs Abdul Latif Sikder
The Customs Act Dhaka Law Report
Bangladesh Customs- Act and Policy Mohammad Zakir Hossain
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INDIRECT TAX
VALUE ADDED TAX (VAT) SYSTEM IN BANGLADESH
BRIEF HISTORY ON INTRODUCTION OF VAT
Background :
Just before the introduction of VAT the Excise Duty (as Indirect Tax)
under the Excises and Salt Act, 1944 was the domestic source of
revenue for the Govt. of Bangladesh
Business Turnover Tax (BTT) for 8 services under the Business
Turnover Tax Ordinance, 1982. The revenue from BTT was very
insignificant.
Sales Tax on some selected goods at the import stage under the Sales
Tax Ordinance, 1982.
Share of Direct tax (Income tax & others) was only about 12% and it was
very difficult to raise the share shortly.
Taking the pressures for reducing the revenue dependence on customs
duty into an account.
NBR used to increase the rate of taxes every year and the incidence of
tax on tax (cascading effect) was hampering productions and trades.
With the narrow base and regressive nature, the major domestic revenue
source Income tax and Excise system was unable to mobilize the
increasing need of revenue for the Govt. and the development of the
country.
7
Continued
Development budget was dependent on Paris Consortium

meeting (Bangladesh Aid Gr. or Dev. Partners meeting).
World Bank and IMF suggested to introduce the VAT system
as progressive and useful for Bangladesh to enhance
revenue and mitigate the crisis of dev. fund.
A joint delegation from Govt. Official and Trade bodies
visited some of the countries, already implemented VAT or
Sales Tax system.
Govt. lastly decided to leave the Excise system and
introduce the modern and progressive VAT system.
It was also decided to introduce the VAT system by replacing
the Sales Tax (chargeable at a different rates at import
stage), the Excise Duty (chargeable at different rates on
locally produced goods and rendered services) and the
Business Turnover Tax (chargeable at a rate of 2% on some
local small units).
France was the first country to introduce the modern VAT
system in 1954. At present about 144 countries are realizing
revenue under VAT system.
8
Continued ..
With the recommendation and help of Intl. Monetary Fund (IMF)

and World Bank (WB) VAT Act and Rules were drafted.
The Customs and Excise Department was entrusted to implement

the VAT system in Bangladesh.
At the time of introduction, VAT system was introduced
only at
the import stage, manufacturing stage and service rendering stage

only, trade level was not covered. But now it is extended to all levels
with wholesale and retails.
VAT system was introduced on 2nd June, 1991 through promulgation of Value Added Tax Ordinance, 1991 (Ordi. 26 of 1991).
At the Budget time (FY 1991-92) the Value Added Tax Act, 1991
was passed by the Parliament and then signed by the Honble
President in due course. At the same time the Value Added Tax
Rules,1991 was also formulated by NBR under the VAT act.
Later on Electricity duty, Advertisement tax and Guest Control fee

9
were merged into VAT system for better service and revenue realization .
Continued..
Disadvantages of Excise System
Narrow tax base

Different rates with some higher rates
Rate of taxes was increased every year
Cascading effect of taxes were hampering production and trades
Unable to mobilize the increasing need of revenue
Foreign debt was increasing day by day and development program
was hampered
Advantages of VAT System:

Modern and progressive tax system with credit mechanism
Single standard rate of 15%
Audit and account based system minimizing harassment and
forcible enforcement
Broaden tax base and ensure proportionate low tax incidence
No cascading effect of taxes
Balanced tax system with equity
Minimizes tax evasion and cost of tax collection
Increases domestic revenue realization.
ORGANIZATIONAL STRUCTURE AND MANPOWER OF

BANGLADESH VAT
Ministry of Finance has four divisions :
Internal Resources Division (IRD)

Finance Division
Economic Relation Division (ERD)
Bank & Financial Institution
Each division is headed by a Secretary and each of them are separately
reportable to Hon'ble Finance Minister.
National Board of Revenue (NBR) is working under Internal Resources Division
(IRD). Secretary, IRD is the Ex- Officio Chairman of NBR . NBR has three
functional wings.
Value Added Tax (VAT)

Customs
Income Tax
Each wing of NBR has separate Members. Now VAT wing has three Members.
All the twelve functional Commissionerates and two Directorates are functioning
under these three Members. The function and organizational structure of NBR
and Bangladesh VAT is given below :
11
Continued
MAIN FUNCTIONS OF NBR

FORMULATION OF TAX POLICY AND REVENUE BUDGET
FORMULATION OF TAX RULES AND REGULATION
COLLECTION OF DIRECT AND INDIRECT TAXES
ADMINISTRATION OF
Income Tax
Travel Tax
Gift Tax
Customs duty
Regulatory Duty
Value Added Tax

Supplementary Duty
Turnover Tax
Excise Duty
Surcharge
TO PROVIDE WAIVERS AND INCENTIVES UNDER DIFF. TAX LAWS

TO GIVE SUGESSIONS AND OPINIONS TO GOVT. ON VARIOUS FISCAL
ISSUES
12
Continued
National Board of Revenue (NBR)

Administration of
Direct Taxes & Indirect Taxes
Ministry of Finance
Finance Division
Internal Resources
Division (IRD)
National Board of Revenue (NBR)
Economic Relation
Division (ERD)
Bank & Financial

Institution Div.
Appellate Tribunal
Customs, Excise
& VAT
Functional Wings:
Supporting Wings:
1. VAT Wing
2. Customs Wing
3. Income Tax Wing
1.
Income
Tax
Administration
Research & Statistics
Information Technology
Central Intelligence Cell (CIC)
Law Officer
13
Continued
ORGANISATIONAL STRUCTURE OF BANGLADESH VAT

NATIONAL BOARD
OF REVENUE
WINGS OF NBR
CUSTOMS
Income TAX
RESEARCH &
STATISTICS
VAT
CENTRAL INTL.
CELL (C I C)
ADMINISTRATION
OFFICES UNDER
THE VAT WING
DUTY EXEMPTION &

DRAWBACK
DIRECTORATE
DHAKA
(South)
Commissionerate
DHAKA
(North)
Commissionerate
LTU,VAT,Dhaka
Commissionerate
CHITTAGONG
Commissionerate
VAT
Audit, Intl. & Inv.
DIRECTORATE
RAJSHAHI
Commissionerate
Dhaka (East)
KHULNA
Commissionerate
Dhaka (West)
JESSORE
Commissionerate
Rangpur
SYLHET
Commissionerate
Comilla
Under each Commissionerate Office there are some (5-11) Division Offices and under divisional
offices there are some (2-5) Circle Offices. But LTU, VAT office dont have any outside Division
or Circle offices.
Continued
ORGANISATIONAL STRUCTURE OF VAT FUNCTIONAL UNITS
[VAT Field Administration]

COMMISSIONERATE
OFFICE
CE&V
DIVISION
OFFICE
CE&V CIRCLE
OFFICE
CE&V
DIVISION
OFFICE
CE&V
DIVISION
OFFICE
CE&V CIRCLE
OFFICE
CE&V
DIVISION
OFFICE
CE&V CIRCLE
OFFICE
CE&V
DIVISION
OFFICE
CE&V CIRCLE
OFFICE
RANGE/AREA
RANGE/AREA
RANGE/AREA
RANGE/AREA
RANGE/AREA
Each Commissionerate Office is headed by a Commissioner, Division Office is headed by a
Deputy/Assistant Commissioner and Circle Office is headed by a Revenue Officer (RO). Circle
Office is the grass root level office of VAT system in Bangladesh which directly deals with the
tax payer and the Range Officer performs his duties from Circle Office.
Continued
Number of VAT Offices under VAT

VAT Commissionerates
12
Directorates
VAT Divisional Offices
84 (29)
VAT Circle Offices
254 (111)
VAT Ranges/ Areas
1270 (540)
16
Manpower under VAT
Continued
Member VAT
VAT Commissioners
12
Director Generals
Additional Commissioners
32
Joint Commissioners
30
System Analyst / Senior Programmer
Deputy/Assistant Commissioners
210
Programmer / Assistant Programmer
15
Revenue Officer
562
ARO
3125
Computer Personnel
68
Ministerial staff
1335
Motor Vehicle Driver
341
Sub-Inspectors
233
Sepoys
1981
MLSS
375
Total =
8324 (5084)
17
CONTRIBUTION OF VAT IN NBR REVENUE

Like other developing countries, trade-based taxes
dominated the tax structure with Customs Duty alone
accounting for more than 51% of total NBR revenue. After
introducing VAT in Bangladesh tax system, gain from
VAT revenue was quite impressive (55.63% of total tax
revenue in 2011 - 2012), it recorded to 28.4% of total
revenue during 1990-1991. Historically, revenue collection
of NBR does not always reach the target but it recorded
surplus in FY08-09, FY09-10, FY10-11, and FY11-12 and
the collection of FY 12-13 & FY 13-14 was also satisfactory
in the context of international and domestic reality.
This outcome of the recent VAT collections is quite
impressive though VAT system is not fully modernized and
exist a lot of exemptions and is suffering from acute
manpower. A lot of scope still remains to boost up VAT
revenue collections if a modern and efficient VAT system
could be implemented through initiating different reform
measures and adequate manpower and logistics are
provided.
18
Continued ..
Twenty three year old Bangladesh VAT has contributed a very handsome
share in the NBR revenue which is shown below :
REVENUE PERFORMANCE OF
VAT, CUSTOMS, INCOME TAX & NBR TOTAL
FY 2013-14
140000
120000
100000
80000
60000
40000
20000
0
Customs
(Rev. Figure in Crore Tk.)
120512.83
63389.74
42915.5
13676.03
Income Tax
VAT
NBR
VAT Revenue (VAT+SD+Turnover Tax+ Excise Duty) includes19
both Import & Local level. Only local level 43,726.41 Crore Tk.
Continued
REVENUE COLLECTION BY THE VAT WING IN COMPARISON

TO TOTAL REVENUE COLLECTED BY NBR.
140000
VAT
TOTAL
120512.83
120000
108618
100000
94754
78692
80000
63389.74
62103
58131
60000
52711
52525
47436
43922
40000
37219
29905
23770
20000
35134
33961
18774 20224
26195
16156
14869 15123
14107
12509
12503 13802
11370
10523
8769 9525
8638 8996
6519 6793 7143
6152 7348
4986 5508 6161
4087
3876
1747 3165
28900
25646
18719 20015
0
20
Continued
Number of VAT Registered Units/ Taxpayers

under VAT system of Bangladesh
( As on November, 2014 )
Manufacturing Units
54,371
Service rendering Units (excluding construction units)
1,78,130
Construction Units
2,51,888
3,05,316
Trader (local)
Trader (Commercial Importers)
Importers (excluding Comm. Imp.)
58,450
82,314
Exporters
43,740
Total
Total No. of VAT Registered Units
9,74,209
8,06,805
21
BASIC CONCEPTS AND ISSUES RELATED TO VAT
Main Features of Bangladesh VAT

Self assessing, self accounting, self depositing and self clearance system.
Advalorem tax system with invoice binding supply / delivery.
Uniform, single standard rate 15% .

Wide tax net ( Import stage, production stage, service rendering stage, wholesale
and retail stage ) and limited exemption including exemption on primary and
unprocessed agricultural goods .
Internal balance and equitable treatment .
Liberal treatment like turnover tax and cottage industries facilities for the small
units.
Elimination of cascading effect ( No Tax on Tax).
Zero rate on all exports, deemed exports and outgoing ship stores.
On imports VAT is an addition to customs duties to initiate VAT system from the
import stage and to protect certain economic activities.
Supplementary Duty and Turnover Tax realized under VAT act .
Audit and account based system.
Positive and helpful for maximizing revenue realization.
Continued
The Concept and Determination of VAT

Value Added Tax is a tax on consumer expenditure and is collected on
business transactions and imports.
The basic principle of VAT is to charge VAT at each stage in the supply
of goods and services (output tax). If the customer is registered for
VAT and uses the supplies for business purposes, he will receive credit
for this VAT (input tax). The broad effect is that businesses are not
affected and VAT is actually borne by the final consumer.
According to Carls. Shoup, VAT is a tax on the value added by a

business firm , through its activity, to the goods and services it buys
from other business firms.
According to Bannock & Peacock, VAT is a tax on final consumption
which is collected at every stage of production and distribution rather
that at the retail stage alone.
In other words, VAT is an expenditure tax or a transaction tax or a
consumption tax.
23
Continued
The Concept and Determination of VAT

Value: Here the Value means the Value on which the VAT will
be calculated or assessed or imposed, but not the Value in
common sense or in Economics.
Value Added: Added Value is the value that a manufacturer or a
service renderer or a businessman add to his inputs or raw materials or

other purchases by the time he sells the product or service. In other
words, the added value is the differential amount between the sales
price and the input cost.
And the Tax here is, the tax on that Added Value; and that's the Value
Added Tax (VAT) stands for.
So, Value Addition = Sales Price Input (raw mate.) cost
And VAT = Output Price 15% Input price 15% (if any)
[the rate of VAT in Bangladesh is uniformly 15%]
i,e VAT = Tk. 150 15% 100 15%
= Tk. 22.50 15.00 = 7.50 (Net VAT)
24
The Act and the Rules :
Value Added Tax (VAT) is administered under the Value Added Tax Act,
1991 and the Value Added Tax Rules, 1991 and the SROs and Orders
made there-under.
The Act contains 73 sections, 3 Schedules and the Rules contain 42
rules and 27 Forms. Now the Act contains 101 sections, 3 Schedules
and the Rules contain 52 rules and 37 Forms.
RATE OF VAT
Standard/uniform rate of 15% on all VAT applicable goods and services.
Though there are some applicable net rates for services like, 2.25%, 3%, 4%,
4.5%, 5%, 5.5%, 6%, 7.5%, 9% etc. But practically these rates come from the
truncated base for assessable value for VAT of some specific service items. If
the truncated base value of an item is made tk. 30 over market price tk.100,
then the amount of VAT at the rate of 15% on tk. 100 will be tk. 4.5, That it is
generally, but unofficially known as 4.5% VAT on the total amount.
Zero rate on all exports, deemed exports and foods for consumption outside
Bangladesh and other goods supplied to an out going conveyance. (Section-3 )
Continued
Rate of VAT in different countries

Name of Countries
Austria
Yr. of intro
Standard rate (%)
Reduced rate (%)
1973
20
12,10
21
10.5
Argentina
Germany
1968
16
Denmark
1967
25
---
Thailand
1992
---
South Africa
14
---
South Korea
10
---
Nepal
13
---
New Zealand
1986
12.5
---
Canada
1991
---
Japan
1989
---
Italy
1973
19
4, 9
26
Continued
Name of
Countries
Yr. of
introd.
Standard rate
(%)
Reduced rate
(%)
Pakistan
1998
7.5
France
1968
19.6
5.5, 2.1
Bangladesh
1991
15
9,5,4.5,2.25,1.5
Belgium
1971
21
12,6
India
2007
12.5
4,1
UK
1973
17.5
Sweden
1969
25
12, 6
Spain
1986
16
7,4
Greece
1987
18
4, 8
Turkey
1985
12
8
27
TAXES UNDER VAT SYSTEM

The under mentioned taxes are administered and realized under
VAT Act and Rules made there-under :
(a) Value Added Tax (VAT)
(b) Supplementary Duty (SD)
(c) Turnover Tax (TT)
(d) Advanced Trade VAT (ATV)
Duty Drawback or Export Rebate against the VAT, SD, Customs Duty
(CD), Excise Duty and other duties & taxes paid on the inputs used at
the time of manufacture of goods or rendering of services or paid at
the production level are given under VAT Act.
SURCHARGE IMPOSED UNDER FINANCE ACT, 2014

(a) Health development Surcharge @ 1% on tobacco products
(b) Environment protection Surcharge @ 1% on all goods
produced in an industry, pollutes environment
(c) Information and communication technology Development
Surcharge @ 1% on Mobile phone set imported or produced
The above surcharge shall be levied and realized as and when VAT is
levied and realized.
28
SUPPLEMENTARY DUTY ( SD ) :
Goods and services socially undesirable, luxurious and not
essential mentioned under the Third Schedule of the VAT
Act are subject to SD under VAT Act [Section 7 and SRO]
at a rate ranging from 5% to 500%, such as: 5%, 10%,
15%, 20%, 25%, 30%, 35%, 43%, 45% 60%, 61%,
93.24%, 100%, 150%, 200%, 250%, 350%, 500%.
The SD imposed major items are :
Goods : Import Stage
Fresh and Chilled Tomato, Fresh and dried Nut, Fresh and
dried Fruits, Spices, Finished Chock let
Marble, Granite, Cement, Petroleum products
Detergent powder, Mosquito coil, Printed PVC Sheet
Toilet paper, Tissue paper, Oven fabrics, Carpet
Diamond, Imitation Jewellery
Explosive powder, Revolbar, Pistol and other fire Arms.
Liquor, Motor Vehicle
TV, Refrigerator, VCP, VCR, VCD, DVD
29
Continued
Goods : Production Level
Cigarettes, Cigarettes Paper, Biri, Zarda and Gool,

Natural Gas in gaseous form
Shampoo, Perfume, Cosmetics And other luxury goods
Paints
Mosaic cube and similar goods, Ceramic Tiles, Bath tub, Jacuzzi,
Sink, Basin, Commode and other bathroom fitting and fixtures.
Other Filament lamp, Excepting ultra violet/Infra-red lamp and
float glass.
Beverage and Energy drink, Fruit juice and Fruit drink
Mineral water (up to 3 liter)
Services : Local Stage
Satellite channel distributor
SIM Card supplier
Hotel and Restaurant (Incase of liquor & Floor show bills).
30
TURNOVER TAX
Turnover Tax is administered under VAT Act and Rules. It is a liberal and
easier tax treatment for the small enterprises (production and services).
[Sec. 8, 16 and rule 4]
Turnover means total money received or receivable in a certain period by a

registered person against his goods manufactured, service rendered or
goods supplied.
Turnover Tax means the tax payable on the said total money under section 8
of VAT Act,1991 and rule 4 of VAT Rules,1991.
Who is eligible to pay Turnover Tax
Yearly turnover not more than tk. 80 lac, ie upto 80 lac VAT is exempted
and Turnover Tax is payable.
Rate of turnover tax to be applied @ 3%.
Not listed in the SRO No.183-law/2012/641-Mushak, dated:07
June,2012.
- 26 goods and 64 services
31
Continued
Procedure to be maintained for Turnover Tax

Application (Mushak- 6) to the Divisional Officer, VAT
Issuance of Enlistment certificate (Mushak- 8) by the Divisional
Officer, VAT within 07 (seven) working days.
Two copies of annual turnover declaration (Mushak- 2Kha) to the
Divisional Officer, VAT
Estimated annual turnover and turnover tax declaration to be
submitted every year subsequently by the tax payer within 30
(thirty) days of the date of Enlistment.
After examining the declaration; the amount of annual turnover and
Turnover tax ought to be approved by the Divisional Officer
Approval letter to be issued by the Divisional Officer within 30
(thirty) working days
Turnover tax is payable on the date of issuance of Enlistment
certificate by the Divisional Officer
Deposit the amount of turnover tax to the Govt. treasury under the
account code number 1/1133/0010/0313
Submission of turnover tax Return (Mushak- 4) along with treasury
challan to the Divisional Officer of VAT for every tax period
32
Continued
Responsibility of a person liable to pay Turnover Tax

Application to the concerned Divisional Officer of VAT with Form
Mushak-6
Enlistment by the concerned Divisional Officer of VAT with Form
Mushak-8
Issuing of cash memo with serial number at the time of supplying
goods or rendering services using Enlistment number on it.
Payment of turnover tax monthly/quarterly/ yearly basis.
Submission of turnover tax Return (Mushak-4) in every tax period
Registers and documents to be maintained:
Purchase register (Mushak-16)

Sales register (Mushak-17)
Counter foil or copy of cash memo
Copy of turnover tax Return (Mushak-4)
Documents relating to import and export (if any)
Relevant commercial documents
All the documents relating to turnover Tax to be maintained for

6 (six) years
33
Continued
Penal provision [Rule 4 (13 Ka)]

Penalty of Five thousand taka in each case
against failure to pay turnover tax in due time
Imposition of 2% interest against the
unrealized turnover tax
Arrear turnover tax to be realized under section
56 of VAT Act and Rule 43 of VAT Rules
34
APPLICABLE AREA OF VAT

VAT Levi-able on
From the very inception, VAT was applicable on most of the goods
and a few number of services at the rate of 15%.
VAT was applicable on all goods under the H.S. Nomenclature

except the following:
[Section3,8]
All exports, deemed exports and foods for consumption outside

Bangladesh and other goods supplied to an out going conveyance.
Goods and services under the Turnover Tax.
All goods under Second Schedule of Narcotic Control Act, 1990,
incase of manufacturing in Bangladesh. So, VAT is applicable at
import level, service rendering level and trade level also.
Goods described under the First Schedule of the VAT Act, such as:
live animals, meat, fish, fresh milk, unprocessed agricultural
products, natural sands, rough timber, raw silk cocoon, raw wool,
raw cotton, raw jute etc.,
35
Continued
VAT is applicable on all services excepting the services described under

the Second Schedule of the VAT Act, such as :
Basic services to live on, Personal Services, Social welfare services,

Medical and Health services given by the private sector, Library,
Museum, Art gallery, Zoo, Botanical garden, Transmission of
Radio and TV (excepting other commercial activities), Taking
deposit and savings by Bank and Financial Organization, Life
insurance policy, Savings, SEC, Transportation of Passenger
(without AC) and goods, Air lines (excepting the farm rents
Chartered plane and Helicopter), religious activities, Postal
service (excepting Courier and Express mail service), all
charitable and scientific service activities provided for public
interest, Stevedoring and Hand operated laundry and cleaning
activities (except services provided in hotel and mechanized
laundry), etc.
Services under First Schedule (Part-2) of the Excises and Salt Act, such as :
Services rendered by Bank or Financial Institute and Services rendered by
air line
36
EXEMPTIONS OF VAT & SD UNDER SROS:

EXEMPTIONS
[Section 14]
Govt. by notification in the official gazette exempt VAT or SD on

importation or supply of any goods or class of goods or on
rendering of any services subject to some conditions and
limitations.
NBR may by special order exempt payable VAT or SD on any
importation of goods, receive of supplies or receive of services
subject to some limitations and conditions in view of
enforcement of any international or bi-lateral agreement on
reciprocal basis.
NBR may by special order exempt VAT or SD on importation or
supplies of any taxable goods or on services rendered
mentioning the reason in each case.
Continued
Goods :
Live saving drugs, Plastic kitchen items, Water bottle, basket and
Tiffin carrier used by the school children, Plastic hanger, hand fan
and some other plastic items, Kitchen and household utensils made
of aluminum, MS sheet, Tin or steel (enameled or otherwise
colored), Some medical instruments/ apparatus, Agricultural
machinery and instruments, Some scientific instruments, Books,
booklet, news paper, periodicals and journals, Computer software,
computer and accessories, computer ribbon and modem, Aircrafts
and parts thereof, Chem. fertilizer, insecticides, fungicides,
herbicides, Copra waste, mustard oil, full fat soybean,
Contraceptives, Sugar and molasses, loaves and bread, Biscuit
(hundred taka per kg) cake (hundred taka per kg-except party
cake) Jute goods, electricity, power generator, Hard board,
newsprint (in roll or sheet form) Handloom fabrics of synthetic
fiber and cotton, Silk yarn, plastic or rubber sandal (up to
Tk.100/pair), Ball pen, wood pencils, type writer, Spares of textile
and jute mills, Packed liquid milk, ghee, butter, curd (excepting
sweet curd), Hurricane light, kerosene burner, Tractor, power
tiller (excepting prime mover) etc.
38
Continued
Tax exemptions for Cottage industries:

Goods produced by the cottage industries exempted from
VAT and SD under some conditions mentioned below as
per the SRO No-172-Law/2013/676-VAT, Dated 06 June,
2013 issued under section 14(1) of VAT Act.
Conditions :
For the purpose of the SRO, Cottage Industries means
It should not be a joint stock company

(ii) Its Invested capital for plant, machinery and equipment at
any time in the year should not over taka 40 lacs
(iii) Its Annual Turnover not more than taka 60 lacs
(i)
This Cottage benefit may be taken through certain

procedure :
There is a negative list of items for cottage benefit
39
Continued
Negative List for cottage benefits:
Palm oil (all sorts), Coconut oil (all sorts),

CDSO, Soya bean oil,
Tea, Lozenge, Biscuit, Chanachur,
Juice, Energy drink, Mineral water,
All types of Cigarette and Biri, Zarda, Gul,
Antiseptic, Disinfectant, Medicine,
Paints, Pigments, Varnishes, Polishes,
Perfume, Water used in cosmetics, Cosmetics,
Tooth paste and like items,
Shave and after shave items,
Deodorant, Air freshener,
Soap ( all sorts with Liquid),
PVC pipe, Bricks (all sorts),
40
Continued
M.S. Products, Metal container,

Super enameled copper wire,
House hold fan (fitted with electric motor of production
capacity not over 125 watt)
Dry cell battery, Storage battery,
VCR, VCP,
Television (all sorts),
Electric bulb, Wires and cables,
Cruise Ships (all sorts), Excursion Boats, Ferry boats,
Cargo Ships, Berge and Similar ships for carrying
passenger and goods,
Fishing Boats Factory Ships and Other ships, Used for
preparing and preserving goods like fish,
Yates and other boats, Rowing boats and canoes for games
or entertainments,
Tugs and Pusher craft, Rubber and Plastic foam.
41
Continued
Procedure:
Fulfilling the above SRO conditions the
manufacturer of VAT payable goods except the
goods under the negative list will apply to the
Divisional officer of VAT in form mushak-6 with a
declaration in form-ka. After enquiring into the
matter, if the Divisional officer is confirmed that
the applicant has fulfilled the conditions as per the
SRO, then he will enlist the applicant as a cottage
industry in form mushak-8. The enlisted person will
maintain an accounts of transaction in form-kha
and at the time of supplying the goods, he will
always issue a cash memo mentioning the
enlistment number.
42
Continued
VAT Exemption on Services:

Temporary Hotel and Restaurant; cold storage; Classified Advertisement in
the News paper; Printing charges on books, Periodicals and Educational
materials for the students; Binders, Internet (in case of rendering service to
educational Institution only), VAT payable on Insurance premium by
Private Sector Power Generation Company, VAT payable on Premium of
co-insurance for Aviation Insurance in Foreign Currency . Specialist
Doctor, Travel agency, Indenting Farm Supply of School Tiffin, Organizer of
Cultural Function performed by foreign artist [ less than Tk.100 per single
entry ], Specialist Doctor, Transportation of food grain, Land seller, Power
used for irrigation, Small Tailoring shop for Dhaka & Chittagong city and
non-AC Tailoring Shop for other part of the country, Tourist place or
installation (including historical place), Man power exporter, Stock broker
and other broker, Tour operator, Meditation Services, Purchase of rubber
as industrial raw material through auction by an industry, Private Medical
College & Engineering College, Private University etc.
43
Continued
Exemption at Trade level

Maize seeds (in package form), Rice all sorts
Protein premix of animal feed
All Contraceptives
Insulin, Vaccination for human medicine, Vaccination for veterinary
medicine, Homeopathic, Aurvedic, Unani and Kidney dialysis solution,
Anti-cancer medicine
All fertilizer
Insecticides, Fungicides, Pesticides, Anti sprouting products, Plant
growth regulator and Disinfectants used in agricultural activities.
Streptokinase
Sheath contraceptives
Mobile phone set,
Insulin pen/ Insulin cartridge.
44
INPUT TAX CREDIT MECHANISM : [Section 9, Rule 19 ]

Taxpayers are entitled to get input tax credit (rebate) on the VAT
paid inputs (goods and services) used for producing/ supplying the
taxable goods or rendering the taxable services whether imported
or locally procured. As a result the incidences of taxes are
distributed among the all taxpayer in a same chain and the
individual incidence becomes low. Input tax credit is an incentive
to the tax payer. It is the engine of VAT system. It is a progressive
tax system because of input tax credit facility.
INPUT TAX CREDIT :
Input means
[ Section 2(ga) ]
(a) All raw material, Laboratory re-agent, Laboratory equipment,

Laboratory accessories any Gas, any material used as fuel,
packaging material, services and machinery and spares
excepting labor, land, building, office equipment and conveyance.
(b) Incase of trading, goods imported, purchased, achieved, or
otherwise
procured in view of sale, exchange or in other
words handing over.
45
Continued..
Input tax means
[Section 2(gha)]
Value Added Tax paid on imported inputs or purchased

inputs by a registered person from other registered
person and VAT realized in advance (ATV) on imported
inputs at the import stage shall also be included.
Output tax means
Levi-able tax under Value Added Tax Act, 1991
What is Tax Credit or Rebate
In accordance with the provision of section-9 of VAT Act and
rule-19 of VAT Rules any registered manufacturer, service
renderer, importer or trader of taxable goods or services may
adjust the amount of input VAT paid earlier on his inputs
against output VAT payable on goods or services. The scope or
facilities provided here is called Input Tax Credit/Rebate.
Input Tax Credit = Output Tax Net Tax Payable
46
Continued
Credit/ Rebate Mechanism:
[Section 9, Rule 19 ]
Input tax credit facility is a right for the tax payer. But it is not free to exercise.
This rebate can only be taken under certain conditions. Tax credit is not
permissible in the following cases :
Input tax mentioned in the Bill of Entry or Tax invoice (VAT11) in which the Registration No. does not belong to the
Registration No. of the supplier of goods, trader or service
renderer.
VAT paid against the goods kept under others possession, right
or supervision.
The amount of SD or Turnover Tax paid earlier.

The raw materials used in the production of goods or services
exempted from VAT.
VAT paid against reusable packaging material, excepting the
first time use.
VAT paid on Goods and Services which are related to the
construction. Modernization, expansion, renovation and repair
of any building or establishment and also purchase or repair of
any kind of furniture, stationeries, air conditioner, fan, lighting
47
equipment, generator etc.
Continued
VAT paid on rent or lease of Architectural Plan and Design,
conveyances etc.
VAT paid against expenditure of travel, entertainment, staff welfare
and development activities.
VAT paid against such inputs which is not entered in the book of
purchase (Mushak-16) prescribed by rules.
VAT paid against inputs which is not included in the base value of the
taxable goods.
Input tax on increased price of inputs purchased or procured when
amended value declaration is not submitted after increase of total
input price exceeding 7.5%.
The amount of VAT concerned with bank guarantee under which the
input is released, till the bank guarantee finally disposed of .
If the NBR by notification in the official gazette fix the rate and
amount of value addition for the purpose of assessment of VAT
incase of supply of goods or class of goods by a trader.
If the NBR by order determine VAT on the basis of real value
addition or by notification in the official gazette determine VAT on
the basis of fixed rate of value addition on some certain services ,VAT
paid against that inputs purchased.
48
Continued
If the total value received or receivable by a trader against his

supplies is determined by rule for the purpose of payment of VAT.
VAT paid on inputs purchased where tariff value is fixed u/s 5(7).
If the amount of payable VAT is not included in the supply price

or
price declaration of goods and if there is no proof of payment in the Govt.
treasury, incase when services supplied from outside Bangladesh.
If the value of inputs of goods or services worth Tk. one lac or more and
if the purchase price does not paid fully or partially through banking or
electronic channel
Credit is to be taken within the same tax period, in case of failure it must
be taken within next 2 tax period provided the total inputs entered into the
production, supply or service rendering place
Continued
Exceptions and other relevant issues

Partial Rebate : As per rule 19 of VAT Rules 1991 the following
percentages of rebate may be taken in respect of place,
installation or premises used in connection with production or
supply of goods or rendering of services :
(a) VAT paid on insurance, gas and power distribution:
80%.
(b) VAT paid on telephone, tele-printer, fax, internet, freight

forwarders, C & F agent, WASA, audit and accounting firm,
procurement provider, security service, legal advisor, transport
contractor and banking service (LC) :
80%
Adjustment of Rebate: Any taxpayer may adjust the amount of

VAT shown in the Bill of Entry (B/E) or VAT Challanpatra (Mushak11) on the rebate column of Account Current Register (Mushak-18)
after the goods entered into the factory or business place.
50
Continued..
How does the tax credit / Rebate system work at

different levels of a business supply chain ?
[ Flow Chart for Credit / Rebate Mechanism ]
China
Exporting
Country
Import level
Value for VAT 100 tk.
Rate of VAT = 15%
Total VAT= 15 tk.
VAT paid value

= 115 tk.
Consumer level
Total value=
250+37.50
=287.50 tk.
(VAT inclusive)
Industry level
Rate of VAT = 15%
Total VAT= 22.50 tk.
VAT Rebate= 15 tk.
Net VAT = 7.50 tk.
VAT paid value

= 172.50 tk.
Distribution level
Value for VAT 180 Tk.
Rate of VAT = 15%
VAT Rebate= 22.50 tk.
Net VAT = 4.50 tk.
VAT paid value
= 207 tk.
Retail Level
Whole Sale Level

Rate of VAT = 15%
Net VAT = 4.50 tk.
VAT paid value
51
= 241.50 tk.
Rate of VAT = 15%

Net VAT = 6.00 tk.
VAT paid value
= 287.50 tk.
Continued
Cancellation of Rebate and Executive Appeal :
[ Section-(2),2ka,2kha ]
If any taxpayer without having legal right of taking rebate

avails tax rebate, the concern officer cancelling the taken
rebate may order for adjustment with the account current
register or tax return(Mushak-19).
The person aggrieved by the order may submit a

written objection to a VAT officer senior to the officer
passing the order within 15 working days.
The officer shall give an opportunity of being heard to
dispose of the issue within 15 working days and the
order issued by the said officer shall be final.
52
IMPORTANCE AND PROCEDURE OF VALUATION

UNDER VAT SYSTEM
As the realization of VAT in Bangladesh is still dependent on
manufacturing level and the VAT is realizable on ad valorem basis, so
if the correct value is not determined, the actual revenue could not be
realized. But whenever the real VAT system will be implemented at all
stages of goods and services the question of value for VAT in
Bangladesh may be dealt with relaxed approach.
Value for VAT does not mean the actual value or sale value of a
commodity or service. Actual value or sale value is determined by the
manufacturer or trader or market. Here the value stands for the
purpose of assessment of VAT at different stages only. So the question
of value for VAT in Bangladesh is very important, though it is not
important for the countries where the ideal VAT system is introduced
at all stages like: import, manufacturing, trading and service
rendering.
Provisions regarding determination of value for VAT and SD are
contained in section 5 and 7 of VAT Act and rule 3, 3ka, 3kaka, 3kha
of VAT Rules. As per the current position of law the assessable value
for VAT at different stages are to be calculated as mentioned below :
53
Continued
Import stage:
Assessable value for VAT :
Assessable value for Customs Duty under section-25 or 25A of Customs
Act + Customs Duty + Regulatory Duty (if any) + Supplementary Duty
(if any) with other Duties and Taxes (if any), except AIT.
Other duties and taxes means : Safe Guard Duty (SGD), Counter-veiling
Duty (CVD), Anti Dumping Duty (ADD) etc.
Calculation of taxes is given below:

Customs Duty (CD) and Regulatory Duty (RD)
Flat on Value:
If assessable value
if rate of CD
then amount of CD
is
is
is
100.00
25%,
25.00
if rate of RD
then amount of RD
is
is
05%
05.00
54
Continued
[Assessable value for SD: Assessable value for Customs

Duty + Customs Duty + Regulatory Duty (if any)].
Supplementary Duty (SD):
Based on :
Value+ CD
If assessable value
If rate of CD
If rate of RD
and if rate of SD
Then amount of SD
is
100.00
is
25%
is
5%
is
20%
is = (100+25+5) X 20%
= 26.00
[ i.e, Assessable value for SD = 130.00 ]
55
Continued
Calculation of Taxes
Value Added Tax (VAT) at Import stage :
Based on :
Value+CD+RD+SD
If assessable value
If rate of CD
If rate of RD
If rate of SD
& rate of VAT
is
is
is
is
is
Then amount of VAT
is
100.00
25%
5%
20%
15%
= (100+25+5+26)
X rate of VAT 15%
= 23.40
[i.e, Assessable value for VAT=156.00]

56
Continued
Local
stage:
Value of goods is determined by aggregating the cost of inputs, other costs & charges,
profit and commissions.
Goods (Manufacturing): [{Value of Inputs + Total Expenses + Commission, Charge,
Fee (if any) + all Duties and Taxes (if any), Excepting VAT + Profit} +
Supplementary Duty (if any)].
Calculation of Taxes :
Value of Inputs =
Total Expenses =
Commission =
Profit =
Total Cost =
Supplementary Duty @20% =
Value for VAT = 210.00+42.00 =
So the amount of VAT=(252x 15%)=
156.00
+30.00
+4.00
+20.00
210.00
42.00
252.00
37.80
[Assessable value for SD: The amount or consideration received or receivable from
the buyer excluding the amount of SD and VAT.]
57
Continued
Services
Value for Services :
Total receipts excluding VAT, but including supplementary duty (if

any) ]
Total
receipt means-- Total money received or receivable
including commission or charge, excepting VAT by the taxable
service renderer in exchange of his services.
[Section 2(bha)]
[Assessable value for SD: Total receipt excluding the amount of SD and
VAT.]
Calculation of Taxes :
Value of services =
138.00
Value for VAT =

Value for SD =
120.00
100.00
So Total Money received or receivable = 100.00

[Amount of SD @ 20% =
20.00
58
Continued
Trade ( Whole sale and retail level ):

Local Trader :
Base value for VAT : [{Purchase value + 26.67% (value addition)] x 4%,
ie,15% on 26.67 (amount of value addition).

Value to be declared under section 5(2) with the form-1kha (rule 3) to
the divisional Officer of VAT for supply of goods and taxes to be paid
@ 15%.
The rate of value addition for pharmaceutical and petroleum
substances will be counted as 13.33% and 2% VAT will be calculated
on the total value of the supplies.
In case of payment on the basis of truncated base, no rebate can be
claimed.
The small retail traders whose annual turnover is not over tk. 70 lac
they can pay fixed amount of VAT region wise on the basis of certain
amount of value addition determined by NBR .
Rate of value addition is determined to be 26.67%, i.e. net 4% on the sale

amount is payable. But one can pay VAT at the rate of 15% on actual basis
declaring value and maintaining required Registers and formalities [according
to ideal VAT system]. In that case,
[VAT = Sale value 15% Purchase value 15%]
59
Commercial Trader :
Continued
Advanced Trade VAT (ATV)
[{(Customs assessable value + Customs duty) + Regulatory Duty (if any) +

SD (if any)}+ 26.67% (Value Addition)] 4%.
Value to be declared under section 5(2) with the form-1kha (rule 3) to the
divisional Officer of VAT for the next supply and taxes to be paid @ 15%.
Based on Value
If assessable value
+ CD+ RD +SD + 26.67% CD
(Value addition)
RD
SD
VAT
AIT
ATV
is
is
IS
is
is
is
is
100.00
25%
5%
20%
15%
5%
4%
The amount of ATV is = (100+25+5+26+41.60)

x rate of ATV 4%
= 197.60x rate of ATV 4%
60
= 7.90
Continued
EXCEPTIONS :
Production on contractual basis
[Section5(2ka)]
NBR may by rule ascertain the procedure of valuation incase of

manufacturing the brand goods of a registered manufacturer on
contract basis by another registered manufacturer.
The manufacturer of the goods (sub-contractor) will submit a value
declaration in form Mushak-1 to the Divisional Officer of VAT
on the basis of the consideration/charges against each unit of goods
he will receive from the owner of the brand goods.
The owner of the brand goods will also submit a value declaration
in form Mushak-1 to the Divisional Officer of VAT as per normal
procedure laid down in rule 3(1) of VAT rule.
The manufacturer of the goods (sub-contractor) shall only be
entitled to supply the manufactured goods to the registered
premise of the owner of that brand goods. At the time of supply he
will issue a Mushak-11 using double sided carbon destined to the
premise of the owner.
61
Continued
Supply against in-different value
[Section 5(2kha ), rule 3kha]
Both the Manufacturer and Importer can opt for supply against in-different
value.
Option to sale with printed in-different value through out the country
Manufacturer will have to pay in total at the factory level and importer
will have to pay in total at his supply level.
Prior approval from NBR is to be taken.
Back Calculation Method
[Section 5(2ga
Whatever the provisions prevail in section 5(2), in view of maintaining

stable price for goods and services if the Government through any
Govt. office or other organization determine unit price of such goods
or services then at the level of production or service rendering the
payable total SD and VAT shall be realizable on the basis of back
calculation from the determined price.
In the above case Govt. may by notification in the official gazette
exempt from the responsibility of value declaration under some terms
and condition mentioned in the gazette.
(Rule 3kaka)
62
Continued
For Retail Price at Production Level

[Section 5(3)]
Govt. may by notification in the official gazette

determine the goods on which VAT will be applicable
on the basis of retail price.
The retail price of the goods shall be the price
determined by the manufacture on approval from the
concerned officer in which all expenses, commission,
charges, duties and taxes are included. and
The goods with special brand and marks sold at the
price to the general consumer and the price is clearly,
remarkably and indelibly printed on to the goods or
its package, bag or cell.
63
Continued
Trade (Whole sale and retail) level:
[Section 5(2)]
NBR by notification in the official gazette may fix the

rate and amount of value addition of any goods or
class of goods at trade level.
For Services
[Section 5(4)]
NBR may by order fix the actual value addition of any services
or by notification in the official gazette fix the value added tax
on the basis of determined value addition.
Govt. may by notification in the official gazette fix a minimum
value added tax on any service, in spite the service renderer
provides that service free of cost.
64
TRUNCATED BASE SYSTEM FOR SERVICES

Truncated base value for services were introduced to
protect the interest of govt. revenue,
protect the interest of the taxpayers who add low value to their
services,
the items for which input credit system does not work properly
and exist major evasion risks,
the items for which easier and simple documentation and tax
payment system is essential.
NBR may by order fix VAT on the basis of real value addition or
by SRO in the official gazette fix VAT on the basis of determined
rate of value addition of certain services.
[Section 5(4) ]
65
Continued
Truncated base and net VAT rate of some service items

National Board Revenue SRO No. 108-Law/2014/703-VAT, Dated: 05
June, 2014. Determination of tax on the basis of value addition at
certain rate in case of specific services rules, 2012.
Service Provider
Base of Particular Rate of Value Addition
Net VAT
Rate
(1)
(2)
(3)
Restaurant
Motor Car
Garage &
Workshop
100% of the amount received against the

Service provided by air conditioned restaurants
15%
50% of the amount received against the service

provided by ordinary (non air conditioned)
restaurants
7.5%
50% of the total amount received against

servicing and repairing of a motor vehicle along
with the value of the machinery and machinery
parts used by the service provider
7.5%
66
Service Provider
Net VAT
Rate
(1)
(2)
(3)
Dockyard
50% of the total amount received instead of servicing and

repairing of a marine vehicle along with the value of the
machinery and machinery parts added to that vehicle by the
service provider
7.5%
36.67% of the value mentioned in the tender for any

particular construction work
5.5%
Construction
Firm
Land Developer (a) 20% of the total amount received instead of sales or
Building
handover of developed land
Construction (b) 20% of the total amount received instead of sales or
Firm
handover of building
Photo Maker
50% 0f the total amount received by the photo maker
Furniture Sales (a)40% of the total amount received at production stage

Centre
(b) 26.67% of the total amount received, at sales stage (on
the condition of having the payment receipt of VAT at the
rate of 6%, at production stage)
3%
3%
7.5%
6%
4%
67
Service Provider Base of Particular Rate of Value Addition

(1)
(2)
Net VAT
Rate
(3)
Goldsmith,
Silversmith,
Jewelers
& Guilders
20% of the total amount received instead of

sales of gold, gold jewellery, silver or silver
jewellery
3%
Procurement
Provider
26.67% of the total value of the product or

service supplied by the procurement provider
or of the value mentioned in the tender
4%
Transport
Contractor
(a) 15% of the total amount of value (in

applicable cases, the value mentioned in the
tender) received by the service provider
engaged in transporting petroleum products
(b) 50% of the total amount of value (in
applicable cases, the value mentioned in the
tender) received by the service provider
engaged in transporting other products
2.25%
7.5%
68
Service Provider
Net VAT
Rate
(1)
(2)
(3)
Power Suppliers
33.34% of the total electricity bill received against the

usage of electricity
5%
26.67% of the sales value of the auctioned goods
4%
Buyer of Auctioned
goods
Immigration
Consultant
50% of the total amount received instead of the service

provided by the service provider
7.5%
English Medium
School
50% of the total amount received instead of the service

provided by the service provider
7.5%
Space or Installation
Rent taker
60% of the total amount of rent, in case of space and

structure rent
9%
Sales Centre of RMG

with Own Brand
33.34% of the total amount received at sales stage
5%
Information Technology
Enabled Services
30% of the total amount received by the service

provider
4.5%
Sponsorship Services
50% of the total amount received by the service

provider
7.5%
69
Continued
VAT will be applicable at the rate of 15% in the cases of

those taxable services which are not mentioned in this
aforesaid table.
The VAT determined in the column (3) of the aforesaid
table will be paid by the service providers.
In case of the aforesaid service providers shown in

column (1), no input tax credit will be allowed.
If any service provider wants to pay VAT at the rate of 15%
on the total received amount, taking credit, s/he will be
entitled to do that complying with the applicable terms
and conditions of VAT Act and VAT Rules.
70
TARIFF VALUE FOR GOODS

Tariff Value
[Section 5(7)]
NBR by notifications in the official gazette may fix the Tariff Value
for SD and VAT in case of goods or services considering the
importance of public interest and being satisfied after due enquiry.
Tariff Value for goods were introduced to
[Section 5(7), 5(4) ]
protect the interest of govt. revenue,

protect the interest of the taxpayers who add low value to their
goods/services,
the items for which input credit system does not work properly and
exist major evasion risks,
the items for which easier and simple documentation and tax
payment system is essential.
71
Continued
National Board of Revenue General Order No.-02/Mushak/2014,

Dated: 05 June, 2014. Some examples of tariff value:
Purified Soya bin oil
Purified Palm oil
Pickle (Bottled)
Pickle (Packed)
Tomato Paste
Mango Juice
Newsprint
Tk. 4110/MT
Tk. 3700/MT
Tk. 50/KG
Tk. 60/KG
Tk. 15/KG
Tk. 15/KG pack
Tk. 10000/MT
The tariff value is fixed only for the purpose of assessment and
realization of VAT, it is not a market price or real price or total cost
of the goods. It may be the value or amount equal or nearer to the
amount of value addition or how much relax treatment the policy
maker wants to consider for a certain sector or item. It is a
distortion to the VAT system, but the government of Bangladesh has
under taken this system on interim basis to address the trade reality.
72
Value declaration and approval procedure
[Rule 3]
Value declaration with input output co-efficient in Form

Mushak-1 to the Divisional Officer of VAT
Goods may be supplied from that day on the declared value
In case of any change in value, it is to be noticed to the Divisional Officer
before seven working days of its execution
If any anomalies are found in the value declaration after investigation,
Divisional Officer may by giving an opportunity of hearing can review
the value and execute it from the date of declaration
The decision of the Divisional Officer regarding the value within 15
working days
On request of registered person or Divisional Officer or of his own
initiative, Commissioner can fix the assessable value due to increase or
decrease of market price or of other reason.
A registered person may apply to the Commissioner to review the value
assessed/imposed by the Divisional Officer at a higher level and
Commissioner will solve the same within 15 working days.
A declaration regarding input-output co-efficient of every goods in form
Mushak-1ka to be submitted to the Divisional Officer of VAT in case
of goods under Tariff Value and in form Mushak-1kha in case of
trader or commercial importer.
73
Continued
Role of value review committee formed by NBR
[Rule 3(7)]
Committee: Director General VAT Audit, Intelligence and Investigation is the

President and a member (Additional Commissioner/Joint
Commissioner) from every VAT Commissionerate and VAT Wing
(First Secretary).
NBR, any VAT Commissioner or registered taxpayer may proceed to

the committee and committee may give suggestions after review.
Practical Problem in Value declaration
Fluctuation of value of inputs and currency rate

Complication in actual distribution of input-output co-efficient
Problem of adjustment with the market price and instability in
business system
Inadequate skilled and efficient person power
May create inconsistency between business flow and system
Less accommodative approach towards reverse interest
74
VAT AT TRADE LEVEL AND ATV
At the time of inception of VAT in Bangladesh it was not applicable at

the trade level. It was applicable at the import level, production level
and service level only. Later on in 1996 only 12 luxury items at the
trade level were brought under VAT. After words the items were
increased to 60 within some years. But the result was not satisfactory.
In 2001 all the items are brought under VAT at the Trade level. To
impose and realize VAT from trade sector of Bangladesh the traders
was defined in a different way.
Trader means a person who sales or otherwise handover the goods to

other person in exchange of consideration without changing any
shape, nature, characteristics or quality of goods imported,
purchased, achieved or otherwise collected by him.
[Section 2(tha tha tha tha)]
Commercial Importer means a person who sales or otherwise

handover the goods to other person in exchange of consideration
without changing any shape, nature, characteristics or quality of
goods imported by him excepting the goods described in the First
Schedule.
[Section2(thatha)]
NBR by notification in the official gazette may fix the rate and amount
of value addition of any goods or class of goods at trade level.
[Section 5(2)]
75
Continued
Realization of VAT payable on the supply of goods by the

Commercial Importer, Trader and Retail small trader Rules, 2012.
Commercial Importer :
ATV to be paid at the importing customs station through Bill of Entry at the time
the import level duties are paid.
Base value for ATV : [{Approved assessable value + Customs Duty (CD) +
Supplementary Duty (SD, if any) + Other Duties & Taxes (except VAT & AIT)}
+26.67% (value addition)] x 4%.
divisional Officer of VAT for the next supply and taxes to be paid @ 15%.
Goods to be supplied subject to payment of taxes and issuance of Mushak-11
and Mushak-11ka challanpatra.
VAT paid at the import level and as ATV may be taken as Credit/Rebate against
payable taxes subject to the provision of section 9.
Commercial importer should maintain accounts under rule 22, but form-ka may
be maintained instead of Books of accounts for purchase (Mushak-16) and Books
of accounts for sale (Mushak-17).
Payable tax to be paid with the head of accounts 1/1133/concerned
Commissionerate code/0311 and VAT return (Mushak-19) to be submitted to the
local VAT office by 15th of the next month.
There is a negative list for ATV.
76
Continued
Local Trader :
Base value for VAT : [{Purchase value + 26.67% (value addition)] x 4%,
ie,15% on 26.67 (amount of value addition).
divisional Officer of VAT for supply of goods and taxes to be paid @ 15%.
Goods to be supplied subject to payment of taxes and issuance of

Mushak-11 and Mushak-11ka challanpatra.
VAT paid at the earlier stage may be taken as Credit/Rebate against
payable taxes subject to the provision of section 9.
Local trader should maintain accounts under rule 22, but form-ka may be
maintained instead of Books of accounts for purchase (Mushak-16) and
Books of accounts for sale (Mushak-17).
Payable tax to be paid with the head of accounts 1/1133/concerned
Commissionerate code/0311 and VAT return (Mushak-19) to be submitted
to the local VAT office by 15th of the next month.
The rate of value addition for pharmaceutical and petroleum substances
will be counted as 13.33% and 2% VAT will be calculated on the total value
of the supplies.
In case of payment on the basis of truncated base, no rebate can be
claimed.
But one can pay VAT at the rate of 15% on actual basis declaring value and
maintaining required Registers and formalities [according to ideal VAT
system]. In that case, [VAT = Sale value 15% Purchase value 15%].
77
Continued ..
Trade VAT for Small Retail Traders :

The small retail trader whose annual turnover is not over tk. 70 lac he can
pay VAT as per the amount mentioned in the table below :
Sl.
No.
Applicable Area
Max. Value Addition

per year
Rate of VAT
Mini. Payable
VAT per year
(1)
(2)
(3)
(4)
(5)
1.
Dhaka & Chittagong

City Corporation
73,334.00
15%
11,000.00
2.
Other City Corporation
53,334.00
15%
8,000.00
3.
Municipal Area of
District Town
40,000.00
15%
6,000.00
4.
Other Area of the

Country
20,000.00
15%
3,000.00
VAT may paid annually or monthly basis.
The small retail trader will have to maintain purchase documents, cash
memo and books of accounts for sales
78
BUSINESS PROCESS UNDER VAT SYSTEM

A taxable person should run his business activities through certain
procedure prescribed by act and rules. He has to know and abide by the
rules and regulation relevant to his business. The responsibilities and
activities to be observed by him are mentioned below :
(a) The activities to be carried out by a Taxpayer
Taxpayers duty cycle :
Registration to be taken from the Divisional Officer of VAT
Declaration of Value to the Divisional Officer of VAT before the supply of goods.
Assessment of Duties & Taxes before the supply of goods.
Payment of Duties & Taxes before the supply of goods (in case of service, payment
of duties to be made within 15th of the next month).
Delivery of Goods or rendering of Services
Submission of Monthly Return (Mushak-19) to the Circle Superintendent of VAT

Office within 15th of the next month.
79
Continued
VAT MANAGEMENT IN BANGLADESH

VAT payment and record keeping process by the taxpayers
Registration
Submission of
Monthly Return
Delivery of
Goods & Services
Record Keeping
Registration documents
Valuation Documents
Purchase Records
Invoice Book
Sales Records
Account Current
Copy of VAT return
Commercial doc. (if any)
Declaration
of Value
Assessment of
Duty & Taxes
Payment of
Duty & Taxes
80
VAT REGISTRATION
To be Registered
Supplier of taxable Goods

Provider of taxable Services
Importer of any Goods or Services
Exporter of any Goods or Services
Whole sale or Retail Trader
Waiver from Registration
[Section 15, Rule 9]
[Section 3 & 14]
Govt.s power for any person or class of persons

on the basis of annual Turn Over
NBRs power for any Importer or Exporter
Whose annual Turnover is not over Tk. 80 lakh
(They have to be enlisted under Turnover Tax)
Obligatory Registration.
Voluntary Registration.
[ Section 15(4) ]
[ Section 17, Rule 10 ]
81
VAT REGISTRATION
REGISTRATION PROCEDURE
Submission of Application Form (Mushak-6)

along with the required documents to the
Divisional Officer of VAT or an Officer not
below the rank of Assistant Commissioner as
directed by NBR.
[Rule 9 (1)]
Issuance of Registration Certificate (Mushak8) within two working days by the Divisional
Officer/AC.
[Rule 11 (1)]
Online Registration is possible for some
selected VAT Division. [Rule 9 (1)]
82
Documents to be submitted for Registration
Application to be filled with prescribed form mushak-6

Managing director or Proprietors and authorized signatorys two copies of
pp size photograph
Trade license of the particular business
Tax identification number (TIN)
Import registration certificate (for Commercial/Industrial importer)
Export registration certificate (for exporter)
National ID or photocopy of passport of the proprietor/managing director
Plant machinery and raw materials (If any) declaration (Mushak-7)
Blue print or sketch map (where applicable)
Bank certificate
Certification of incorporation (for limited company)
Copy of rent agreement with the space owner or deed for ownership
83
VAT REGISTRATION
LOCATION AND OTHER ISSUES
One Registration
[ Rule 9 ( 4 ) ]
Production and supply of more than one goods from one

production place or rendering of more than one services
from one place or maintaining of import or export of more
than one goods or services from one place
Separate Registration [ Section 15 (2), Rule 9 ( 1 ) ]

Goods supplied or Services rendered or performing of
Imports or Exports or Trading from two or more places.
Central
Registration
[ Section 15 ( 2 ) ]
One can opt for central registration in the following case

under prescribed rules :
84
Continued
Central Registration & Tax Payment Procedure

Rule ,2012 under Value Added Tax
[ NBR SRO No. 186-Law/2012/644- Mushak, Date : 7 June 2012 ]
Applicability :
a)
b)
c)
Where a Manufacturer manufactured goods from one place but supplies

goods from different sales centre.
When a commercial Importer imports under his registered address and
supplies through different sales centre.
When a Service renderer renders his Service through different branches.
Registration :
The suppliers of goods or renderer of Services shall apply in Form Mushak-6 along with
required documents to concerned Divisional officer of VAT where it tends to get Central
Registration.
Getting application and papers Okay and NOC from the concerned Commissioner of
VAT, the Divisional officer shall issue Central registration in Form Mushak-8 and send
attested copies to the concern Divisional officer & NBR.
85
Continued
Tax Payment Procedure :
(1) In case of Manufacturer & Commercial Importer :

Centrally Registered office shall pay the taxes due in advance in a
coordinated way and perform different activities against tax ability.
a. Centrically Registered office shall pay the Taxes due in advance in a
coordinated way and perform different activities against Taxability.

b. Centrally Registered Office shall declare the price of goods in Form
Mushak-1 or Mushak-1 Kha to the concerned divisional officer as per

section-5 of VAT Act and Rule-3 of VAT Rules.
c. As the VAT of Trade level
is being paid in advance at the Centrally

registered office the amount of Value addition of trade level is to be
included in the declared price.
d. The amount of VAT is to be paid through adjustment in the account current
register at the time of supplying the goods from Centrally registered office to
branch office or consumer.
86
Continued
2. In case of Service Rendering :
Centrally registered office shall pay the taxes aggregating the taxes of all service
rendering unit through VAT return within the 15th of next Tax period.
Centrally registered person shall purchase or import the inputs in the name of
centrally registered office.
VAT Challanpatra :
a. Mushak-11 challanpatra is to be issued at the time of supplying goods from
centrally registered office to warehouse or sales unit.

b. Centrally registered office shall supply Mushak-11 or Mushak-11kha challan
book to sales unit and accounts of the challan book supplied to be maintained in
a register with the centrally registered office
c. Sales unit shall issue challanpatra in form Mushak-11 or Mushak-11kha in favor
of each sales and the required information is to be written on the chllanpatra.

d. Address of sales unit is to be written on Mushak-11 or Mushak-11kha issued
from sales unit and VAT shall not be payable insprite of Mushak-11 or Mushak11kha challanpatra issued from sales unit.
Continued
Sales information :
Centrally registered office shall submit to the concerned local
VAT office the statement of sales and supplies of each sales

unit in Form prescribed by the divisional officer with VAT
return within the 15th of next month.
Maintaining of Accounts:
Centrally registered office shall maintain all accounts as per
section-31of VAT act rule 22 of VAT rules.
VAT REGISTRATION
Amendment, Exhibition and Cancellation of Registration
Change of address or other informations regarding Registration

(Application Form Mushak-9 to the Circle Office) [Section 18, Rule 12 ]
Power of Commissioner regarding amendment of Registration
[ Rule 14 ]
Exhibition of Registration Certificate and Registration Number on

to the Signboard
[ Rule 13 ]
Cancellation of Registration (Application Form Mushak-10 to the
Circle Office)
[ Section 19, Rule 15 ]
Issuance of duplicate registration certificate
89
Continued
(b) When VAT is payable?

In case of supply of goods, at the time the activity which occurs first
amongst the following four activities:
(a) When goods are delivered or supplied,
(b) When the invoice (Mushak-11) regarding supply of goods is issued,
(c) When the goods are consumed/used personally or given for others
consumption/use,
(d) When partial or full value is received.
(c) Who will pay VAT and related taxes ?

The section 3 of VAT Act fixed the liability of payment of VAT through
treasury challan as follows:
At the import stage

Incase of imported goods, Importer
At the manufacturing stage
Incase of manufactured goods, Supplier
Incase of service providing, Service provider
Incase of services supplied from outside Bangladesh territory, Service
recipient
In other cases, Supplier.
90
Continued
In case of service rendering, at the time the

activity which occurs first amongst the following
three activities:
(a) When the service is rendered or provided,
(b) When the invoice (Mushak-11) regarding rendering
of service is issued,
(c) When partial or full value is received.
(d) When partial or full value is paid incase of services
received from outside Bangladesh territory.
91
Continued
(d) VAT PAYMENT PROCEDURE AND TIME FRAME

The tax should be paid in the following cases as per the procedure
prescribed by rule :
[section 6(5) ]
(1) At the import stage, with import duty;
(2) At the Manufacturing stage and in some cases at the trade
level, through Account current register and Return
(Mushak-19); and
(3) Incase of other goods or services supplied, through Return
(Mushak-19).
The amount of payable taxes should be deposited to the government

treasury through TR-7 mentioning the head of accounts before
supplying the goods incase of goods and 15th of the next month (
before submission of Return Mushak-19 ) incase of rendering the
services
In case of VAT . . . . . . . . . . . . . . 1 / 1133 / 0006 / 0311

In case of SD on goods . . . . . . . . 1 / 1133 / 0006/ 0711
In case of SD on services . . . . . . 1 / 1133 / 0006/ 0721
In case of Turnover Tax . . . . . . . 1 / 1133 / 0006 / 0921
92
Continued
(e) Procedure to be maintained for delivery of goods and

rendering of services.
Incase of goods :
Value of goods is to be declared and approval is to be taken from

divisional officer
Assessment of duties is to be made as per the indent of the purchaser
Payable duties is to be paid to the Govt. treasury
Tax invoice (Challanpatra) is to be issued properly
Sales register (Mushak-17) is to be filled up as per the indent of the
purchaser
Amount of payable taxes is to be adjusted in the Account Current
Register (Mushak-18)
Incase of Trading, payable duties is to be paid to the Govt. treasury

within 15th of the next month and before submission of VAT return to
the Circle office.
93
Continued
Incase of services :
Value of some services (selected by NBR) is to be declared and approval is to
be taken from Divisional officer

Assessment of duties is to be made as per the indent of the purchaser
Tax invoice (Challanpatra) is to be issued
Sales register (Mushak-17) is to be filled up as per the indent of the purchaser
Payable duties is to be paid to the Govt. treasury within 15th of the next month
and before submission of VAT return to the Circle office.
(f) Record Keeping by a taxpayer:

Records to be maintained and kept by the taxpayer for the next 6 years at his
concerned factory/business premise. The records are mentioned below:
[Section 31, 32, 33 Rule 22]
Registration documents (Mushak-6 and Mushak-8)

Valuation Documents ( Mushak-1 and relevant documents)
Purchase Records (B/ Entry or Mushak-11 or other Invoice)
Purchase Register (Mushak-16)
Sales Invoice (Mushak-11)
Sales Register (Mushak-17)
Treasury challan
Account Current Register (Mushak-18)
Copy of monthly Return (Mushak-19)
Other commercial documents(if any)
94
Continued
Tax invoice (Challanpatra)
[ Sec. 32, Rule 16 ]
Tax Invoice or Challanpatra is a document under prescribed rules
which is mandatory to issue for a registered person when ever he

supplies taxable goods or renders taxable service or exports any
goods or service or sales any taxable imported goods. NBR also by
Official Gazette may allow any other Procedure or Form with serial
number.
Tax invoice is treated as a proof of payment of taxes against any

consignment or any delivery.
Mushak-11, Mushak-11 Ka, Mushak-11 Ga, Bill of Entry, ECR Challan,

POS Software Memo, NBR approved own receipt or bill form used as
Tax invoice.
Only one tax invoice is allowed to issue against a single supply of

taxable goods or sale of taxable imported goods or rendering of a
single taxable service or an exportation of goods or services.
95
Continued
Other documents ( Books of Accounts )

The under mentioned books of accounts is prepared and
maintained as per prescribed rules :
Purchase register (Mushak-16)
All purchases of a taxable person should be entered in to the purchase

register and maintained for 6 years.
Sales register (Mushak-17)
All sales of a taxable person should be entered in to the sales register and
maintained for 6 years.
Account Current register (Mushak-18)
Accounts of all treasury deposit, payable taxes, adjustments and balance

should be entered and maintained in this register.
VAT Return (Mushak-19)
Summery of tax liability of a registered person for a certain tax period

(generally an English calendar month) along which some important
matters of his business activities should be reflected.
96
Continued
Maintaining of VAT documents and accounts through selected software

General Order No.-64/VAT/2011, Dated : 29 June, 2011 issued by
National Board of Revenue under rule 23(3) of Value Added Tax
Rules, 1991.
Mandatory provision of using VAT automation software prepared
and supplied by a qualified software farm enlisted by NBR.

Such firm to be selected by the concerned Commissioner whose total
revenue of the previous fiscal year was 50 lac or more.

One
or more software company on the basis of specific

characteristics, qualification and capability to be enlisted by Member
VAT (Implementation and IT) or by a committee formed in this
regard.
[ Temporarily it is suspended and some changes are under process.]
97
Submission of VAT Return

VAT RETURN ( Mushak Dakhilpatra/Mushak-19 )
Return filling, analysis and responsibilities

VAT return is a summery of tax liability of a registered person for a
certain tax period (generally an English calendar month) in which the
under mentioned important matters of his business activities are reflected.
Aggregation of sales
Accounts of payable taxes
Aggregation of purchase
Accounts of deduction at source / rebate / duty
drawback
Final accounts and balance
Accounts of deduction by supplier at source
98
Continued
Submission of Return
[ Section-35 ]
Submission of return covering the statement of tax liability of every tax

period by a manufacturer of taxable goods or trader or renderer of
taxable services to the concerned officer (circle officer) within the
specific date (15th of the next month, 20th of the next month incase of
insurance) under prescribed form and procedure. Two copies of Return
on prescribed form Mushak-19 should be submitted ( rule 24).
Examination of Return
The concerned officer will scrutinize the return according to the
procedure prescribed by the Rules.
If short payment of taxes is evidenced, the concerned officer will order,
in case of product, to adjust the Account Current, and incase of service,
to repay in prescribed manner for this purpose.
In case of extra payment of taxes, the related officer will provide with
the opportunity to adjust the Account Current on the next tax period. 99
Continued
The officer concerned will arrange necessary survey, if needed to determine
the appropriate Input-Output Coefficient of a product or if the amount

received instead of a service is shown less.
If less tax is shown on the Return or undue Drawback is applied for, the
related officer will have the jurisdiction to determine the amount of payable
taxes along with the Duty Drawback, considering collected information or the
result of survey, after hearing from the taxpayer.
Rule 25
If the submitted Return is found correct and appropriate after being
scrutinized by the Assistant Revenue Officer and Revenue Officer of the

concerned circle, it will be certified having signed along with sealed by
the aforementioned officers; the certified Return should be returned to
the taxpayer within thirty (30) days.
The Commissioner will send the main copy of the Return to the DEDO,
if the amount of rebatable tax is high, in case of a larger exporter in
comparison to a 100% exporter or a local supplier.
If a registered person, who is bound to submit the Return, does not
submit the Return of a certain tax period, the related Assistant Revenue
Officer will inform the Divisional Officer via the Revenue Officer for
100
taking action under Section 37.
Continued
Rule 26
If
any
registered
person
applies
for
deregistration,
the
Divisional
Officer,
determining unsettled liabilities, willl order to
submit the final Return within fourteen (14) days.
Rule 29
The Director General of the DEDO (Duty Exemption
and Drawback Office) will approve the Drawback

after reviewing the Return, export documents and
determined coefficient.
101
DEDUCTION OF VAT AT SOURCE

In VAT system, usually the purchaser of goods or receiver of
services pays money and seller/supplier of goods or renderer
of services receives money and deposit the amount of taxes to
the Govt. treasury. It is the obligation of the supplier of goods
or the renderer of services to deposit the taxes.
In spite of the general procedure of paying VAT by the
suppliers of goods or services, NBR may prescribe by rule
make provision to determine the time and procedure for the
payment of VAT and deduction of VAT at source in case of
goods, class of goods or services.
Section -6(4)
Under the rules prescribed by NBR payable VAT by a
registered person should be realized or deducted at source
and deposited it to the Govt. treasury at the time of payment
of value or commission by the service receiver or the payer of
the value or the commission. Section-6 (4kaka)
Continued. .. .
If any service renderer under a Foreign Aided

project maintaining procedure determined by
NBR through rule realize or deduct total payable
VAT and deposit it to the Govt. treasury, and in
this case if the documentary evidence of deducting
and depositing VAT at the Govt. treasury is
presented, no any amount of VAT shall be realized
again from a sub-contractor, agent or other
service renderer appointed by a service renderer
for supply of a part of whole services. Sec.(4kaka)
Continued .. .
NBR may by order determine the list and code of services to
realize or deduct VAT and deposit it to the Govt. treasury at
the time of taking service
by the under-mentioned
organizations.
Section- 6(4kakaka) & Rule- 18ka.
Organization eligible to deduct VAT at Source

(a) Government Organization
(b) Semi-government Organization
(c) Autonomous Organization
(d) Non Govt. Organization (NGO)
(e) Bank
(f) Insurance Company
(g) Financial Institution
(h) Limited Company
(i) Educational Institution
(j) Other Offices or Institutions, in such case.
104
Continued .. .
Responsibilities of the organization deducting VAT

at source:
Section-6(4kha), Rule-18(kha)
The person deducting VAT at source will issue a certificate in
triplicate, within five (05) working days, by and through the
prescribed rules. S/he will send one of its copy with treasury
challan in original to the Circle officer of that area, another
copy along with photocopy of the treasury challan to the
supplier of the product or the service and the rest will remain
with him/her possession. The above mentioned certificate
regarding deduction of VAT at source on form Mushak12Kha will include the following information.
1. VAT Registration number of the taxpayer
2. Total value or commission against the product or services supplied
3. Taxable Value or commission of taxable product or service
4. Amount collected or deducted as VAT
5. Other necessary information
105
Continued
The person deducting VAT at source will deduct VAT at the
rate shown against each item in the truncated base SRO or @
15% on the paid value in case where there is no truncated rate.
But VAT will not be deducted at source only in case the service
provider renders the service or the suppliers of the goods
supplies through VAT challanpatra (Mushak-11).
Section-6(gha)
The supplier of goods or services will not be entitled to get

excuse from the obligation of paying VAT of the rest amount
even after s/he deducted partly against any supplies.
[Section- 6(4cha)]
Both the person deducting VAT at source and the provider of
product or service will bear combined responsibility as for the
payable amount of VAT at source. Section-6(4uma)
106
Continued
Legal restrictions for the organizations realizing/

deducting VAT at source or the payers of the
value or commission for the service . Section-6(4ga)
If the organization or person deducting VAT atsource or the payer of the value or commission
fails to collect the VAT at source and/or to
deposit the amount to the Public Treasury Section 37(3), Rule-18kha]
The amount with 2% interest per month will be recoverble from him/ her, considering him/ her as a registered
person under section 6(4kaka).
107
Continued
Rule- 18kha
The person deducting VAT at-source will deposit the amount to
the Public Treasury in favor of his concerned Commissionerate
code within 15 working days from the date of deduction.
The person deducting VAT at-source will prepare 3 copies of
certificate in Form-12khaof which one is to be send with
treasury challan in original to the Circle Office of his area, one
is to be send with photo copy treasury challan to the supplier of
services and another copy will be preserved in his or her office
for six (6) years.
The person deducting VAT at-source will show the amount of
deducted VAT against Sl. No. 5 of Form-19 within the
respective tax period and the supplier will show the amount of
deducted VAT against Sl. No. 19 of the Form-19 within the
respective tax period or next tax period.
Government of the Peoples Republic of Bangladesh

National Board of Revenue
Dhaka.
Mushak-12kha
Certificate of VAT deducted at Source

(Note Rule 18kha)
The name of person deducting VAT at Source :
Address :
Business Identification Number (If any) :
Certificate Number :
Business Identification Number (BIN) :

Date of Issue :
I am hereby certified that, VAT at Source has been deducted form the
under mentioned supplier as per the Value Added Tax Act & Rules. The details are mentioned below :
SL
No.
Name &
address of
Supplier
Business
Identification
Number of
Supplier
Sum of money
mentioned in the
Bill/VAT
applicable Value
or Commission
of Goods or
Services
Date of Bill
Payment
Amount
of VAT
deducted
at Source
Applicable
Service
Name &
Code
Number & Date of

Book Transfer
Challan/ Receipt
/Certificate in
Support of Tax
deposit in the
treasury/online
tax payment
Remarks
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
I am (Name & Designation) ..with complete understating and

correctly furnishing the above mentioned information.
Name, Designation & Signature
To,
Revenue Officer
.Circle
Full Address..
Copy :
Managing Director/Proprietor
M/S.
Full Address.
109
Continued
Duties of a registered person at the time of supplying goods
or services to the person deducting VAT at source. (Rule-18ka)
At the time of supplying product or service against

tender or work order, the registered person -(a) Will issue a VAT challanpatra on actual rate;
(b) Will mention the total amount of VAT on sales invoice or
commercial document; and
(c) Will mention the VAT Registration No. and the matter of
supplying product or service against a tender or a work
order on sales invoice or commercial documents.
110
Deduction of VAT at source on Misc. Fee, Royalty,

Charge etc.
[Rule - 18uma]
VAT Shall be realized or deducted, If under mentioned
services are provided by the Govt. Semi- govt.
autonomous and local authority :
(a) On the total money received at the time of issuance
of license, registration, permit or renual
(b) On the total money received as revenue sharing,
royalty, commission, charge, fee, registration, permit
or in other way under the conditions mentioned in the
issued license, registration, permit
VAT Shall be realized or deducted on the total money
received at the time of rendering connection for
water, power, gas and telephone by the connection
rendering organization
Continued
General Order no. 24/VAT/2013, dated 06 June, 2013

of National Board of Revenue
The Board, with the power given in section 6(4kakaka) of
the Act, has determined, for the purpose of collection,
deduction of VAT at-source and deposit the amount to the
Public Treasury by the receiver of the service, in case of
the service being received by the government organization,
semi-government organization, autonomous organization,
private organization (NGO), bank, insurance company,
financial institution, limited company, or educational
institution.
Thirty seven (37) services are shown in Column (3) of the
following table in this regard :
112
Continued
Heading No)
Service Code
Service Provider
(1)
(2)
(3)
S002
S002.00
Decorators & Caterers Workshops

Advertising Firms
S003
S003.10
Motor Car Garages &
S003
S003.20
Dockyards
S004
S004.00
Construction Firms
S007
S007.00
Advertising Firms
S008
S008.10
Printers
S009
S009.00
Auctioneers
S010
S010.10
Land Developers
S010
S010.20
Building Construction Firms
S014
S014.00
Indenters or Indenting Firms
S020
S020.00
Surveyors
S021
S021.00
Renters of Plant or Capital Machinery
S024
S024.00
Furniture Sales Centre
113
Continued
S028
S028.00
Courier service & Express Mail Service
S031
S031.00
Person, Institute or Organization Engaged in

Repairing or Servicing of Taxable Products
against consideration.
S032
S032.00
Consultancy Firm and Supervisory Firm
S033
S033.00
Izarader
S034
S034.00
Audit & Accounting Firm
S037
S037.00
Procurement provider
S040
S040.00
Security Services
S045
S045.00
Law Consultant
S048
S048.00
Transport Contractor
S049
S049.00
Rent-a-car
S050
S050.10
Architect, Interior Designer or Interior Decorator

114
Continued
S050
S050.20
Graphic Designer
S051
S051.00
Engineering Firm
S052
S052.00
Renters of Sound and Lighting Equipments
S053
S053.00
Joiners to Board Meeting
S054
S054.00
Broadcaster of Advertisement through Satellite channel
S058
S058.00
Renters of Chartered Aero plane or Helicopter
S060
S060.00
Buyers of Auctioned goods
S065
S065.00
Building, Floor and Premises Cleaning or Maintenance

Firm
S066
S066.00
Seller of lottery tickets
S071
S071.00
Event Management Firm
S072
S072.00
Human Resource Supply or Management Firm
S099
S099.10
Information Technology Enabled Services
S099
S099.10
Information Technology Enabled Services
S099
S099.20
Other misc. Services
S099
S099.30
Sponsorship services
115
DISPUTE RESOLUTION AND ALTERNATIVE DISPUTE

RESOLUTION (ADR)
Value Added Tax Act, 1991 contains a very standard procedure of dispute
resolution in which issuance of show cause notice, hearing, adjudication/
judgment, appeal and revision are clearly spelled and exercised.
Offences and Penalties
[ section 40 ]
Offences under VAT Act and Rules.

Power of Adjudication.
A. Incase of import and export as per the provision of section 179 of
Customs Act.
B. Incase of goods supplied or services rendered adjudication by VAT
officers as mentioned below:
116
Continued
(a) Forfeiture of goods or services and imposition of

penalty involving duty evasion
(i) Commissioner : Value of goods or taxable services exceeding taka 20 lac.
(ii) Addl. Commissioner: Value of goods or taxable services not exceeding taka 20 lac.
(iii) Joint Commissioner: Value of goods or taxable services not exceeding taka 15 lac.
(iv) Dy. Commissioner: Value of goods or taxable services not exceeding taka 10 lac.
(v) Asst. Commissioner: Value of goods or taxable services not exceeding taka 5 lac.
(vi) Revenue Officer : Value of goods or taxable services not exceeding taka 2 lac.
(b) Other penalties excepting the penalties mentioned above in the

clause (a).
(i) Divisional Officer : Full Power.
Explanation:
To ascertain the value of goods or taxable services mentioned in the clause (a)
and (b), the value of the vehicle carrying the seized goods or services will not
the included.
117
Continued
Confiscation, Fine and Penalties.

Appeal and Revision.
Appeal to the Commissioner of Appeal
Appeal to the Appellate Tribunal
Appeal to the Hon'ble High Court
Appeal to the Appellate Division the Hon'ble Supreme Court
ALTERNATIVE DISPUTE RESOLUTION (ADR)

In spite of the provision of Adjudication, Judgment, Appeal in the VAT act
an aggrieved person may apply for disposal of his case through
Alternative Dispute Resolution procedure in respect of a case pending
before the VAT authority or Appeal authority or a dispute under section
41(ga).
The facilitator appointed by NBR will deal the ADR cases as the
118
procedure laid down in the rule.
EXPORT INCENTIVES, DUTY DRAWBACK

Almost every countries in the world provide zero rate and
incentives to encourage and boost export. Bangladesh is also
maintaining the same policy.
Zero rate (0%) for all Export
Export
Deemed export
Foods and other goods supplied to a foreign going
conveyances for consumption
Moreover there are incentives against export of some items.

These are :
Fish, textile, etc.
119
Continued
Export procedure
Prepare the Packaging of goods
Application to VAT superintendent for examination of goods in VAT
Form-20
Examination of goods by the Inspector
Permission for export by the Customs Officer, if the seal of the
packages are intact
AC or officer above than AC may order for re-examination
or --
Export procedure
Application to VAT superintendent to examine the goods at the
exporting port in lieu of manufacturing place

Mentioning Examination is to be done at the exporting port by the
inspector of VAT
Examination and certification of export by the inspector of customs
after by the exporter after getting from customs station
120
Continued
Postal Export
Certification of export by the Head Postmaster after
exportation
Sending of export documents to Customs & Exporter by the
Postmaster
Submission of export documents to the superintendent of
VAT by the exporter
Non applicability of the above provisions
100% exporting industry

Exports done by the Commercial Exporter
Industries exempted from VAT
Export of goods and services exempted from VAT
121
DUTY DRAWBACK
[ Section 13 ]
Any person shall be entitled to drawback of Customs Duty ( CD ), SD,

VAT, Excise Duty and all other duties and taxes paid on any input used
in the manufacture or production of
exported goods or services; or
goods or services deemed to have been exported; or
any food or consumables mentioned in sub-section (2) of
section 3. t
No person shall be entitled to duty drawback, if

Income Tax paid in Advance ( AIT );
Determined by the Govt. in the official gazette in this respect the
SD paid on any input used in the prod. or manufacture of goods

exported.
The drawback is not claimed within the 6th month of export or
deemed export.
122
Continued
Not-withstanding anything contained in sub-section (1) govt.

may by notification in the official gazette, determine the rate of
drawback of VAT and other duties and taxes where applicable,
paid on certain input used in the production or manufacture of
goods or services exported or deemed to have been exported
Any exporter may adjust his all duties and taxes supposed to
be drawn back under sub-section (1 )
NBR may, by order notified in the official gazette, instruct to
repay the amount of duties and taxes paid on the input used in
the goods exported, on consignment basis or where applicable
on flat rate determined by NBR on the basis of input-output coefficient of goods exported.
NBR may, by order published in the official Gazette, direct the

payment of drawback of VAT or where applicable, VAT and SD
paid by any person or organization on locally produced goods
or services, subject to such condition as specified in the order
for the implementation of any international agreement.
123
REFUND IN VAT SYSTEM

Applicability
VAT or SD or Turn over Tax paid or paid in excess inadvertence,
erroneously or for misinterpretation or for other reason

Refund should not be given, if the application of refund is not submitted
within six month of payment
Refund is not payable if their is any scope of adjustment against input
tax credit
Procedure
Apply in Form TR-31 in triplicate to the divisional officer of VAT and
for the custom house to the DC/AC nominated by commissioner

Sanction of refund by the D.O or DC/AC customs having confirm
about the genuinely of the refund
Pre-audit by the office of the commissioner
Disposal of refund application within 90 days
124
ENFORCEMENT AND AUDIT MANAGEMENT

ENFORCEMENT
[Section 25, 26, 26kha, 27, 28, 29, 30, 48, 48ka, Rules 7 ]
Power of sending summons

Power of entering into the production place, service rendering
place, business place & houses.
Power to examine store of goods, raw material and services.
Power to examine accounts, files and documents.
Power to execute supervised supply and monitoring.
Power of search and seizure of confiscable goods and
management of seized goods.
Power of search of any house or vehicle or place.

Power to call for any files and documents and seizure of the
same.
Power of a first class magistrate with regards to the enforcement
125
of VAT act & rules.
Continued .. .
AUDIT MANAGEMENT
Effective and in-depth audit by the VAT officers for
the Taxpayers education
better compliance
the strict enforcement of law
minimizing tax evasion
proper and maximum realization of revenue
VAT audit is also conducted by Directorate of Audit,

Intelligence & Investigation, Value Added Tax and
Directorate of Local & Revenue Audit
126
FACTORS AND CONSTRAINTS IN VAT MANAGEMENT

OF BANGLADESH
There are so many factors and limitations to implement and
run the modern VAT system in Bangladesh. Shortly these
are mentioned below:
Lack of modern tax culture in the trade sector and Govt.

machinery
Negative mentality of the business people about the
payment of tax
Excessive wants of manpower
Lack of adequate education and skill in the filed level of
tax department
In adequate fund and logistics for the tax department
Lack of automation
127
REALATION BETWEEN VAT AND INCOME TAX

Formulation of policy and discharging the duties under the same Board
and same Division/Ministry.
Use of same business information, Data and Statistics of a Taxpayer by

three wings.
Use of Income Tax Return incase of actual payable VAT realization.
Role of CIC for VAT and Income Tax.
Obligation of using TIN in VAT Registration certificate.
Use of Bill of Entry of Customs and VAT Challan (Mushak-11, 11ka, 11ga,
11gha), Purchase register (Mushak-16), Sales register (Mushak-17),
Account current register (Mushak-18) and Return (Mushak-19) incase of
assessing actual Income Tax.
Wide network between Custom Houses/Stations, VAT field offices, Income
Tax offices and NBR for exchanging free flow of information.
128
(B) CUSTOMS MANAGEMENT

AND
FORMALITIES
Md. Abdul Kafi

Commissioner
Large Taxpayers Unit, VAT
129
ORGANISATIONAL STRUCTURE
BANGLADESH CUSTOMS
MINISTRY
OF FINANCE
FINANCE
DIVISION
INTERNAL
RESOURCES
DIVISION
ECONOMIC
RELATIONS
DIVISION
Bank & Other Financial

Institutions
NATIONAL SAVINGS
DIRECTORATE
NATIONAL BOARD
OF REVENUE
WINGS
OF NBR
INCOME TAX
WING
VALUE ADDED
TAX WING
CUSTOMS
WING
RESEARCH &
STATISTICS
WING
ADMINISTRATION
WING
OFFICES UNDER
THE CUSTOMS
WING
6 (SIX)
CUSTOM HOUSE
178
LAND CUSTOMS
STATIONS
CUSTOMS
INTELLIGENCE &
INVESTIGATION
DIRECTORATE
2 (TWO) CUSTOMS
BOND
COMMISSIONERATE
CUSTOMS
VALUATION & AUDIT
COMMISSIONERATE
130
OFFICES UNDER THE CUSTOMS WING OF NBR

6 CUSTOM HOUSES
178 LAND CUSTOMS STATIONS
DIRECTORATE OF CUSTOMS INTELLIGENCE &
INVESTIGATION, DHAKA
2 CUSTOMS BOND COMMISSIONERATE, DHAKA
& CHITTAGONG
CUSTOMS VALUATION & INTERNAL AUDIT
COMMISSIONERATE, DHAKA
131
CUSTOMS STATIONS
6 (SIX) CUSTOM HOUSES
CHITTAGONG CUSTOM HOUSE (SEA PORT)

MONGLA CUSTOM HOUSE (SEA PORT)
DHAKA CUSTOM HOUSE (AIR PORT)
ICD CUSTOM HOUSE, KAMALAPUR
(INLAND- RAIL)
BENAPOLE CUSTOM HOUSE (LAND PORT)
PANGAON CUSTOM HOUSE (RIVER PORT)
178 LAND CUSTOMS STATIONS

16 OPERATIONAL
162 DORMANT
132
REVENUE PERFORMANCE CUSTOMS

FY 2011-12
(Rev. Figure in Crore Tk.)
94454.11
100000
80000
52711.22
60000
28735.83
40000
13307.02
20000
0
Customs
Income Tax
VAT
NBR
Total Revenue of Import level 31445.56 (CD+RD+ED+SD+VAT),

33.19% of Total NBR Revenue.
133
Duties and Taxes
Customs Duty (CD)
25%, 12%, 5%, 3%, 0%
Regulatory Duty (RD)
5%
Supplementary Duty (SD)
500%, 350%, 250%, 150%,

100% 60%,45%, 30%, 20%
Value Added Tax (VAT)
15%
Advanced Income Tax (AIT)
5%
Advanced Trade VAT (ATV)
4% net (15% on 26.67%

value addition)
134
TARIFF REGIME IN BANGLADESH

Tariff Structure
Our tariff structure is signified by cascading tariff rates:

(Higher rate on finished goods, lower rate on intermediate
products and basic raw materials and lowest rate on
Capital Machinery & Spares)
1.
2.
Finished products
Intermediate products; Also Intermediate
Raw materials that have local production
Basic Raw materials that do not
have domestic production
Capital Machinery, Spares & computer items
There is also a Zero rate
25%
12%
Regulatory duty (RD) on all goods under

25% CD and Powdered milk imported in bulk
except some item benifited under SRO and Order
5%
3.
4.
5.
5%
3%
0%
135
Tariff Structure
(Basis or Formula of calculation)
Ad valorem duty: Fixed percentage of the value of the
product (25% customs duty on Motor car)
Specific rate of duty: Fixed sum of money per physical unit
of the product (e.g. Tk. 1500/MT. on Raw sugar, Tk. 3,000
on Refined sugar and Tk. 500/MT. on Clinker)
Bound duty: Maximum Duty rate that a country can impose

on a product. Agreed under WTO negotiations. Bangladesh
has bound duty basically on food products.
136
Value Calculation for Ad-valorem

Free on Board (F.O.B): price of the product on board
a vessel at the time of embarkation
Cost & Freight (CFR): price that include F.O.B. price

and the transportation cost from the country of
exportation to the country of importation
Cost, Insurance & Freight (C.I.F.): price that includes

price of the product up to the port of entry
137
Prohibitions & Restrictions on Import & Export
Section 15
Import is banned on -
Counterfeit coin
Forged or counterfeit currency notes
obscene book, photo, article, paint
Goods having counterfeit trade mark or a false trade
description
Goods with a trade mark that is used by any producer in
Bangladesh (with exceptions)
Piece-goods manufactured outside Bangladesh
Goods with a design that is patented in Bangladesh
Smuggle
[ Section 2 (S) ]
Smuggle means to bring into or take out of Bangladesh in breach

of any prohibition or restriction for the time being in force or
evading payment of customs duty or taxes leviable thereon,
..
..
..
Section 16
Power of Government to prohibit or restrict importation or
exportation of goods.
Section 17
Goods brought in violation of Sections 15 and 16 to be
detained and confiscated and shall be disposed of.
139
Imposition of Duty
Goods Dutiable (Section 18)
Customs Duty Rate of Duty shall be Levi-able as are prescribed in the
First Schedule or any other law for the time being in force on
(a) Goods imported into, or exported from Bangladesh
(b) Goods brought from any foreign country to any customs station of
BD and without payment of duty there, transhipped or transported
to any other customs station.
(c) Goods brought in bond from one customs station to another
Provided, no Customs Duty shall be levied in the following cases :
i) If the value of the goods in any one consignment does not exceed
Tk. 1000 ; and
ii) The total amount of such duty and Tax does not exceed Tk. 1000.
Regulatory Duty In addition to customs duty Govt. may, by notification

in the official gazette levy Regulatory Duty on all or any of the goods
specified in the First Schedule at the rate not exceeding the highest rate
of customs duty in the First Schedule subject to such conditions,
limitations or restrictions as it deem fit to impose.
140
Continued .
Imposition of Duty
Countervailing Duty (Section 18A)
Subsidy on manufacturing or transportation in the exporting
country and imported into Bangladesh. Countervailing
Duty not exceeding the amount of subsidy.
Anti dumping duty (Section 18B) Goods exported from

any country to BD with a value less than normal value.
Anti-dumping Duty not exceeding the margin of dumping.
Safeguard Duty (Section 18E) Increased quantities of

importation which may cause injury to domestic industry
safeguard Duty on that article.
141
Exemptions
Section 19 : (General)
Govt. if satisfied in the public interest to do so, it may,
by notification in the official gazette, subject to such
conditions, limitations or restrictions exempt whole or
any part of customs duties chargeable thereon.
If exemption is given on a goods, the rate of duty

cant be
changed more than once in that FY.
Exemption granted shall be effective from the
date mentioned in the notification.
142
Continued .
Exemptions
Section 20 (Special)
Government may provide whole or partial exemptions
under exceptional circumstances to any particular
goods subject to some conditions, limitations or
restrictions.
Difference between 19 & 20:

Section 19: General Exemption
Section 20: Specific Exemption
Section 21
NBR may order to deliver certain goods without payment of customs
duty and to repay duty on certain goods subject to such conditions,
limitations or restrictions as it thinks fit.
143
Valuation
Section 25 (1): Transaction Value
(a) Value Actually paid
(b) Value to be payable
Detailed by Valuation Rules, 2000.
Previous Basis was

1. BDV (Brussels Definition of Value)
(Example: Quaker Oats, Titan)
2. Tariff Value
144
Normal Value vs. Transaction Value

Price of Hilsha Fish
For 5 buyer 300

For A
- 280
Normal (A)
Transaction (A)
300
280
Transaction Value Methods
Transaction value
Transaction Value of identical goods
Transaction Value of similar goods
Deductive method
Computed method
Fallback method
Each method must be tried in order of hierarchy
145
Section 25 (1):
Time of Importation: date of Bill of Entry submission
Time of Exportation: date of Bill of Export submission
Place of Importation: Custom House/ LCO where B/Entry is
submitted
Place of Exportation: Custom House/ LCO where B/Export is
submitted
Pre-shipment Inspection System

Section 25 A:
Government may appoint PSI company to certify on the quality,
quantity, price, description and customs classification of goods
146
Section 25 B :
PSI system is optional on all types of imported goods.
Section 25 C:
1% PSI charge deducted
PSI RULES
SRO 255/2002 (new) / SRO 316/2000 (old)
Effective from September, 2005-new / February, 2000- old)

90% goods are cleared without any physical examination
10% goods are subject to such examination (5% through
random sampling, and 5% through Commissioners selection)
147
Bill of Entry (B/E)

Section 79
LODGEMENT OF IMPORT DECLARATIONS (B/E)

* IN ALL CUSTOM HOUSES - COMPUTERISED
* IN ALL LC STATIONS MANUAL
PROCESSING OF IMPORT DECLARATIONS
* IN ALL CUSTOMS HOUSES COMPUTERISED
* IN LC STATIONS MANUAL
DOCUMENTATION CHECKING
148
The owner shall submit a bill of entry in prescribed form and with necessary
particulars before making entry for home consumption or for warehousing.
Documents to be submitted with B/E :
Letter of Credit Authorization (LCA)
Letter of Credit (LC)
Bill of Exchange
Bill of Lading (BL) / Truck Receipt / Rail Receipt
Import Registration Certificate (IRC)
Invoice
Packing list
Country of origin certificate
Radiation certificate
Insurance memo
Pre Shipment Inspection Certificate (CRF)
Value Added Tax Registration certificate etc.
TIN Certificate
B/E should be submitted and goods be cleared within 30 days (in
custom house/ LCO) or 21 days (in airport) of unloading of goods.

However, Commissioner may allow submission of B/E even before goods
arrive at the port and expected to arrive within 30 days of such submission149
Journey of Bill of Entry

Goods not selected for Examination:
Manifest section/On-line submission
Lodgment section/Pouch center
Assessment Section
(a) Principal Appraiser
(b) Appraiser
Treasury for Payment of duty
Treasury SPEED section for release order
Port Gate for actual delivery/release
150
Goods selected for Examination:
Manifest section/On-line submission

Lodgment section/Pouch Center
Jetty Examination
Commissioner
Assessment Section
(a) AC/DC/JC
(b) Principal Appraiser
(c) Appraiser
Treasury for Payment of duty
Treasury SPEED section for release order
Port Gate for actual delivery/release
151
Bill of Export
Section 131
(1) The owner shall submit a bill of export (Shipping Bill) in
prescribed form and with necessary particulars before
making entry for exportation.
(2) NBR may allow any specific goods or a class of goods to be
exported within submission of Shipping Bill or payment of
duty.
Assessment of duty
Section 80 (1) :
First Appraisement (from 10%)
Once B/E is submitted, goods shall without undue delay be

examined or tested in presence of the owner and then be
assessed to duty and allowed for clearance
152
Assessment of duty
Section 80 (2) :
Second Appraisement (from 10%)
Goods shall be assessed first and then will be subject to
examination or test at the time of delivery. In case of any
evidence of mis-declaration, goods will be reassessed
Section 80 (3) :
Exemption from examination:
Government may exempt any goods or a class of goods from
the requirement of physical examination (As is done under the
PSI system)
153
Provisional Assessment
Section 81 (1) :
Goods will be assessed provisionally by an AC if
It requires chemical or other test or a further enquiry for purposes of

assessment,
All documents or complete documents or full information are not
furnished ;
Provided that the importer submits a security or bank guarantee
Assessment of duty
Section 81 (2) :
Once assessed provisionally, final assessment should be made
within 120 days of provisional assessment date, and security/bank
guarantee be settled on the basis of final assessment results.
NBR may extend the period under exceptional circumstances,
recorded in writing.
154
Amendment of Assessment
Section 83A (1) :
AC or above can make amendment to assessment of duty or
value from time to time to ensure correctness
Section 83A (2) :

If it imposes liability to importer, he will be given a demand
notice
Section 83A (3):

Due date of payment is 30 days from issuance of notice
Section 83B :
Amendment of assessment to increase the amount has to be made
within 3 years of original assessment
155
Assessable Value
Assessable value for Customs Duty (CD):
FOB Price
+ Freight (actual freight charge or 20% of
Value, if Freight Receipt is unavailable)
= C&F Price
+ 1% Insurance Fee
= CIF price
+ 1% Landing Charge
= Assessable Value
HS Code
(Harmonised Commodity Description and Coding System)
Nomenclature of goods, classification of goods.
System of coding the goods numerically and to assess particularly.
Number of sections 21 and Chapter 98
Four digit heading for world wide and Eight digit for Bangladesh.
156
Calculation of Duty
Customs Duty (CD) and Regulatory Duty (RD)
Flat on Value:
If assessable value
if rate of CD
then amount of CD
if rate of RD
is
is
is
is
then amount of RD is
100.00
25%,
25.00
05%
05.00
157
Supplementary Duty (SD):
Based on :
Value+ CD
If assessable value
if rate of CD
If the rate of RD
and if rate of SD
then amount of SD
is
100.00
is
25%
is
05%
is
20%
is =(100+25+5) X
20%
= 26.00
[i.e, Assessable value for SD=130.00]
158
Value Added Tax (VAT) :
Based on :
Value+ CD+RD+ SD
If assessable value
if rate of CD
If the rate of R
if rate of SD
& rate of VAT
is
is
is
is
is
100.00
25%
05%
20%
15%
then amount of VAT
is
= (100 + 25+5 +
26) x rate of VAT 15%
=156x15% = 23.40
[i.e, Assessable value for VAT=156.00]

159
Advanced Income Tax (AIT):
Flat on Value: if assessable value
And rate of AIT rate
is
is
100.00
5%
then AIT amount of AIT is = 100 X 5% = 5.00
160
Advanced Trade VAT (ATV):
Based on Value
+ CD+ RD +SD + 26.67%
(Value addition)
If assessablee value
CD
RD
SD
VAT
AIT
ATV
is
is
IS
is
is
is
is
then amount of ATV

={(100+25+5+26)+41.60}
x rate of ATV 4%
is
= 197.60
= 7.90
100.00
25%
5%
20%
15%
5%
4%
Total amount of duties & taxes

(25+5+26+23.40+5+7.90)
= 92.30
PSI Charge :
Flat on Value:
If assessable value
and PSI charge
then PSI charge
is
is
is
100.00
1%
1.00
161
Total Duty and Taxes on Imports

Consider the total duty and taxes on the import of one motor car that costs Tk.
5,00,000/= CIF. This car is subject to a 25% CD ; 5% RD, 20% Supplementary Duty,
15% Value Added Tax (VAT), 5% AIT and 4% ATV. Total duty & taxes for this car
amount to:
CIF price+1% Landing Charge
Tk. 5,05,000.00
Import Duty at 25% Flat;
Tk. 1,26,250.00
Regulatory duty at 5% Flat;
Tk.
SD at 20%
Tk. 1,31,300.00
VAT at 15%
Tk. 1,18,170.00
AIT at 5% Flat
Tk.
ATV at 4% (Rate of value Addition 26.67%)
Tk. 39,916.25
---------------------Tk. 4,66,136.25
Total duty & taxes on the car is
25,250.00
25,250.00
Total price of the import, landed (with all duties & taxes)= Tk. 9,71,136.25
162
Clearance for Import

Section 83 (1) :
Clearance order (release order) for importable goods will be
given once duty is paid
Section 83 (2) :
An importer or a class of importer may be allowed clearance
without any release order
Clearance for Export

Section 131:
Clearance order for export will be given onceBill of export/Shipping Bill submitted
Duties applicable paid
Assessment completed/Shipping Bill approved by Appraiser/
Inspector
163
Auction
Section 82 (1):
Goods will be auctioned, after serving due notice to the
owner, if they are not cleared or entered into home
consumption or transshipped within 30 days (in custom
house/ LCO) or 21 days (in airport) of unloading of goods.
Acceptance of Bid:
(A) Allow sale at first auction, if 60% of reserve value

covered
(B) Allow sale at second auction, if bid is higher than first
auction
(C) Allow sale at third auction whatever it is the bid.
164
Auction
Section 201:
Sale proceeds is to be distributed in the

following manner(a) first to pay expense of sale
(b) then to pay freight/other charges
(c) then to pay duties and taxes
(d) then to pay charges of the custodian
(e) then to pay the owner (supplier), if he applies within six
months of auction.
165
Warehousing/Bond
Sections 12-13:
These sections provides authority to appoint public
warehouses (e.g. Chittagong port, Dhaka Airport, Benapole
land port etc.) and to issue licenses to private warehouses.
Sections 84-119A:
Provide elaborated and detailed guidelines for the operation
of bonding and warehousing system
*Important sections are Section 95 that allows manufacturing and other operations at
warehouses
166
Warehousing/Bond
Section 98 that specifies the period for goods to be
warehoused, and
Section 104 that outlines the procedure for clearance of
bonded goods for home consumption
Types of Warehouses
100% Export Oriented Bond

(e.g. Woven and Knitted garments)
(24 Months + 6 Months)
Free
167
Types of Warehouses
Specialized Bond
(a) Deemed
Free
(e.g. deemed exporters such as plastics, dyeing, packaging)
Deemed means selling inputs/services to exporters.
(b) Guarantee-based
Partial BG
(e.g. leather, ship building etc.)
BG refunded once export is established
168
Types of Warehouses
Diplomatic Bond
Free
(e.g. for diplomatic/privileged persons)

(12 months + 6 months)
Home consumption Bond
BG
(e.g. crude edible oil, MS products/CR coil/HR coil

as raw materials)
BG returned when duty is paid during removal from bond.
(6 months + 6 months)
169
THANKS
THANKS

Taxation Course

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WELCOME

INDIRECT TAXES (VAT & CUSTOMS)

August 2014 January 2015

MD. ABDUL KAFI

Brief history on introduction of VAT system in Bangladesh.

Organizational structure and manpower of Bangladesh VAT

Contribution of VAT in the NBR Revenue

Basic concepts & determination of VAT

The Act and the Rules

Taxes under VAT system

Applicable area of VAT

Exemption of VAT and SD.

Exemption benefits for Cottage Industries

Input tax credit mechanism.

Importance and procedure of valuation under VAT system

Business process under VAT system

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Tolleys Value Added Tax Rhianon Davies & David Rudling

The Modern VAT International Monetary Fund (IMF)

(B) Customs Management and Formalities

Organizational structure and manpower of Bangladesh Customs

Revenue performance of customs

Duties and Taxes under Customs Management

Tariff regime in Bangladesh

Prohibitions & Restrictions on Import & Export

Valuation, Transaction value method, PSI system

Bill of Entry, Clearance procedure

Bill of Export, Export procedure

H. S. Code, Assessment of duty

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Development budget was dependent on Paris Consortium

With the recommendation and help of Intl. Monetary Fund (IMF)

The Customs and Excise Department was entrusted to implement

At the time of introduction, VAT system was introduced

the import stage, manufacturing stage and service rendering stage

Later on Electricity duty, Advertisement tax and Guest Control fee

Disadvantages of Excise System

Narrow tax base

Advantages of VAT System:

ORGANIZATIONAL STRUCTURE AND MANPOWER OF

Internal Resources Division (IRD)

Value Added Tax (VAT)

MAIN FUNCTIONS OF NBR

Value Added Tax

TO PROVIDE WAIVERS AND INCENTIVES UNDER DIFF. TAX LAWS

National Board of Revenue (NBR)

National Board of Revenue (NBR)

Bank & Financial

ORGANISATIONAL STRUCTURE OF BANGLADESH VAT

DUTY EXEMPTION &

ORGANISATIONAL STRUCTURE OF VAT FUNCTIONAL UNITS

[VAT Field Administration]

Each Commissionerate Office is headed by a Commissioner, Division Office is headed by a

Number of VAT Offices under VAT

VAT Divisional Offices

VAT Circle Offices

VAT Ranges/ Areas

Manpower under VAT

System Analyst / Senior Programmer

Programmer / Assistant Programmer

Motor Vehicle Driver

CONTRIBUTION OF VAT IN NBR REVENUE

(Rev. Figure in Crore Tk.)

VAT Revenue (VAT+SD+Turnover Tax+ Excise Duty) includes19