ITO Section 46,47

"[46A. Exemption from tax of newly established industrial undertakings, etc. in certain cases.— (1) Subject to the provisions o f this Ordinance, ""[profits and

gains under section 28 from] an industrial undertaking, tourist industry or physical infrastructure facility j (hereinafter referred to as the said undertaking) set-up in Bangladesh between the first day o f July, 1995 and the thirtieth day o f ""[June, 2008] (both days inclusive) shall ' be exempt from the tax payable under this Ordinance for the period specified below— (a) i f the said undertaking is set-up in '[Dhaka and

Chittagong divisions], excluding the h i l l districts o f Rangamati, Bandarban and Khagrachari, for a period o f ""[four] years beginning wi th the month o f commencement o f commercial production or operation o f the said undertaking;

/. T. Manual, Part-I 121 Sec. 46A

(b) i f the said undertaking is set-up in '[Rajshahi, Khulna, Sylhet and Barisal divisions] and the hi l l districts o f Rangamati, Bandarban and Khagrachari, for a period o f "[six] years beginning with the month o f commencement o f commercial production or operation o f the said undertaking.]

^[Explanation.—For the purpose o f this section, industrial undertaking, tourist industry or physical infrastructure facility does not include expansion of an existing undertaking.]

[ ( l A ) industrial undertaking, tourist industry, or physical infrastructure facility does not include expansion of an existing undertaking for the purpose o f this section,— (i) "industrial undertaking" means an industry

engaged in the production o f textile, textile machinery, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, basic raw materials o f drugs, chemicals, pharmaceuticals agricultural machine, ship building, boilers, compressors and any other category o f industrial undertaking as the Government may by notification in the official Gazette speciiy;

Explanation:—'high value garments' mean overcoats, jackets and suits.

( i i ) "physical infrastructure faci l i ty" means sea or river port, container terminals, internal container depot, container freight station, L N G terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, large water treatment plant & supply through pipe line, waste treatment


plant, [solar energy plant,] export processing zone and any other category o f physical infrastructure facility as the Government may by notification in the official Gazette specify;

( i i i ) "tourist industry" means residential hotel having facility o f three star or more and any other category o f tourist industry facility as the Government may by notification in the official Gazette specify.]

(2) The exemption under sub-section (1) shall apply to the said undertaking i f it fulfils the fol lowing conditions, namely:— (a) that the said undertaking is owned and managed

b y -( i ) a body corporate established by or under an

Act o f Parliament with its head office in Bangladesh; or

( i i ) a company as defined in the Companies Act, 1913 ( V I I o f 1913) or ( < ^ \ i^^8 (iS>s.8 -iV^K ^5nt ) wi th its registered office in Bangladesh and having a subscribed and paid up capital o f not less than one lakh taka on the date of commencement o f commercial production or operation;

"[(b) that the said undertaking is engaged i n — (i) the manufacture o f goods or materials or the

subjection o f goods or materials to any such process, or the exploration and extraction of mineral resources and processing of agricultural products;

( i i ) providing, on commercial basis, physical infrastructure facility;


( i i i ) tourist industry as defined in the explanation to section 46.

Explanation.—For the purposes of this section, "physical infrastructure facility" means generation, transformation, conversion, transmission and distribution or supply of electrical energy or hydraulic power, or road, highway, bridge, airport, or the system o f railway or telecommunication, or such other public facility of similar nature as may be specified by the Board in this behalf by notification in the official Gazette;]

' [(c) that thirty per cent of the income exempted under sub-section (1) is invested in the said undertaking or in any new industrial undertakings during the period o f exemption or within one year from the end o f the period to which the exemption under that sub-section relates and in addition to that another ten per cent o f the income exempted under subsection (1) is invested in each year before the expiry o f three months from the end o f the income year in the purchase of shares o f a company listed with any stock exchange, failing which the income so exempted shall, notwithstanding the provisions of this Ordinance, be subject to tax in the assessment year for which the exemption was allowed:

Provided that the quantum of investment referred to in this clause shall be reduced by the amount of dividend, if any, declared by the company enjoying tax exemption under this section:

^[Provided further that, the provision for purchase of shares of a company listed with any stock exchange referred to in this clause shall not be applicable to ready made garments industry, if it re-invested forty percent of the income exempted

T. Manual, Part-I 124 Sec. 46A

under sub-section (1) in the said undertaking or in any new industrial undertaking during the period of exemption or within one year from the end of the period to which the exemption under that subsection relates.]

(d) that the said undertaking is not formed by splitting up or by reconstruction or reconstitution of business already in existence or by transfer to a new business o f any machinery or plant used in business which was being carried on in Bangladesh at any time before the commencement o f the new business;

(e) that the said undertaking is approved, and during the relevant income year, stands approved by the Board for the purposes o f this section;

(f) that the application in the prescribed form for approval for the purposes o f this section, as verified in the prescribed manner, is made to the Board ' [wi th in six months from the end of the month] o f commencement o f commercial production or operation.

^[(2A) Notwithstanding anything contained in this section— (a) where a said undertaking enjoying exemption of

tax under this section is engaged in any commercial transaction with another undertaking or company having one or more common sponsor directors, and

(b) during the course o f making an assessment of the said undertaking i f the Deputy Commissioner of Taxes is satisfied that the said undertaking has purchased or sold goods at higher or lower price in comparison to the market price wi th intent to reduce the income o f another undertaking or company—


the exemption o f tax o f that said undertaking shall be deemed to have been withdrawn for that assessment year in which such transaction is made.]

(3) The Board shall give its decision on an application made under clause (f) o f sub-section (2) within '[forty-five days] from the date o f receipt o f the application by the Board, failing which the undertaking shall be deemed to have been approved by the Board for the purposes o f this section:

^[Provided that the Board shall not reject any application made under this section unless the applicant is given a reasonable opportunity of being heard.]

(4) The Board may, on an application o f any person aggrieved by any decision or order passed under subsection (3), i f the application is made within four months o f the receipt o f such decision or order, review the previous decision or order and pass such order in relation thereto as i t thinks fit .

(5) The profits and gains o f the undertaking to which this section applies shall be computed in the same manner as is applicable to income chargeable under the head "Income from business or profession":

^[Provided that in respect of depreciation, only the allowances for normal depreciation specified in paragraph 3 of the Third Schedule shall be allowed].

(6) The profits and gains o f the said undertaking shall be computed separately from other income, profits and gains o f the assessee, i f any, and where the assessee sustains a loss from such undertaking it shall be carried forward and set o f f against the profits and gains o f the said undertaking for the following year and where it cannot be whol ly set off, the amount o f the loss not so set off, shall be carried forward for the next year and so


on, but no loss shall be carried forward beyond the period specified by the Board in the order issued under sub-section (3) or (4).

(7) Unless otherwise specified by the Government, nothing contained in this section shall be so construed as to exempt the fol lowing from tax chargeable under this section:— (a) any dividend paid, credited or distributed or

deemed to have been paid, credited or distributed by a company to its share-holders out o f the profits and gains;

(b) any income o f the said undertaking classifiable as "Capital gains" chargeable under the provisions of section 3 1 ; ' [and]

^[(c) any income o f the said undertaking resulting from disallowance made under section 30 •*[.

(d) dividend distribution tax under section 16D.]

(8) Where any exemption is allowed under this section and in the course o f making assessment, the Deputy Commissioner o f Taxes is satisfied that any one or more o f the conditions specified in this section are not fulfi l led, the exemption w i l l stand withdrawn for the relevant assessment year and the Deputy Commissioner o f Taxes shall determine the tax payable for such year.

(9) Any such undertaking approved under this section may, not latter than one year from the date o f approval, apply in wr i t ing to the Board for the cancellation o f such approval, and the Board may pass such orders thereon as it may deem fit .

(10) Notwithstanding anything contained in this section, the Board may, in the public interest, cancel or suspend fully or partially any exemption allowed under this section.

/. T. Manual, Part-I 127 Sec. 46A, 46B

(11) The Board may make rules regulating the procedure for the grant o f approval under sub-section (3), review under sub-section (4) and furnishing o f information regarding payment o f other taxes by the said undertaking and any other matters connected with or incidental to operation o f this section.

[46B.Exemption from tax of newly established industrial undertakings set up between the period of July, 2011 and ^[June, [2019]], etc. in certain cases.— (1) Subject to the provisions o f this Ordinance, income, profits

and gains under section 28 from an industrial undertaking (hereinafter referred to as the said undertaking) set-up in Bangladesh between the first day of July, 2011 and the ''[thirtieth day of June, '[2019]] (both days inclusive) shall be exempted from the tax payable under this Ordinance for the period, and at the rate, specified below: i f the said undertaking is set-up i n — ^[(i) Dhaka and Chittagong divisions, excluding Dhaka,

Narayanganj, Gazipur, Chittagong, Rangamati, Bandarban and Khagrachari districts, for a period o f five years beginning wi th the month of commencement o f commercial production o f the said undertaking:

Period of Exemption Rate of Exemption

For the first and second year 100% o f income For the third year 60% o f income For the fourth year 40% of income For the fifth year 20% o f income ;

^[( i i ) Rajshahi, Khulna, Sylhet, Barisal and Rangpur divisions (excluding City Corporation area) and

/. T. Manual, Part-I 128 Sec. 46B

Rangamati, Bandarban and Khagrachari districts, for a period o f ten years beginning wi th the month o f commencement o f commercial production o f the said undertaking:

Period of Exemption Rate of Exemption For the first and second year 100% o f income For the third year 70% o f income For the fourth year 55% o f income For the fifth year 40% o f income For the sixth year 25% of income For the seventh to tenth year 20% of income:

Provided that any industry engaged in the production of item as referred to in clause (e) or clause (I) of sub section (2) shall be entitled to exemption fi'om tax under the provision of this section even if it is set up in the districts of Dhaka, Gazipur, Narayanganj or Chittagong.]

(2) For the purpose o f this section— "industrial undertaking" means an industry engaged in the production of— (a) active pharmaceuticals ingredient industry and radio

pharmaceuticals industry;

(b) barrier contraceptive and rubber latex;

(c) basic chemicals or dyes and chemicals;

(d) basic ingredients of electronic industry (e.g resistance, capacitor, transistor, integrator circuit);

(e) bio-fertilizer;

(f) biotechnology;

(g) boilers;

' [ (gg)brick made o f automatic Hybrid Hoffmann Ki ln technology;]

(h) compressors;


(i) computer hardware;

(j) energy efficient appliances;

(k) insecticide or pesticide;

(1) petro-chemicals;

(m) pharmaceuticals;

(n) processing of locally produced fruits and vegetables;

(o) radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or preservation o f food or disinfecting medicinal equipment);

(p) textile machinery;

(q) tissue grafting; or

(r) any other category o f industrial undertaking as the Government may, by notification in the official Gazette, specify.

(3) Notwithstanding anything contained in sub-section (2), for the purpose of this section industrial undertaking shall not include expansion of such an existing undertaking.

(4) The exemption under sub-section (1) shall apply to the said undertaking i f it fulfils the fol lowing conditions, namely:— (a) that the said undertaking is owned and managed

b y -(i) a body corporate established by or under any

law for the time being in force with its head \ office in Bangladesh; or I

\

( i i ) a company as defined in C<PMI^ ^srft^, : (i>S.!»8 ^ iW? i lr -i 'v Wtt^) wi th its registered office in Bangladesh and having a subscribed and paid up capital o f not less than two mil l ion taka on the date of commencement o f commercial production;


(b) that thirty percent o f the exempted income under sub-section (1) is invested in the said undertaking or in any new industrial undertaking during the period o f exemption or within one year from the end of the period to which the exemption under that subsection relates and in addition to that, another ten percent o f the exempted income under sub-section (1) is invested in each year before the expiiy of three months from the end o f the income year in the purchase o f shares o f a company listed with any stock exchange, failing which the income so exempted shall, notwithstanding the provisions of this Ordinance, be subject to tax in the assessment year for which the exemption was allowed:

Provided that the quantum of investment referred to in this clause shall be reduced by the amount of dividend, if any, declared by the company enjoying tax exemption under this section;

(c) that the said undertaking is not formed by splitting up or by reconstruction or reconstitution of business already in existence or by transfer to a new business o f any machinery or plant used in business which was being carried on in Bangladesh at any time before the commencement o f the new business;

that the said undertaking is approved, and during the relevant income year, stands approved by the Board for the purposes o f this section;

that application in the prescribed form for approval for the purposes of this section, as verified in the prescribed manner, is made to the Board within six months from the end of the month of commencement o f commercial production;

that the said undertaking obtained a clearance certificate for the relevant income year from the Directorate o f Environment;

(d)

(e)


(g) that the said undertaking maintains books of accounts on a regular basis and submits return of its income as per provisions laid down in section 75 o f this Ordinance.]

(5) Notwithstanding anything contained in this section, where an undertaking enjoying exemption o f tax under this section is engaged in any commercial transaction wi th another undertaking or company having one or more common sponsor directors, and during the course o f making an assessment o f the said undertaking i f the Deputy Commissioner o f Taxes is satisfied that the said undertaking has purchased or sold goods at higher or lower price in comparison to the market price with intent to reduce the income o f another undertaking or company, the exemption o f tax o f that undertaking shall be deemed to have been withdrawn that assessment year in which such transaction is made.

(6) The Board shall give its decision on an application made under clause (e) o f sub-section (4) within forty five days from the date o f receipt o f the application by the Board, fail ing which the undertaking shall be deemed to have been approved by the Board for the purposes of this section:

Provided that the Board shall not reject any application made under this section unless the applicant is given a reasonable opportunity of being heard.

(7) The Board may, on an application o f any person aggrieved by any decision or order passed under subsection (6), i f the application is made within four months o f the receipt or such decision or order, review the previous decision, order or orders and pass such order in relation thereto as it thinks f i t .

(8) The income, profits and gains o f the undertaking to which this section applies shall be computed in the same manner as is applicable to income chargeable under the head "Income from business or profession".


Provided that in respect of depreciation, only the allowances for normal depreciation specified in paragraph 3 of the Third Schedule shall be allowed.

(9) The income, profits and gains o f the undertaking to which this section applies shall be computed separately from other income, profits and gains o f the assessee, i f any, and where the assessee sustains a loss from such i undertaking it shall be carried forward and set of f against the profits and gains o f the said undertaking for the next year and where it cannot be whol ly set off, the amount o f the loss not so set off, shall be carried forward for the fol lowing year and so on, but no loss shall be carried forward beyond the period specified by the Board in the order issued under sub-section (6) or (7).

(10) Unless otherwise specified by the Government, nothing contained in this section shall be so construed as to exempt the fol lowing from tax chargeable under this section:-(a) any dividend paid, credited or distributed or


(b) any income o f the said undertaking classifiable as "Capital gains" chargeable under the provisions of section 31;

(c) any income o f the said undertaking resulting from disallowance made under section 30.

(11) Where any exemption is allowed under this section and in the course o f making assessment, the Deputy Commissioner o f Taxes is satisfied that any one or more o f the conditions specified in this section are not fulfi l led, the exemption shall stand withdrawn for the relevant assessment year and the Deputy Commissioner o f Taxes shall determine the tax payable for such year.

(12) Any such undertaking approved under this section may, not later than one year from the date o f approval, apply

/. T. Manual, Part-I 133 Sec. 46B, 46C

in wr i t ing to the Board for the cancellation of such approval, and the Board may pass such order or orders thereon as it may deem fit .

(13) Notwithstanding anything contained in this section, the Board may, in the public interest, cancel or suspend fully or partially any exemption allowed under this section.

(14) The Board may make rules regulating the procedure for the grant o f approval under sub-section (6), review under sub-section (7), furnish information regarding payment o f other taxes by the said undertaking, and take such other measures connected therewith or incidental to the operation o f this section as it may deem fit.

'[46C.Exemption from tax of newly established physical infrastructure facility set up between the period of July, 2011 and "[June, ^[2019]], etc. in certain cases.— ' [ (1) Subject to the provisions o f this Ordinance, income,

profits and gains under section 28 from physical infrastructure facility, hereinafter referred to as the said facility, set up in Bangladesh between the first day of July, 2011 and the thirtieth day o f June, '[2019] (both days inclusive) shall be exempted from the tax payable under this Ordinance for ten years beginning with the month o f commencement o f commercial operation, and at the rate, specified below:

Period of Exemption Rate of Exemption

For the first and second year 100% o f income For the third year 80% of income For the fourth year 70% o f income For the fifth year 60% o f income For the sixth year 50% o f income

/. T. Manual, Part-I 134 Sec. 46C

For the seventh year 40% o f income For the eighth year 30% o f income For the ninth year 20% o f income For the tenth year 10% o f income. ]

(2) For the purpose o f this section, "physical infrastructure faci l i ty" means,— (a) deep sea port;

(b) elevated expressway;

(c) export processing zone;

(d) flyover;

(e) gas pipe line,

(f) Hi-tech park;

(g) Information and Communication Technology ( ICT) village or software technology zone;

(h) Information Technology ( IT) park;

( i ) large water treatment plant and supply through pipe line;

(j) Liquefied Natural Gas ( L N G ) terminal and transmission line;

(k) mono-rail;

(1) rapid transit;

(m) renewable energy (e.g energy saving bulb, solar energy plant, windmi l l ) ;

(n) sea or river port;

(o) ' [ to l l road or bridge];

(p) underground rail ;

(q) waste treatment plant; or


(r) any other category o f physical infrastructure facility as the Government may, by notification in the official Gazette, specify.

(3) The exemption under sub-section (1) shall apply to the said facility i f it fulfils the following conditions, namely:— (a) that the said facility is owned and managed by—

(i ) a body corporate established by or under any law for the time being in force with its head office in Bangladesh; or

( i i ) a company as defined in 'C^sT"^ srlt , iSicsS (b!s.S.8 ib- -Ri wlt=T) with its registered office in Bangladesh and having a subscribed and paid up capital of not less than two million taka on the date of commencement of commercial operation;

(b) that thirty percent of the exempted income under sub-section (1) is invested in the said facility or in any new physical infrastructure facility during the period o f exemption or within one year from the end o f the period to which the exemption under that sub-section relates and in addition to that, another ten percent of the exempted income under subsection (1) is invested in each year before the expiry o f three months from the end of the income year in the purchase of shares o f a company listed with any stock exchange, failing which the income so exempted shall, notwithstanding the provisions of this Ordinance, be subject to tax in the assessment year for which the exemption was allowed:

Provided that the quantum of investment referred to in this clause shall be reduced by the amount of dividend, if any, declared by the company enjoying tax exemption under this section:

(c) that the said facility is approved, and during the relevant income year, stands approved by the Board for the purposes o f this section;

T. Manual, Part-I 136 Sec. 46C

(d) that application in the prescribed form for approval for the purposes of this section, as verified in the prescribed manner, is made to the Board within six months from the end o f the month of commencement o f commercial operation;

(e) that the said facility maintains books o f accounts on a regular basis and submits return o f its income as per provisions o f section 75 o f this Ordinance.

(4) The Board shall give its decision on an application made under clause (d) o f sub-section (3) within forty five days from the date o f receipt o f the application by the Board, failing which the facility shall be deemed to have been approved by the Board for the purposes o f this section:

Provided that the Board shall not reject any application made under this section unless the applicant is given a reasonable opportunity of being heard.

(5) The Board may, on an application o f any person aggrieved by any decision or order passed under subsection (4), i f the application is made within four months o f the receipt o f such decision or order, review the previous decision, order or orders and pass such order in relation thereto as it thinks f i t .

(6) The income, profits and gains o f the facility to which this section applies shall be computed in the same manner as is applicable to income chargeable under the head "Income from business or profession":

Provided that in respect of depreciation, only the allowances for normal depreciation specified in paragraph 3 of the Third Schedule shall he allowed.

(7) The income, profits and gains of the facility to which this section applies shall be computed separately from other income, profits and gains of the assessee, i f any, and where the assessee sustains a loss from such facility it shall be carried forward and set off against the profits and gains of the said facility for the next year and where it cannot be wholly set o f f the amount of the loss not so set o f f shall be


carried forward for the following year and so on, but no loss shall be carried forward beyond the period specified by the Board in the order issued under sub-section (4) or (5).

(8) Unless otherwise specified by the Government, nothing contained in this section shall be so construed as to exempt the following from tax chargeable under this section:— (a) any dividend paid, credited or distributed or


(b) any income o f the said facility classillable as "Capital gains" chargeable under the provisions of section 31 ;

(c) any income o f the said facility resulting from disallowance made under section 30.

(9) Where any exemption is allowed under this section and in the course o f making assessment, the Deputy Commissioner o f Taxes is satisfied that any one or more o f the conditions specified in this section are not fulfilled, the exemption shall stand withdrawn for the relevant assessment year and the Deputy Commissioner o f Taxes shall determine the tax payable for such year.

(10) Any such facility approved under this section may, not) later than one year from the date o f approval, apply in wr i t ing to the Board for the cancellation of such approval, and the Board may pass such order or orders thereon as it may deem fit .

(11) Notwithstanding anything contained in this section, the Board may, in the public interest, cancel or suspend full} or partially any exemption allowed under this section.

(12) The Board may make rules regulating the procedure fo the grant o f approval under sub-section (4), review unde sub-section (5), furnish information regarding paymer o f other taxes by the said facility, and take such othe measures connected therewith or incidental to th operation o f this section as it may deem fit.J

/. T. Manual, Part-I 138 Sec. 47

47. Exemption of income of co-operative societies.— (1) The tax shall not be payable by a co-operative society

' [ including a co-operative society carrying on the business o f banking] in respect of— (a) so much o f its income as is derived by it as a result

o f such o f its dealings with its members as involve sale o f goods, the lending o f money or the lease of buildings and land which is for the personal use of such members, or where such member is a firm or an association o f persons, for the personal use of the partners or members thereof;

(b) the entire income from business carried on by it, i f it is engaged in the fo l lowing :— (i) agricultural or rural credit;

( i i ) cottage industry;

( i i i ) marketing o f agricultural produce o f its members;

( iv) purchase o f agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose o f supplying them to its members; or

(v) such processing, not being the performance of any manufacturing operation with the aid of power, of the agricultural produce o f its members as is ordinarily employed by a cultivator to render marketable the agricultural produce raised by him;

(c) any income from interest and dividends derived from its investments wi th any other co-operative society; and

(d) any income derived from the letting o f godowns or warehouses for the purpose o f storage, processing or facilitating the marketing o f commodities belonging or meant for sale to its members.

/. T. Manual, Part-I 139 Sec. 47

Explanation.—For the purpose of this section,— (a) "cottage industry" means an enterprise, not being

owned by a jo in t stock company which fulfils the fol lowing conditions, namely:— (i ) it is basically an enterprise in which the

owner is the investor, a full-time worker and the actual entrepreneur;

( i i ) the capital invested in plant, machinery and equipment does not exceed '[three lakh taka] at any time during the income year;

( i i i ) the number o f workers, including the owner and the members o f his family, shall not on any one twenty-four hour day during the income year, exceed ^[fifteen]; and

( iv) the owner o f the enterprise or any member o f his family does not own any other industrial or commercial enterprise either in his own name or in the name o f any other person; and

(b) "member o f his family", in relation to the owner of an enterprise, means the parents, spouse and children dependent on the owner and employed in the enterprise, whether working full-time or part-time, or whether for or without any wages, remuneration or compensation in any form.

(2) Nothing contained in sub-section (1) shall apply to a cooperative society carrying on such business o f insurance as is carried on by a mutual insurance association in respect o f its profits and gains to which paragraph 8 o f the Fourth Schedule applies.

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ITO Section 46,47