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June 20, 2004

A brief Outline for

Filing of Return of Income

Md Zahidul Islam

Paying tax is not only a moral duty but also a legal
obligation of a person. A person, under the Income Tax Ordinance, 1984, includes an individual, a firm, an association of persons, a Hindu undivided family, a local authority, a company and every other artificial person. All these persons are under a legal obligation to pay income tax if they fall within the jurisdiction of the Ordinance. Then comes a question how to pay tax?

The Income Tax Ordinance provides a simple, easy and people-friendly system for paying tax. Following this system step-by-step, one can easily pay income tax. Hence, Filing of Return of Income can be stated as the first step of the taxpaying system. Because, on the basis of the correct and complete return of income a person's total income and the sum payable as tax is determined. So, every person should possess a clear idea about Filing of Return of Income.

Who to file a Return of Income
Every person is required to furnish voluntarily a return of his total income or the total income of other person in respect of which he is assessable to tax, if-
- such total income during the income year exceeds the maximum amount which is not chargeable to income-tax. (The maximum amount not chargeable to tax is provided in the Finance Act for every assessment year. For the current assessment year (i.e. 2003-2004) the amount is Tk 90,000.); or
- he has once been assessed to tax in any of the three years immediately preceding that income year; or
- he resides in a city corporation or a pouroshova or divisional headquarters or district headquarters having owned
* a building of more than one storey with a plinth area exceeding one thousand six hundred square feet; or
* a motor car or a jeep or microbus; or
* a telephone; or
* a membership of a club registered under the Value Added Tax Act.
- he runs any business or profession having trade license from a city corporation, or Pouroshova or a Union Parishad and operates a bank account; or
- he has registered with a recognized professional body as a doctor, dentist, lawyer, income-tax practitioner, chartered accountant, cost and management accountant, engineer, architect or surveyor or belongs to any other similar profession; or
- he is a member of a chamber of commerce and industries or a trade association; or
- he is candidate for an office of any union parishad, pouroshova, city corporation or a Member of Parliament; or
- he participates in a tender floated by the government, semi-government, autonomous body or a local authority.
However, a company is an exceptional case where it is mandatory to file a return of income regardless of its income or loss. Moreover, a representative assessee would have to file a return in respect of the total income of a non-resident or a minor or a beneficiary.

A non-resident Bangladeshi may also file his return of income along with a bank draft equivalent to the tax liability on the basis of such return to his/her nearest Bangladesh mission.

Again, where any business or profession is discontinued in any financial year and assessment may be made in that year he/she is liable to file a return showing income of the period between the end of the income year and the date of such discontinuance. In case of a deceased person, a return of his/her income should be made by his/her executor, administrator or other legal representatives.

How to file a Return of Income
A Return of Income is to be furnished in the specific form prescribed under Rule 24(1) of the Income Tax Rules, 1984. For the purpose two alternative forms have been prescribed: Form A and Form B.

Form A has been prescribed for use for all classes of assesses. Income from all sources can be shown in this form. In like manner, Form B has been prescribed for use by an individual assessee having limited income from salary, ways and/or from self-employment.

Also, there is another Form of certificate of income prescribed for the assessee having income from salaries or any other income from which tax payable has been fully deducted at source.

It should the kept in mind that such a return of income must be accompanied by the following documents:
In the case of individual:
- Particular of his/her personal and family expenditure in the format prepared by the National Board of Revenue (NBR). This is not required in the case of a return of self-assessment and in case of income only from salary.
- Where the total income exceeds 3,00,000 taka (Tk 3 Lakh) in the income year a statement of assets, liabilities and expenses in the form and manner prescribed in the Ordinance and Rules.
In the case of a company, a statement of accounts audited by a Chartered Accountant.

Where to file a Return
A Return of Income by a person is to be filed with a Deputy Commissioner of Tax (DCT) holding jurisdiction over such person. . As a rule, jurisdiction depends on residence or the place of business of the person (assessee).

A non-resident Bangladeshi may file his Return of Income along with a bank draft equivalent to the liability, if any, on the basis of such a return, to his/her nearest Bangladeshi mission. The Mission will issue a receipt of such a Return with an official seal and send the Return to the NBR.

When to file a Return
Every Return of Income must be filed within the time specified in the Income Tax Ordinance, 1984. The time specified for filing of return by an individual is September 30 of the assessment year. In case of a company it is July 15 of the assessment year, but when this fifteen of July falls within the six month from the end of the income year, it is to be filed before the expiry of such period. However, this specific time may be extended by the Deputy Commissioner of Taxes (DCT), if necessary.

It is expected that an assessee will submit his Return of Income voluntarily within the specified time. But if an assessee, liable to furnish a return of income, fails to file his/her return within the specified time the DCT may, by notice in writing, direct him/her to submit the same within the time legally extended or specified in the notice.

When a person after filing his return of Income discovers that any omission or incorrect statement has been put in the return, he/she may file a revised return at any time before the assessment is made.

Concluding remarks
Generally, every breach of law is followed by some penalty or punishment. The Income Tax Ordinance, 1984 is not an exception. Here are also some measures of penalty and prosecution for the violation or breach of its provisions. Accordingly, the person, who fails without reasonable cause to furnish the return within specified or extended time or in the manner required, is made liable to pay a penalty. Making a deliberately false return can also result in punishment.

Md Zahidul Islam, a legal researcher, is currently working as a member of the Research Team for Legal Affairs of Reforms in Revenue Administration (RIRA).