Save as otherwise provided, in this Ordinance, all incomes shall, for the purpose of charge of income tax and computation of
total income, be classified and computed under the following heads of income, namely:-

(a) Salaries.

(b) Interest on securities.

(c) Income from house property.

(d) Agricultural income.

(e) Income from business or profession.

(f) Capital gains.

(g) Income from other sources.

21. Salaries.—

(1) The following income of an assessee shall be classified and computed under the head "Salaries", namely:-
(a) Any salary due from an employer to the assessee in the income year, whether paid or not;

(b) any salary paid or allowed to him in the income year, by or on behalf of an employer though not due or before it became
due to him; and

(c) Any affairs of salary paid or allowed to him in the income year by or on behalf of an employer, if not charged to income tax
for any earlier income year.

(2) Where any amount of salary of an assessee is once included in his total income of an income of an income year on the basis that it had become due or that it had been paid in advance in that year, that amount shall not again included in this income of other year.

22. Interest on securities. -

The following income of an assessee shall be classified and computed under the head "Interest on securities", namely:-

(a) interest receivable by the assessee on any security of the Government; and

(b) interest receivable by him on debentures or other securities of money issued by or on behalf of a local authority or a company.

23. Deductions from interest on securities.

(1) In computing the income under the head "Interest on securities", the following allowances and deduction shall be made, namely:

(a) any sum deducted from interest by way of commission or charges by a bank
realizing the interest on behalf of the assessee;

(b) any interest payable on money borrowed for the purpose of investment in the securities by the assessee:
 

1[Provided that no allowance or deduction on account of any interest or commission paid under clause (a) or (b), as the case may be, in respect of or allocable to the securities o Government which have been issued with the condition that interest thereon shall not be liable to, tax shall be made in computing the income under section 21;]

2[(c) ***]

(2) Notwithstanding anything contained in sub section (1), no deduction shall be allowed under this section in respect of any interest payable outside Bangladesh on which tax has not been paid or deducted in accordance with the provisions of Chapter VII

1 Ins. By F.A. 1995
2 Deleted by F.A. 1995

24. Income from house property.--

(1) Tax shall be payable by an assessee under the head "Income from house property” in respect of the annual value of any property 1[ whether used for commercial or residential purposes,] consisting of any building and lands appurtenant thereto of which he is the owner, other than such portions of the property as he may occupy for the purposes of any business or profession carried on by him, the income from which is assessable to tax under this Ordinance.

(2) Where any such property as is referred to in sub section (1) is owned by two or more persons and their respective shares are definite and ascertainable, such persom .4hall not constitution and shall not be deemed to be, an association of persons.; and for the purpose of computation of the income of an assessee in respect of that property, only such pan of income as is proportionate to the share of the assessee sha.11 be reckoned as Ws income from that property.

25. Deductions from income from house property.

(1) In computing the income, under the head "Income from house property" the following allowances and deductions shall be made, namely:-

(a) any sum payable to Government as land development tax or rent on account of the land comprised in the property;

(b) the amount of any premium paid to insure the property against risk of damage or destruction;

2[(c) ***]

(d) where the property is subject to mortgage or other capital charge for the purpose of extension or reconstruction or improvement, the amount of any interest’ payable on such mortgage or charge;

(e) where the property is subject to an annual charge not being a capital charge, the amount of such charge;

Explanation -- The expression "annual charge”, as used in this clause, includes any tax livable any tax livable, in respect of property or income from property, by

1Ins. by F. A. 2002
2Deleted by F.A. 1992

Local authority Government but does not include the tax livable under this Ordinance;

(f) where the property is subject to a ground rent, the amount of such rent;

(g) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital;

1[(gg) Where the property has been constructed with borrowed capital and no income under section 24 was earned from that property during the period of such construction, the interest payable during that period on such capital, in three equal proportionate installments for subsequent first three years for which income is assessable from that property;]

2[(h) an amount equal to one fourth of the annual value of the property in respect of expenditure for repairs, collection of rent, water and sewerage, electricity and salary of darwan, security guard, pump man, lift man and caretaker and all other expenditure related to maintenance and provision of basic services;]

[(i) ***];

(j) where, the whole of the property is let out and it was vacant during a part of the year, a sum equal to such portion of the annual value of the property as is proportionate to the period of the vacancy; and

(k) where, the property is let out in parts, a, sum equal to such portion of the annual value appropriate to the vacant part as is proportionate to e period of the vacancy of such part.

(2) Notwithstanding anything contained in sub section (1), no deduction shall be allowed under this section in respect of any interest or annual charge payable outside Bangladesh on which tax has not been paid or deducted in accordance with the provisions of Chapter VII.

1 Ins. by F.A. 2002
2 Subs. by F.A. 2000
3 Deleted by F.A. 1992

[(3) ***]

26. Agricultural income.--

(1) The following income of an assessee shall be classified and computed under the head "Agricultural income", namely:-
(a) any income derived by the assessee which comes within the meaning of “agricultural income” as defined in section 2(l);

(b) the excess amount referred to in section 19(17);

(c) the excess amount referred to in section 19(19).

(2) Agricultural income derived from the sale of tea grown and manufactured by the assessee shall be computed in the prescribed manner.

(3) Where the Board, by notification in the official. Gazette, so directs, agricultural income from the sale of rubber, tobacco, sugar or any other produce grown and manufactured by the assessee may be computed in the manner prescribed for the purpose.

27. Deductions from agricultural income.--

(1) In computing the income under the head “Agricultural income”, the following allowances and deductions shall be made, made, namely:-
(a) any land development tax or rent paid in respect of the land used for agricultural purposes;

(b) any tax, local rate or cess paid in respect of the land used for agricultural purposes, if such tax, rate or cess is not levied on the income arising or accruing, or deemed to accrue or arise, from agricultural operations or is not assessed at a proportion or on the basis of such income;

(1) (i) subject to sub classes (ii) and (iii), the cost of production, that is to say, the expenditure incurred for the following purposes, namely:-

(a) for cultivating the land or raising livestock thereon;

1Deleted by F. A. 1993

(b) for performing any process ordinarily employed by a cultivator to render marketable the produce of the land,

(c) for transporting the produce of the land or the livestock raised thereon to the market; and

(d) for maintaining agricultural implements and machinery in good repair and for providing upkeep of cattle for the purpose of cultivation, processing or transportation as aforesaid;

(ii) where books of accounts in respect of agricultural income derived from the land are not maintained, the cost of production to be deducted shall, instead of the expenditure mentioned in sub clause (i) be sixty per cent of the market value of the produce of the land.

(iii) no deduction on account of cost of production shall be admissible under this clause if the agricultural income is derived by the owner of the land from the share of the produce raised through any system of sharing of crop generally known as adhi, barga or bhag;

(d) any sum paid as premium in order to effect any insurance against loss of, or damage to, the land or any crop to be raised from or cattle to be reared on, the land;

(e) any sum paid in respect of the maintenance of any irrigation or protective work or other capital assets; and such maintenance includes current repairs and, in be case of protective dykes and embankments, all such work as may be necessary from year to year for repairing any damage or destruction caused by flood or other natural causes;

(f) a sum calculated at the rate as provided in the Third Schedule on account of depreciation in respect of irrigation or protective work or other capital assets constructed or acquired for the benefit of the land from which agricultural income is derived or for the purpose of deriving agricultural income from the land if the required particulars are furnished by the assessee;

(g) where the land is subject to a mortgage or other capital charge for purposes of reclamation or improvement, the amount of any interest paid in respect of such mortgage or charge;

(h) where the land has been acquired, reclaimed or improved by the use of borrowed capital, the amount of any interest paid in respect of such capital;

(i) where any machinery or plant which has been used by the assessee exclusively for agricultural purpose has been discarded, demolished or destroyed in the income year, the amount actually written off on that account in the books of accounts of the assessee, -

(i) subject to the maximum of the amount by which the written down value of the machinery or plant exceeds the scrap value thereof if no insurance, salvage or compensation money has been received in respect of such machinery, or plant; and

(ii) subject to the maximum of the amount by which the difference between the written down value and the scrap value exceeds the amount of insurance, salvage or compensation money received in respect of such machinery or plant;

(j) where any machinery or plant which has been used by the assessee exclusively for agricultural purposes has been sold or transferred by way of exchange in the income year, the amount actually written off on that account in the books of accounts of the assesses, subject to the maximum of the amount by which the written down value of t1w machinery or plant exceeds the amount for which it has been actually sold or transferred; and

(k) any other expenditure, not being in the nature of capital expenditure or personal expenditure laid out wholly and exclusively for the purpose of deriving agricultural income from the land.

(2) Notwithstanding anything contained in sub section (1), no deduction shall be allowed under this section in respect of any interest on which tax has not been paid or, deducted in accordance with the provisions of Chapter VII

28. Income from business or profession.--

(1) The following income of an assessee shall, be classified and computed under the head “Income, from business or profession”, namely:-

(a) profits and gains, of any business or profession carded on, or deemed to be carried on, by the assessee, at any time during the income year;

(b) income derived from any trade or professional association or other association of like nature on account of specific services performed for its members;

(c) value of any benefit or perquisite, Whether convertible into money or not, arising from business or the exercise of a profession;

(d) the amount, the value of the benefit and the trading liability referred to in section 19(15);

(e) the excess amount referred to in section 19(16);

(f) the excess amount referred to in section 19(18);

(g) the sale proceeds referred to in section 19(20);

(h) the amount of income under section 19(23).]

Explanation. Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as "speculation business") shall be deemed to be distinct and separate from any other business.

(2) Notwithstanding anything contained in this Ordinance,-

(a) the profits and gains of any business of insurance and the tax payable thereon shall be computed in accordance with the provisions of the Fourth Schedule;

(b) the profits and gains from the exploration and production of petroleum (including natural gas) and the tax payable thereon shall be computed in accordance with the provisions of Fourth Schedule;

(c) the profits and gains of any business which consists of, or includes, the exploration and extraction of such mineral deposits of a wasting nature (not being petroleum and natural gas) as may be specified in this behalf by the Government, carried on by an assessee in Bangladesh shall be computed in accordance with the provisions of Part B of the Fifth Schedule.

Ins. by F. A. 1994

1[(13) Notwithstanding anything to the contrary contained in any other provisions of this ordinance, in the case of Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha 2[. Investment Corporation of Bangladesh] and any commercial bank including the Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, the income by way of interest relation to such categories of bad or doubtful debts as the Bangladesh Bank may classify in the, Income year in which it is credited to its profit and loss account for that year or, as the case may be, in which it is actually received, whichever is earlier.]

29. Deductions from income from business or profession.--

(1) in the income under the head “Income from business or profession”, the following allowances and deductions shall be allowed, namely :

(i) the amount of any rent paid for the premises in which the business or profession is carried on :

Provided that if a substantial part of the premises is used by the assessee as a dwelling-house, the amount shall be a proportionate part of the rent having regard to the proportionate annual value of the part so used,

(ii) the amount paid for the repair of the hired premises in which the business or profession is carried on if the assessee has undertaken to bear the cost of such repair,

Provided that if a substantial part of the premises is used by the assessee as a dwelling house, the amount shall be a proportionate part of the sum paid for such pair having regard to the proportionate annual value of the part so used;

(iii) the amount of any interest paid or any profit shared with a bank run on Islamic principles in respect of capital borrowed for the purposes of the business or profession;

Provided that if any part of such capital relates, to replenishing the cash or to any other asset transferred to a newly set up industrial

1Ins. by F. A, 1996
2Ins. by F A, 1999

undertaking or to an extension of an existing industrial undertaking whose income is exempted of tax, the amount shall be proportionate tax part of the interest so paid or the profit so shared having regard to the proportion of such capital so used;

(iv) any sum paid or credited to, any person maintaining a profit and loss sharing account or deposit with a bank run on Islamic principles by way of distribution of profits by the said bank in respect of the said account of deposit;

(v) an amount not exceeding ten percent of the total income carried to any special reserve created by such financial institution and for such purposes as may be approved by the Government in this behalf, if the aggregate amount standing in such reserve does not exceed the paid up share capital of the institution;

(vi) the amount paid on account of current repairs to buildings, machinery, plant or furniture used for the purposes of the business or profession;

(vii) the whole or the proportionate part of the amount of any premium paid for insurance, against risk of damage, destruction or loss of buildings, machinery, plant or furniture, stocks or stores according as the whole or part thereof is used for the purposes of the business or profession,

(viii) in respect of depreciation of building, machinery, plant or furniture, being the properly of the assessee and used for the purposes of business or profession, the allowances as admissible under the Third Schedule;

(ix) in the case of a ship, being a passenger vessel plying ordinarily on inland waters, or a fishing trawler, which is entitled to a special depreciation allowance under paragraph 8 of the Third Schedule, an investment allowance of an amount equivalent to twenty percent cost to the assessee for the year in which the ship or the trawler is first put to use for public utility;

(x) in the case of any machinery or plant (other than office appliances and road transport vehicles) which is entitled to accelerated depreciation under paragraph 7 of the Third Schedule, an investment allowance, for the year in which the undertaking starts commercial production, at the following rates, namely:

(a) if the undertaking is set an amount equivalent to
up in areas specified in 25 percent of the actual
this behalf by the Board, cost to the assessee;

(b) in other cases, ------ an amount equivalent to
20 percent of the actual
cost to the assessee;

1[(xa) where an assessee being a company registered under 2[The Companies Act, 1913 (VII of 1913) or ‡Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb)] invests any amount in the purchase of any new plant or machinery for installation in an industrial undertaking set up in Bangladesh and owned by it for the purpose of balancing, modernization or replacement of the plant or machinery already installed therein, an investment allowance at the rate of twenty five percent of the amount so invested;]

(xi) where any building, machinery or plant which, after having been used by the assessee for the purpose of his business, has been discarded, demolished or destroyed in any income year or any such asset has been sold, transferred by way of exchange or compulsorily acquired by a legally competent authority or exported outside Bangladesh in any income year, an obsolescence allowance to the extent and computed in the manner specified in paragraph 10 of the Third Schedule;

(xii) in the case of any animal which has been used by the assessee for the purpose of business or profession otherwise than as stock in trade, has died or become permanently useless for such purpose, an amount equivalent to the difference between the original cost of the animal to the assessee and the sum, if any, realized by sale or other disposition of the carcass, as the case may be, of the animal,

1Ins. by F. A. 1989
2 Subs. for “the Companies Act. 1913 (VII 1913)” by F. A. 1995

(xiii) any sum paid on account of land development tax or rent, local rates or municipal taxes in respect of such premises or part thereof as is used by the assessee for the purpose of business or profession;

(xiv) any sum paid in the income year to an employee as bonus or commission for services rendered where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission and is reasonable with reference, except in the case of payment of festival bonus, to

(a) the general practice in similar business or profession,

(b) the profits of the business or profession in that year and

(c) the pay and other conditions of service of the employee:

1[***]

(xv) the amount of any debt or part thereof which is established to have become irrecoverable and has actually been written off as such in the books of accounts of the assessee for the income year if the debt or part thereof has been taken into account in computing the income of the assessee of that income year or an earlier income year and, in the case of the business of banking or money lending carried on by the assessee, represents money lent in the ordinary course of business;

(xvi) where 'any amount of debt or part thereof which has actually been written off as irrecoverable in the books of accounts of the assessee in any income year but has not been allowed on the ground that it has not then become irrecoverable, so much of such debt or part thereof as has been established to have become irrecoverable in any subsequent income year shall be allowed as a deduction in that income year;

(xvii) where any such debt or part thereof is written off as irrecoverable in the books of accounts of the assessee for an income year and the Deputy Commissioner of Taxes is satisfied that such debt or part thereof became irrecoverable in an earlier income year not falling beyond a period of four years immediately preceding the income year in which was written off, the

1Ins. by F. A. 1993 & deleted by F.A. 2002

Deputy, Commissioner of Taxes may, notwithstanding anything contained in this Ordinance, allow such debt or part thereof as a deduction for such earlier income year if the assessee accepts such finding of the Deputy Commissioner of Taxes and re compute the total income of the assessee for such earlier income year and make the necessary amendment; and the provisions of section 173 shall, so far as may be, apply thereto the period of four years referred to in sub section (4) of that section being reckoned from the end of the year in which the assessment relating to the income year in which the debt or part thereof is written off was made;

1[(xviii)***]

2[(xviiia) in respect of provision for bad and doubtful debt made by Bangladesh
Shilpa Bank or Bangladesh Shilpa Rin Sangstha ror overdue loan, a sum
equal to five per cent of such overdue loan or the amount of actual
provision for such bad or doubtful debt in the books of the assessee,
whichever is the less;

Provided that the deduction shall be allowed only in respect of the assessment years 1987 88, 1988 89, 1989 90 and 1990 91;

Provided further that if any amount out of the amount so allowed is ultimately recovered, the same shall be deemed to be a profit of the year in which it is recovered;]

3(xviiaa) in respect of provision for bad and doubtful debt and interest thereon trade by a commercial bank including the Bangladesh Krishi Bank and the Rajshahi Krishi Unnayan Bank, a sum equal to 4[three per cent.] of the total outstanding loan including interest thereon or the amount of actual provision for such bad or doubtful debt and interest thereon in the books of the assessee, whichever is less;

1Deleted by F A. 1990
2Ins. by F. A. 1987
3Ins. by P. A. 1990
4 Subs. for “five per cent” by F. A. 1997

Provided that the provisions, of this clause shall apply. only in respect of such loan as the Bangladesh Bank may, from time to time, classify as bad doubtful debt;

1[Provided further that the deduction shall be allowed only in respect of the assessment years 1990 91, 1991 92, 1992 93, 1993 94, 1994 95, 2[1995 96, 1996 97, 1997 98, 1998 99 3[, 1999 2000; 2000 2001 4[ 2001-2002, 2002 2003, 2003 2004 and 2004 2005;]]

5[Provided further that if any amount out of the amount so allowed is ultimately recovered, the same shall be deemed to be a profit of the year in which it is recovered;]

6[Provided further that no deduction under this clause shall be allowed in respect of -

(a) any amount representing grant allowed by the Government in the form of 5 years Special Treasury Bonds;

(b) any loan advanced to any government organization, body corporate, local authority, autonomous body, or any other loan guaranteed by the Government; and

(c) any debt representing loans advanced to any director of the bank, his nominees or dependants;]

[***]

(xix) any expenditure, not being in the nature of capital expenditure, laid out or expended on scientific research in Bangladesh related to the business carried on by the assessee;

1 Subs. by F.A. 1993
2 Subs. by F.A. 1997 for “and 1995 96 or till the assessment year the actual provision respect of which is equal to the bad and doubtful debts as per Bangladesh Bank's guideline in this, behalf “ins. by F.A. 1995

3Subs. for “and 1999 2000” by F.A. 1999
4Subs. for “and 2001 2002” by F.A. 2002
5Ins. by F.A. 1995
6Ins. by F.A. 1993
7Ins. by F.A. 1996 & deleted by F.A. 1997

(xx) any expenditure of a capital nature laid out or expended on scientific Bangladesh related to the business carried on by the assessee:

Provided that where a deduction is allowed for any income year under this clause in respect of expenditure represented wholly or partly by any asset, no deduction shall be allowed under clause (viii) or (ix) for the same income year in respect of that asset;

(xxi) any sum paid to a scientific research institute, association or other body having as its object the undertaking of scientific research, or to a University, College, Technical School or other Institution for the purpose of scientific research or technical training related to the class of business carried on by the assesses if such institute or body, or such University, College, Technical School or Institution is, for the time being, approved by the Board for the purpose of this clause.

Explanation In this clause and in clauses (xix) and (xx):-

(a) “scientific research” means any activities in the field of natural or applied science for the extension of knowledge;

(b) references to expenditure incurred on scientific research do not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research, but save as aforesaid, include all expenditure incurred for the prosecution of, or the provision of facilities for the prosecution of, scientific research;

(c) reference to scientific research related to a business or class of business includes

(i) any scientific research which may lend to or facilitate an extension of that business or, as the case may be, all business of that class;

(ii) any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or, as the case may be, business of that class;

(xxii) any expenditure, not being in the nature of capital expenditure, laid out or expended on any educational institution or hospital established for the benefit of the employees of the assessee, their families and dependents or on the training of industrial workers, if --
(a) no charge is made for services rendered by such institution or hospital or for the training of the workers; and

(b) no deduction or allowance is claimed for such expenditure under any other clause of this section;

(xxiii) any expenditure in the nature of capital expenditure laid out or expended on the construction and maintenance of any educational institution or hospital established by the assessee for the benefit of his employees, their families and dependents, or on any institute for the training of industrial workers, if -

(a) no charge is made for the services rendered by s such institution or hospital or for the training of the workers; and

(b) on deduction or allowance is claimed under any other clause of this section for the same income year in respect of expenditure represented either wholly or partly by any asset;

(xxiv) any expenditure laid out or expended on the training of citizens of Bangladesh in connection with a scheme approved by the Board for purposes of this clause;

(xxv) arty expenditure, not being in the nature of capital expenditure or personal expenses, incurred by an assessee In connection with visits abroad as a member of a trade delegation sponsored by the Government;

(xxvi) any sum paid on account of annual membership subscription to a registered trade organization within the meaning of the Trade Organizations Ordinance, 1961(XLV of 1961), or to a professional institution recognized by the Board in this behalf;

(xxvii) any expenditure, not being in the nature of capita expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purpose of the business or profession of the assessee.

(2) Where any premises, building, machinery, plant or furniture is not wholly used for the purposes of business or profession, any allowance or deduction admissible under this section shall be restricted to the fair proportional part of the amount which would be allowable if such premises, building, machinery, plant or furniture was wholly so used.

Explanation. For the purposes of this section, the expression "plant” includes ships, vehicles, books, scientific apparatus and surgical and other instruments or equipment’s used for the purpose of business or profession.

30. Deduction not admissible in certain circumstances.--

Notwithstanding anything contained in section 29, no deduction on account of allowance from income from business or profession shall be admissible in respect of the following, namely:-

(a) any payment which is an income of the payee classifiable under the head “Salaries” if tax thereon has not been paid in accordance with provisions of Chapter VII;

1[(aa) any payment made by an assessee to any person if tax thereon has not been deducted and credited in accordance with the provisions of Chapter VII and (value added tax) thereon has not been collected or deducted and credited in accordance with the provisions of 1991;]

(b) any payment by way of interest, salary, commission or remuneration made by a firm or an association of persons to any partner of the firm or any member of the association, as the case may be;

(c) any payment by way of brokerage or commission made to a person who is not a resident in Bangladesh unless tax has been deducted there from under section 56;

(d) 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”;

2[(e) so much of the expenditure by an assessee on the provision of perquisites or other benefits to any employee as exceeds one lakh and thirty two thousand taka]:

1Ins. by F.A. 1993
2Subs by F.A. 2000

1[Provided that, the provision of this clause shall not be applicable to an employer where perquisites or other benefits were paid to, an employee in pursuance of any Government decision published in the official Gazette to implement the recommendation of a Wage Board constituted by the Government;]

(f) any expenditure in respect of the following is in excess of the amount or rate prescribed in t his behalf and as is not, in the cases of sales and services liable to excise duty, supported by excise stamp or sea, namely
(i) entertainment;

(ii) foreign travels of employees and their dependents for holidaying and recreation;

(iii) publicity and advertisement; and

(iv) distribution of free samples.

1[30A Provision for disallowance-
Notwithstanding anything contained in sections 28, 29 and 30, the Deputy Commissioner of Taxes shall not make any disallowance or deduction for any year from any claim made by an assessee in the trading account or profit or loss account without specifying reason for such disallowance or deduction.]

31. Capital gains:

Tax shall be payable by an assessee under the head “Capital gains” in respect of any profits and gains arising from the transfer of a capital asset and such profits and gains shall be deemed to be the income of the income year in which the transfer took place;

3[Provided that no tax shall be payable by an assessee, being a non resident, in respect of any profits and gains arising from the transfer of stocks or shares of a public company as defined 4[‡Kv¤úvbx AvBb, 1994(1994 m‡bi 18 bs AvBb)] subject to the condition that such assessee is entitled to similar exemption in the country), in which he is a resident.]

1Ins. by FA. 2001
2lns. by F.A. 2002
3lns. by F. A. 1990
4Subs for “the Companies Act, 1913 (VII 1913)” F.A. 1999

32 Computation of capital gains.—

(1) The income under the head “Capital gains” shall be computed after making the following deduction from the full value of the consideration received or accruing from the transfer of the capital asset or the fair market value thereof, whichever is higher, namely:-
(a) any expenditure incurred solely in connection with the transfer of the capital asset; or

(b) the cost of acquisition of the capital asset and any capital expenditure incurred for any improvements thereto but excluding any expenditure;

(c) in respect of which any allowance is admissible under any provisions of sections 23, 29 and 34.

1[(1A)* * *];

(2) For the purpose of this section, “cost of acquisition of the capital asset” means -
(i) where it was acquired by the assessee by purchase, the actual cost of acquisition; and

(ii) where it became the property of the assessee-

2[(a) * * *];

(b) * * *];

3[(C) * * *];

4[(cc) under a deed of gift, bequest or will; or

(ccc) under a transfer on a revocable or irrevocable trust; or)

(d) on any distribution of capital assets on the liquidation of a company; or

1Ins. by F.A. 1995 subsequently omitted by F.A. 1996
2Deleted by F. 0. 1986
3Suhs. by F. A. 1990, subsequently deleted by F.A 1993
4Ins. by F. A. 1990

(e) on any distribution of capital assets on the dissolution of a firm or other, association of persons or the partition of a Hindu undivided family;

the actual cost of acquisition to the previous owner of the capital asset as reduced by the amount of depreciation, if any, allowed to the previous owner; and where the actual cost of acquisition to the previous owner cannot be ascertained, the fair market value at the date on which the capital asset became the property of the previous owner:

Provided that where the capital asset is an asset in respect of which the assessee, has obtained depreciation allowance in any year, the cost Of acquisition of the capital asset to the assessee shall be its written down value increased or diminished, as the case may be, by any adjustment made under section 19(16) or (17) or section 27 (1) (j) or section 29(l) (xi):

1[ * * * ]

2[Provided further that where the capital asset became the property of the assessee by succession, inheritance or devolution, the actual cost of acquisition of the capital asset to the assessee shall be the fair market value of the property prevailing at the time the assessee became the owner of such property.]

(3) Where in the opinion of the Deputy Commissioner of Taxes the fair market value of a capital asset transferred by an assessee as on the date of transfer exceeds the full value of the consideration declared by the assessee by an amount of not less than fifteen per cent of the value so declared, the fair market value of the capital asset shall be determined with the previous approval of the Inspecting Joint Commissioner.

(4) Where in the opinion of the Deputy Commissioner of Taxes the fair market value of a capital asset transferred by an assessee as on the date of the transfer exceeds the declared value thereof by more than twenty five per cent of such declared value, the Government may offer to buy the said asset in such manner as may be prescribed.

1Ins. by F.A. 1986, subsequently deleted by F.A. 1990
2Ins. by F.A. 1993

(5) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of a capital asset which immediately before the date on which the transfer took place was being used by the assessee for the purposes of his business or profession and the assessee has, within a period of one year before or after that date, purchased a new capital asset for the 1[***] purposes of his business or profession, then, instead of the capital gain being charged to tax as income of the income year in which the transfer took place, it shall, if the assessee so elects in writing before the assessment is made, be dealt with in accordance with the following provisions of this sub section, that is to say--

(a) if the amount of the capital gains is greater than the cost of acquisition of the new asset,--

(i) for the difference between the amount of the capital gain and the cost of acquisition of the new asset shall be charged under section 31 as income of the income year, and

(ii) for the purposes of computing in respect of the new asset any allowance under the Third Schedule or the amount of any capital gain arising from its transfer, the cost of acquisition or the written down value, as the case may be, shall be nil, or

(b) if the amount of the capital gain is equal to or less than the cost of acquisition of the new asset

(i) the capital gain shall not be charged under section 31, and

(ii) for the purposes of computing in respect. of the new asset any allowance under the Third Schedule or any income under section 19(16) or the amount of any capital gain arising from its transfer, the cost of acquisition or the written down value, as the case may be, shall be reduced by, the amount of the capital gain:

Provided that where in respect of the purchase of a new capital asset consisting of plant or machinery, the assessee satisfies the Deputy Commissioner of Taxes that despite the exercise of diligence it has not been possible to make the purchase within the period specified in this subsection, the Deputy Commissioner of Taxes may with the prior approval of the Inspecting Joint Commissioner, extend the said period to such date as he considers reasonable,

1The word “same” deleted by F.A. 1995

1[(6) * * *].

2[(7) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of a capital asset being Government securities and stocks and shares of public companies listed with a stock exchange in Bangladesh, 3[* * *] then no tax shall charged under this section.]

4 [(8) * * *].

1[(9) * * * ].

(10) Notwithstanding anything contained in this section or section 31, where a capital gain arises from the transfer of capital being buildings or lands to a new company registered under 6[ the Companies Act, 1913 (VII of 1913) or ‡Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb)], for setting up of an industry, and if the whole amount of capital gain is invested in the equity of the said company, then the capital gain shall not be charged to tax as income of the year in which the transfer took place.

(11) Notwithstanding anything contained in this section, or section 3 1, where a capital gain arises from the transfer of capital asset of a firm to a new company registered under (the Companies Act, 1913 (VII of 1913) or ‡Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb)], and if the whole amount of the capital gain is invested in the equity of the said company by the partners of the said firm, then the capital gain shall not be charged to tax as income of the year in which the transfer took place.

8[(12) Notwithstanding anything contained in sub sections 9[(5), (7), (10), and (11)] no exemption shall be allowed to any person on so much of profits and gains arising out of the transfer of a capital asset as is attributable to the cost of acquisition of such asset in respect of which any investment allowance referred to in paragraph 1, 2, 3, 4, 5, 6, 8, 9, 10 and 11 of PART B of the SIXTH SCHEDULE to this Ordinance was at any time allowed.]

1 Deleted by F. A. 2000
2 Subs by F. A. 1995
3 The words. "other than bonus share of a company" deleted by F. A. 1996,
4. 5 Deleted by F. A. 2 000
6 ,7 Subs. for "the Companies Act. 1913 (VII of 1913) “ by F. A. 1995
8 Ins. by F. A. 1994
9 Subs. for "sub sections (5), (6), (7), (8), (9), (10) and (11)" by F. A. 2000

33. Income from other sources.

The following income of an assessee shall be classified and computed under the head "Income from other sources", namely:-
(a) dividend and interest;

(b) royalties and fees for technical services;

(c) income from letting of machinery, plants or furniture belonging to the assessee, and also of buildings belonging to him if the letting of buildings is inseparable from the letting of the machinery, plant or furniture;

1[(d) any income to which section 19 (1), (2), (3), (4), (5), (8), (9), (10), (11), (12), (13) 2{, (2 1), or (2 1 A)} applies;]

(e) any other income of any kind or from any source which is not classifiable under any of the other heads specified in section 20.

34. Deductions from income from other sources.-

(1) The amount of interest paid in respect of money borrowed for the purpose of acquisition of shares of a company.

(2) Any expenditure, not being in the nature of capital expenditure or personal expenses of the assessee, incurred solely for the purpose of making or earning, the relevant income.

(3) Where the income is derived from letting on hire of machinery, plant or furniture belonging to the assessee and also of building belonging to him if the letting of the building is inseparable from the letting of such machinery, plant or furniture, the same allowances as are admissible under section 29(l) (vi), (vii) and (xi) to an assessee in respect of income under the head "Income from business or profession" subject to the same conditions and limitations as if the income from such letting on hire were income from business or profession:

Provided that the provisions of section 19(l shall also be applicable for the determination of any profits t4iere the sale proceeds of such machinery, plant, furniture or building exceeds the written down value thereof.

1Subs. by F. A 1994
2Subs. for "or 21” by F. A. 2002

(4) Notwithstanding anything contained in this section, no allowance shall be made on account of

(a) any interest chargeable under this Ordinance which is payable outside Bangladesh on which tax has not been paid and from which tax has not been deducted at source under section 56; or

(b) any payment I which is chargeable under the head "Salaries" if tax has not been paid thereon or deducted there from under section 50.

35. Method of accounting.

(1) All income classifiable under the head 1["Agricultural in come"], "Income from business or profession" or "Income from other sources" shall be computed in accordance with the method of accounting regularly employed by the assessee.

(2) Notwithstanding anything contained in sub section (1), the Board may, in the case of any business or profession, or class of business or profession, or any other source of income, or any class of persons, by a general or special order, direct that the accounts and other documents shall be maintained in such manner and form, and that payments of commercial transactions recorded in such manner, as may be prescribed or as may be specified in such direction ; and thereupon the income of the assessee shall be computed on the basis of the accounts maintained, payments made and transactions recorded accordingly.

(3) Without prejudice to the preceding sub , sections, every public or private company as defined in the Companies Act, 1913 (VII of 1913) or ‡Kv¤úvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb), shall, with the return of income required to be filed under this Ordinance for any income year, furnish a copy of the trading account, profit and loss account and the balance sheet in respect of that income year certified by a chartered accountant.

(4) Where--
(a) no method of accounting has been regularly employed, or if the method, employed is such that, in the opinion of the Deputy Commissioner of Taxes, the income of the assessee cannot be properly deduced there from; or

1Ins. by F. A. 1991

(b) in any case, to which sub section (2) applies, the assessee fails Is to maintain accounts, make payments or record transactions in the manner directed under that sub section ; or

(c) a company 1[* * *] has not complied with the requirements of sub section (3); the income of the assessee shall. be computed on such basis and in such manner as the Deputy Commissioner of Taxes may think fit

36. Allocation of income from royalties, literary works, etc.

Where the' time taken by the author of a literary or artistic work in the making thereof exceeds twelve months, the amount received or receivable by him during am income year in lump sum on account of royalties or copyright fees in respect of that work shall, if be so claims, be deemed to be the income of ---

(a) the income year in which it is received and the immediately preceding income year if the time taken in making such work exceeds twelve months but does not exceed twenty four months; and

(b) the income year in which it is received and the two immediately preceding income years if the time taken in making such work exceeds twenty four months, and shall be allocated in equal proportions to each such income year and the income of the assessee in respect of an income year shall be computed accordingly.

Explanation. For the purposes of this section, the expression "author" includes a joint author and the expression "lump sum" in regard to royalties or copyright fees includes an advance payment on account of such royalties or copyright fees which is not returnable.

37. Set off of losses.

Where, in respect of any assessment year, the net result. of computation. of income under any head is a loss, the assessee shall, subject to the other provisions of this Ordinance, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head:

Provided that any loss in respect of any speculation business or any loss under the head "Capital gains" shall not be so set off but shall, in accordance with the provisions of

1The words "or a registered. firm" deleted by, F. A. 1998

this Ordinance. be set off, or be carried forward to succeeding assessment year or years for set off, against any income in respect of speculation business or any income under the head "Capital gains";

Provided further that for the purposes of this section the Deputy Commissioner of Taxes shall, in computing any loss, deduct any amount received in cash as subsidy from the Government.

38. Carry forward of business losses.--

Where, for any assessment year, the net result of the computation of income under the head "Income from business or profession" is a loss to the assessee, not being a loss sustained in a speculation business, and such loss has not been wholly set off under section 37, so much of the loss as has not been so set off, the whole of the loss, where the assessee has no income under any other head or has income only under the head "Capital gains", shall be carried forward to the next following assessment year, and ---
(a) it shall be set off against the income, if any, from the business or profession for which the loss was originally computed if such business or profession is continued to be carried on by him in the income year; and

(b) if the loss cannot be wholly so set off, the amount of the loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years.

39. Carry forward of loss in speculation business.---

(1) Where, for any assessment year, the result of computation of income in respect Of any speculation business carried on by the assessee is a loss, it shall be set off only against the income, if any, from any other speculation business carried on by him and assessable for that assessment year. 41.

(2) Where, for any assessment year, any loss computed in respect of a speculation.
business has not been wholly set off under sub section (1), so much of the loss as has not been so set off, or the whole loss where the assessee has no income from any other speculation business, shall, subject to the provisions of this Ordinance, be carried forward to the next following assessment year, and

(a) it shall be set off, against the income, if any, from any speculation business
carried on by him and assessable for that assessment year; and

(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years.

40. Carry forward of toss under the head "Capital gains",

(1) Where, in respect of any assessment year, the net result of computation of income from any source under the head "Capital gains" is a loss, it shall be set off only against income from any other source falling under that head and assessable for that year.

(2) Where, for any assessment year, any loss computed under the head "Capital gains" has not been wholly set off under sub section (1), so much of the loss as liar not been so set off, or the whole loss where the assessee has no income from any other source falling under that head, shall, subject to the provisions of this Ordinance, be carried forward to the next following assessment year, and --
(a) it shall be set off against income, if any, of the assessee under that head and assessable for that year, and

(b) if the loss cannot be wholly so set off the amount of loss not so set off shall be carried forward to the next assessment year and so on for not more than six successive assessment years.

(3) Where, in respect of any assessment year, the loss computed under the head "Capital gains" does not exceed five thousand taka, it shall not be carried forward and where it exceeds five thousand taka only so much of such loss shall be carried forward as exceeds five thousand taka.

41. Carry forward of loss under the head "Agricultural income".--

Where, for any assessment year, the net result of the computation of income under the bead "Agricultural income" is a loss to the assessee, and such loss has not been wholly set off under section 37, so much of the loss as has not been so set off, or the whole of the loss, where the assessee has no income under any other head or has income only under the head, "Capital gains", shall be carried forward to the next following assessment year, and

(a) it shall be set off against agricultural income, if any, of the assessee assessable for that assessment year; and

(b) if the loss. cannot be wholly so set off the amount not so set forward to the next, assessment year and so on for not more than six successive years.

42. Conditions and limitations, 6f carry forward of loss, etc,---

(1) The provisions of sections 3 7. 38, 39, 40 and 41 shall have effect subject to the conditions and limitations set out in this section.

1[(2) * * *]

(3) In the case of 2[a firm],---
(a) Where the assessee is the firm, the loss sustained by it under any head of income shall be set off under section 37 only against the income of the firm under any other head and not against the income of any of the partners of the firm; and

(b) where the assessee is a partner of the firm, he shall not be entitled to have any loss sustained by the firm carried forward and setoff against his own income.

(4) Where any person carrying on any business or profession has been succeeded. in such capacity by another person otherwise than by inheritance, no person, other than the person incurring the loss, shall be entitled to have the loss in such business or profession set off against his income under any other head.

(5) In the case of a firm in the constitution of which a change has occurred,-
(a) the firm shall not be entitled to set off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits, if any, of the income year in the firm; and

(b) a partner of the firm shall not, be entitled to the benefit of any portion of the said loss as is not apportionable to him.

(6) Where, in making an assessment for any year, full effect cannot be given to the allowances referred to in section 29(l) (viii) owing to there lying no profits or gains chargeable for that year or such profits or gains being less than the allowance then, subject to the provisions of sub section (7), the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following year and be deemed to be part of that allowance~ 'or if there: is no I such allowance for that year, be deemed to be the allowance for that year and so on for succeeding years.

1Deleted by F. A. 1995
2 Subs. for "an unregistered firm" by F. A. 1995

(7) Where, under sub section (6), depreciation allowance is also to be carried forward, effect shall first be given to the provisions of sections 38 and 39(2).

43. Computation of total in