Tax payable Less: Investment tax credit / Tax Rebate Tax liability / (Refundable) But minimum tax should be So tax liability
4,800 5,040 (240) 1,800 1,800
Question3(a) What is meant by a company under Income Tax Ordinance 1984? What are the tax free incomes of a company? State the procedure of asse ssment of a company and its taxrate. Answer 3(a): According to Section2 (20) of ITO 1984: "Company" means a company as defined in the Companies Act, 1913 (VII of 1913) or Companies Act 1994 and includes— a body corporate established or constituted by or under any law for the time being in force; any nationalized banking or other financial insti tution, insurance body and industrial or business enterprise; an association or combination of persons, called by whatever name, if any of such persons is a company as defined in the Companies Act, 1913 or Companies Act 1994. any association or body incorporated by or under the laws of a country outside Bangladesh; and; any foreign association or body,[ not incorporated by or under any law], which the Board may, by general or special order, declare to be a company for the purposes of this Ordinance; Tax free incomes of a company: 50% of the income derived from export business. The exemption would not be allowed to a company not registered in Bangladesh and the company who is enjoying exemption of tax or reduction in the rate of tax by any notification made under ITO 1984(clause 28 of Part A of 6th Schedule of ITO 1984). Income from capital gains from transfer of machinery or plant used for the purpose of business or profession (clause 31A Part A of the 6th schedule of ITO 1984). Any income not exceeding twenty five thousand taka received from interest on savings instruments (clause 31B Part A of the 6th schedule of ITO 1984), Any income from dividend of a mutual fund or a Unit Fund where such dividend does not exceed twenty five thousand taka (clause 22A Part A of the 6th schedule of ITO 1984). Any interest classifiable under the head "Interest on securities" receivable by an assessee on any security of the Government, which is issued with the condition that interest thereon shall not be liable to tax (clause 24 Part A of the 6th schedule of ITO 1984). Any income received by an assessee in respect of any share of income out of the capital gains on which tax has been paid by the firm of which the assessee is a partner(clause 18 Part A of the 6th schedule of ITO 1984). Capital gain arises from the transfer of capital being buildings or lands to a new company registered under the Companies Act, 1913 (VII of 1913) or Companies Act 1994 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[Sec.32(10) of ITO 1984]. 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, then no tax is chargeable [Sec.32(7) of ITO 1984]. Procedure of assessment of a company and its tax rate: The procedure of assessment of companies as noted in ITO 1984 are the followings:a) Provisional assessment u/s 81 b) Assessment on correct return u/s 82 c) Assessment under simplified procedure (other than public limited company) u/s 82 A d) Assessment on the basis of return u/s 82 B e) Assessment after hearing u/s 83 f) Self assessment for private limited companies u/s 83AA g) Assessment on the basis of report of chartered accountant u/s 83 AAA h) Best judgment assessment u/s 84 The rate of tax for companies are as follows Nature of company Rate of tax Remarks Publicly traded company
30%
10% rebate for the company who pay more than 20% dividend and 40% tax for the company who pay less than 10%.