How To Calculate Taxable Income from Company.

A business tax return is usually an income tax return. The return consists of tax calculation sheet, tax assessment information, income details, income tax exemption related information, profit & loss statement, balance sheet, bank account details, enclosures & acknowledgement receipt. For calculating taxable income, you need to follow a lot of rules & regulation as per income tax ordinance, 1984. At first you have to prepare financial statement. It is must be audited by chartered accountancy firm. After receiving audited financial statement, you will calculate total taxable income.

Here the question is Where you will find income tax return form? What is the tax rate for company? How to calculate total taxable income? In which cases expenses not admissible from income?

I will help you answer all these question in this post. You’ll get a clear snap short, even you’re a beginner just follow utilize this & boost your productivity for company tax calculation. Let’s start.

Where you will find income tax return form?

You can find income tax return form from National Board of Revenue website.

• Open any browser.
• Go to www.nbr.govt.bd
• Click on Form Section
• Income Tax
• Find IT-11GHA2016
• Download it.

What is the tax rate for company?

How to calculate total taxable income?

Here you will find a calculation process.

Calculation of Taxable Income

In which cases expenses not admissible from income?

No deduction on account of allowance from income from business or profession shall be admissible in respect of the following, namely:

(a) Salaries paid without deducting TDS (As per Section 50)

Any payment made to payee without deducting tax at sources classifiable under the head ‘Salaries’.

(aa) Any head of expenses can be inadmissible expenses if Tax not deducted at sources.

Any payment is made by an assessee to any person if tax thereon has not been deducted and credited.

(aaa) Any payment by way of salary to an employee without TIN

Any payment by way of salary to an employee without having twelve-digit Taxpayer’s Identification Number.

(aaaa) Statement regarding filing of return of employees under section 108A

Any payment made by way of salary to an employee for whom the statement under section 108A was not provided;

(b) Any payment (interest, salary, commission or remuneration) made to a Partner or member of any Association of Persons

Any payment by way of interest, salary, commission or remuneration made by a firm or an association of persons to any partner or any member of the association of persons.

(c) Brokerage or commission paid to a non-resident without deducting tax

Any payment by way of brokerage or commission made to a person who is not a resident in Bangladesh unless tax (TDS) has been deducted therefrom under section 56.

(d) Any payment to provident fund or other fund without deducting tax

Any payment to a provident fund or other fund established for the benefit of the employees unless the employer has made effective arrangements to secure that tax shall be deducted at source from any payments, made from the fund, which are taxable being income falling under the head “Salaries”

(e) Perquisites exceeds allowable limit.

Perquisites limit for any employee as exceeds [Tk. 1,000,000 (Ten lakh).

For person with disability, as exceeds Tk. 2,500,000 (twenty-five lakh).]

Provided that above mentioned shall not be applicable to an employee in pursuance of any Government decision published in official Gazette to implement the recommendation of a wage Board constituted by the Government.

(f) (i)  Expenses incurred for Entertainment.

The amounts or rates in excess of which no deduction shall be admissible for the expenditure in respect of entertainment are specified below:[ Rule 65]

(f) (ii) Expenses incurred for Foreign travels of employees for holidaying and recreation.

(1) The allowance in respect of expenditure on foreign travels for holidaying and recreation of the employee and his dependents in excess of

• The amount equivalent to three-month basic salary of the employee or
• Three-fourths of the actual expenditure, whichever is less,

Foreign travels allow once in every two years, shall be admissible.

Explanation: For the purposes of this rule—

(a) ‘basic salary’ means the pay and allowance payable monthly, but does not include–

(i) dearness allowance or dearness pay unless it enters the computation of superannuation or retirement benefits of the employee concerned;

(ii) employer’s contribution to a recognized provident fund or a fund to which the Provident Fund Act, 1925(XIX of 1925) applies and the interest credited on the balance of an employee in such fund;

(iii) allowance which are exempt from payment of tax; and

(iv) allowance; perquisites

(b) ‘employee’ includes a director of a company working full-time for one company; and

(c) ‘dependents’ means an employee’s spouse and minor children including step and adopted children. [Rule 65A]

(2) Notwithstanding any this contained in this rule, any expenditure on foreign travels under sub-rule (1) for which payment has been made in a sum exceeding Tk. 10,000 shall not be allowed as a deduction unless such payment is made by a crossed cheque drawn on a bank or by a crossed bank draft.

(f) (ii) Expenses incurred for Distribution of free samples.

The rates in excess of which no deduction shall be admissible for expenditure in respect of distribution of free samples are as follows: [Rule-65C]

(g) Head Office or Intra-group expenses

Any expenditure exceeding 10% of the Net Profit disclosed in the statements of accounts by way of head office or intra-group expense called by whatever name by a company not incorporated in Bangladesh.

(h) Royalty, technical   service   fee, technical know-how fee or technical assistance fee

Royalty, technical services fee, technical know-how fee or technical assistance fee or any fee of similar service expenditure limit:

(i) Any cash payment by way of Salary to an employee having gross monthly salary of Tk. 20,000 or more

Any payment by way of salary or remuneration made to an employee by a crossed cheque or bank transfer to an employee having gross monthly salary of Tk. 20,000 or more. Unless it is inadmissible expenses.

(ii)  Any payment exceeding Taka 500,000 for purchase of raw material.

Any payment exceeding Taka five lakhs paid by person on account of purchasing of raw material otherwise than by bank transfer;

(j) Incentive bonus

Any expenditure by way of incentive bonus exceeding 10% of the Net Profit disclosed in the statements of accounts

(k) Overseas traveling

Any expenditure by way of overseas traveling exceeding 0.50% of the disclosed turnover.

Provided that nothing of this clause shall apply to the overseas traveling expenses by an assessee engaged in providing any service to the Government where overseas traveling is a key requirement of that service;

(l) Commission paid or discount made to a shareholder director

Any payment by way of commission paid or discount made to its shareholder by a company.

(m) Cash payment over Tk. 50,000

Any payment by a person exceeding taka 50,000 or more, other than by bank transfer excluding –

(i)  salary or remuneration made to any employee without prejudice to an obligation referred to in clause (i)

(ii) any payment for government obligation;

(iii) any payment on account of purchase of raw material;

(n) Office rent paid without a crossed cheque or bank transfer

Any payment by way of any rent of any property whether used for commercial or residential purposes, other than a crossed cheque or bank transfer

(o) Fail to obtain TIN

Any payment made to a person who is required to obtain a twelve-digit Taxpayer’s Identification Number fails to hold the same at the time of payment.

(p) Promotional Expenses exceeding 0.50% disclosed business turnover

Any promotional expense exceeding zero-point five percent (0.50%) of the disclosed business turnover.

Explanation-1. For the purpose of the clause (p) ‘promotional expense’ means any expense incurred by way of giving any benefit in kind or cash or in any other form to any person for the promotion of business or profession.

Sec-30A Provision for Dis-allowance:

Notwithstanding anything contained in sections 28, 29 & 30, the DCT shall not make any dis-allowance or deduction for any year from any claim made by the assessee in the trading account or, profit or loss account without specifying reason for such allowance or deduction.

Sec-30B Treatment of dis-allowances:

Notwithstanding anything contained in section 82C or any loss or profit computed under the head “Income from business or profession”, the amount of dis-allowances made under section 30 shall be treated separately as “Income from business or profession” and the tax shall be payable thereon at the regular rate.

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