Bangladesh NBR Expands Tax Deduction Scope Under Income Tax Act

The National Board of Revenue (NBR) in Bangladesh has taken a significant step to broaden the scope of tax collection at source by declaring government and autonomous bodies, alongside various other institutions, as 'specified persons'. This crucial administrative decision was formally enacted through an official order bearing the signature of the NBR's acting chairman, Ahsan Habib.

According to the official directives released on September 2, this regulatory measure was implemented under the specific legal authority granted by section 342 of the Income Tax Act, 2023. Furthermore, the order itself has been issued precisely in accordance with the provisions outlined in sub-section 3 of section 140 of the aforementioned legislation, providing a clear legal framework for the newly designated entities.

As a direct consequence of this comprehensive order, all organizations and institutions categorized under the 'specified persons' designation now face distinct financial compliance obligations. Specifically, whenever these relevant institutions make designated payments as part of their operational activities, they are legally mandated to deduct the applicable tax at the very source of the transaction.

Following this mandatory deduction process, the responsible institutions are required to ensure that the withheld funds are duly transferred and deposited into the official government treasury. This regulatory update by the National Board of Revenue aims to strengthen internal revenue collection mechanisms and ensure stricter adherence to the provisions stipulated within the Income Tax Act of 2023 across the country.