TDS Rate FY 2024-2025 in Bangladesh

Table of Contents

Introduction - TDS Rate FY 2024-2025 in Bangladesh

TDS Rate FY 2024-2025 in Bangladesh – Under the Income Tax Act of 2023, Tax Deduction at Source (TDS) is a crucial compliance requirement for various entities. This obligation extends to businesses, government organizations, and NGOs alike. Even smaller entities with a turnover of Tk. 1 crore must adhere to TDS regulations. Due to the extensive scope of TDS, it is imperative for all stakeholders to be well-versed with the applicable rates. In this blog post, we will discuss the TDS rates for the financial year 2024-2025.

What is TDS?

TDS, stands for Tax Deduction at Source (TDS), refers to the tax withhold at the time of making payment. All withholding entities are required to deduct tax at the applicable rate when paying for goods or services.

For example, let’s consider ABC Limited, which received internet service from XYZ Limited. XYZ Limited issued an invoice for Tk. 100,000, inclusive of tax. When ABC Limited makes the payment, they will withhold Tk. 10,000 as TDS. This means ABC Limited will pay XYZ Limited Tk. 90,000 after deducting Tk. 10,000 as TDS. This process is what we refer to as TDS.

What is TCS?

Tax Collection at Source (TCS) refers to the process by which the revenue authority collects tax at the time of a transaction. Unlike Tax Deduction at Source (TDS), where tax is deducted from the payment, TCS involves collecting tax along with the payment.

A common example of TCS is the tax collected by the Customs Authority during the import of goods into Bangladesh. TCS also applies at the time of issuance and renewal of certain certificates or the registration of title transfers for land, buildings, or apartments.

When should Tax be Deducted?

Tax Deduction at Source (TDS) is applicable only when payment are made. In accounting recording system, two transactions typically occur for any goods or services: recording the invoice in the accounting system and processing the payment based on the agreed terms. In Bangladesh, it is important to note that TDS is applied at the time of payment, not during the initial invoice recording.

Who have to deduct Tax ?

As per Section 140(3) of Income Tax Act 2023, below are the withholding entities who have to deduct tax when making payment:

(a) any company, firm, association, trust or fund;

(b) Public-Private Partnership;

(d) any hospital, clinic or diagnostic center;

(e) any e-commerce platform, called by whatever name, having an annual turnover exceeding Taka 1 (one) crore;

(f) hotels, resorts, motel, restaurant, convention center, community centers, transport agencies having an annual turnover exceeding Taka 1 (one) crore;

(g) any person, other than a farmer, engaged in the production and supply of tobacco leaves, cigarettes, bidis, jorda, gul and other tobacco products;

The above-mentioned entities are responsible for deducting tax at the applicable rate when making payments to vendors.

Legal Reference for Tax Deduction at Source (TDS)

The TDS rates are outlined in Chapter 1 and 2 of Part 7 of the Income Tax Act 2023, while the TCS rates are specified in Chapter 3 of the same part. Here is the summary of TDS and TCS sections under Income Tax Act 2023:

Table of contents of TDS & TCS as per Income Tax Act 2023:
Part	Chapter	Tax Type	Sections
Part 7	Chapter 1	TDS	Section 86 -118
Part 7	Chapter 2	TDS	Section 119
Part 7	Chapter 3	TCS	Section 120 -139

Additionally, the National Board of Revenue (NBR) issues Tax Deduction Rules (TDS) annually to specify the TDS and TCS rates and the deadlines for depositing the deducted or collected tax. The TDS rates for the financial year 2024-2025 are detailed in SRO No. 161-Law/Income Tax-36/2024, dated 29 May 2024.

A comprehensive understanding of the relevant sections and SRO is essential for knowing the applicable TDS rates. Keep in mind that the NBR may periodically update this SRO. You can access the complete SRO, along with its latest amendments, here:

TDS Rate FY 2024-2025 in Bangladesh.

Section wise TDS rates for FY 2024-2025

Here is the section-wise TDS rate FY 2024-2025 in Bangladesh:

Section Ref	Particulars		ITA 2023 Rate	TDS Rules Ref	Rate as per TDS Rules
Sec 86	Deduction of tax at source from income from employment		Average Rate	N/A	N/A
Sec 87	Deduction of tax from remuneration to members of parliament		Average Rate	N/A	N/A
Sec 88	Deduction from payment to workers’ participation fund		10%	N/A	N/A
Sec 89	Payment to contractors & sub- contractors Supply of goods/ Manufacture, process or conversion or printing, packaging or Binding (See below para for more TDS rate u/s 89 & Rule 3)		Not Exceeding 10%	Rule-3	10% === >>> Supply of tobacco products including cigarettes, bidi, zarda, tobacco leaves and gul
					7% === >>> Manufacturing, process or conversion, civil works, construction, engineering or similar works
					5% === >>> In case of any other supply not mentioned above or in the table (see below for the table)
Sec 90	Deduction from the payment services		Not exceeding 20%	Rule-4
	1	Advisory or consultancy service		Rule-4(1)	10%
	2	Professional service , technical services fee, or technical assistance fee		Rule-4(2)	10%
	3	(i) Catering service;		Rule-4(3)(i)	(1) on commission or fee 10% (2) on gross bill amount 2%
		(ii) Cleaning service		Rule-4(3)(ii)
		(iii) Collection and recovery service;		Rule-4(3)(iii)
		(iv) Private security service;		Rule-4(3)(vi)
		(v) Manpower supply service;		Rule-4(3)(v)
		(vi) Creative media service;		Rule-4(3)(vi)
		(vii) Public relations service;		Rule-4(3)(vii)
		(viii) Event management service;		Rule-4(3)(viii)
		(xi) Training, workshop, etc. organization and management service;		Rule-4(3)(ix)
		(x) Courier Service		Rule-4(3)(x)
		(xi) Packing and Shifting Service		Rule-4(3)(xi)
		(xii) any other service of similar nature		Rule-4(3)(xii)
	4	Media buying agency service		Rule-4(4)	(1) on commission or fee 10% (2) on gross bill amount 0.65%
	5	Indenting commission		Rule-4(5)	8%
	6	Meeting fees, training fees or honorarium		Rule-4(6)	10%
	7	Mobile network operator, technical support service provider		Rule-4(7)	12%
	8	Credit rating service		Rule-4(8)	10%
	9	Motor garage or workshop		Rule-4(9)	8%
	10	Private container port or dockyard service		Rule-4(10)	8%
	11	Shipping agency commission		Rule-4(11)	8%
	12	Stevedoring/berth operation commission		Rule-4(12)	(1) on commission or fee 10% (2) on gross bill amount 5%
	13	(i) Transport service, vehicle rental service, carrying service and repairs & maintenance services (ii) any other service under any sharing economy platform including ride sharing service, coworking space providing service and accommodation providing service		Rule-4(13)(i) & (ii)	5%
	14	Wheeling charge for electricity Transmission		Rule-4(14)	3%
	15	Internet Service		Rule-4(15)	10%
	16	Agent, distributor, agency or channel partner, by whatever name called, of mobile financial service provider company		Rule-4(16)	10%
	17	Freight forward agency commission		Rule-4(17)	10%
	18	In case of payment for freight forward, on gross bill irrespective of inclusion of commission or not		Rule-4(18)	2.50%
	19	Any other services which is not mentioned in serial no. 1-18 above and not deductible under any other section of the ITA, 2023		Rule-4(19)	10%
Sec 91	Deduction from payment for Intangible assets		10% or 12% (If Base value exceeds Tk. 25 lac)	N/A	N/A
Sec 92	Deduction of tax from advertising bill of media broadcasting		5%	N/A	N/A
Sec 93	Deduction from payment to actors, actresses, producers, etc.		10%	N/A	N/A
Sec 94	Deduction or collection at source from commission, discount, fees etc.		10%, 5% or 3%	N/A	N/A
Sec 95	Collection of tax from travel agent		0.30%	N/A	N/A
Sec 96	Deduction from the commission of letter or credit		5%	N/A	N/A
Sec 97	Deduction from payment on account of local letter of credit		3%, 1%, 2% or 1%	N/A	N/A
Sec 98	Deduction of tax from payments by cellular mobile phone operators		20%	N/A	N/A
Sec 99	Deduction of tax from any payment in excess of premium pain on life insurance policy		5%	N/A	N/A
Sec 100	Deduction from insurance commission		5%	N/A	N/A
Sec 101	Deduction at source from fees, etc. of surveys of general insurance company		15%	N/A	N/A
Sec 102	Deduction from interest on saving deposit and fixed deposit etc.		20%,10% or 10%	N/A	N/A
Sec 104	Deduction from interest income of resident		10%	N/A	N/A
Sec 105	Deduction from interest of saving instruments		10%	N/A	N/A
Sec 106	Deduction at source from interest on securities		5%	N/A	N/A
Sec 107	Deduction at source from discount on the real value of Bangladesh Bank bills		Maximum Rate	N/A	N/A
Sec 108	Deduction of tax from receipts in respect of international phone cell		1.5% or 7.5%	N/A	N/A
Sec 109	Deduction of tax at source from rent		5%	N/A	N/A
Sec 110	Deduction of tax for rendering , services from convention hall, conference centre etc.		5%	N/A	N/A
Sec 111	Deduction at source from compensation against acquisition of property		6% or 3%	N/A	N/A
Sec 112	Deduction of tax at source from export cash subsidy		10%	N/A	N/A
Sec 114	Deduction of tax against purchase of power		6%	N/A	N/A
Sec 115	Deduction of tax from income received from real estate developer to land owner		15%	N/A	N/A
Sec 116	Deduction of tax from commission or remuneration paid to agent of foreign buyer		10%	N/A	N/A
Sec 117	Deduction of tax from dividends		10% or 15%	N/A	N/A
Sec 118	Deduction from income from lottery etc.		20%	N/A	N/A
Sec 119	Deduction or collection of tax from income of non-residents		Not Exceeding 30%	Rule-5
	1	Advisory or consultancy service		Rule-5(1)	20%
	2	Pre-shipment inspection service		Rule-5(2)	20%
	3	Professional service, technical services, technical know-how or technical assistance		Rule-5(3)	20%
	4	Architecture, interior design or landscape design, fashion design or process design		Rule-5(4)	20%
	5	Certification rating etc.		Rule-5(5)	20%
	6	Charge or rent for satellite, airtime or frequency, rent for channel broadcast		Rule-5(6)	20%
	7	Legal service		Rule-5(7)	20%
	8	Management service including event management		Rule-5(8)	20%
	9	Commission		Rule-5(9)	20%
	10	Royalty, license fee or payments related to intangibles		Rule-5(10)	20%
	11	Interest		Rule-5(11)	20%
	12	Advertisement broadcasting		Rule-5(12)	20%
	13	Advertisement making or Digital marketing		Rule-5(13)	15%
	14	Air transport or water transport not being the carrying services mentioned in section 259 and 260		Rule-5(14)	7.50%
	15	Contractor, sub-contractor, sub-sub-contractor of manufacturing, process or conversion, civil work, construction, engineering or works of similar nature		Rule-5(15)	7.50%
	16	Supply of goods		Rule-5(16)	7.50%
	17	Capital gain		Rule-5(17)	15%
	18	Insurance premium		Rule-5(18)	10%
	19	Rental of machinery, equipment etc.		Rule-5(19)	15%
	20	Dividend-		Rule-5(20)
		(a) company, fund and trust		Rule-5(20)(1)	20%
		(b) any other person, not being a company, fund and trust		Rule-5(20)(2)	30%
	21	Amount received by Artist, singer or player		Rule-5(21)	30%
	22	Salary or remuneration		Rule-5(22)	30%
	23	Exploration or drilling in petroleum operations		Rule-5(23)	5.25%
	24	Survey for Coal, oil or gas exploration		Rule-5(24)	20%
	25	Fees, etc. of surveyors of general insurance company		Rule-5(25)	5.25%
	26	Any service for making connectivity between oil or gas field and its export point		Rule-5(26)	5.25%
	27	Bandwidth payment		Rule-5(27)	10.0%
	28	Courier Services		Rule-5(28)	15%
	29	Any other payments		Rule-5(29)	20%
Sec 124	Deduction of tax from any income remitted from aboard in connection with any service, revenue, sharing etc.		7.5%, 10% or 2.5%	N/A	N/A

TDS Rate as per Rule 3 (u/s 89)

Sl. No	Description	Rate
1	In case of an industrial undertaking engaged in production of MS Billets and & in case of locally procured MS Scarp	0.50%
2	In case of oil supplied by oil marketing companies engaged in marketing of petroleum oil and lubricant	0.60%
3	In case of oil supplied by dealer or agent other than filling station of petroleum oil marketing companies	1%
4	In case of supply of paddy, rice, wheat, potato, fish, meat, onion, garlic, peas, chickpeas, lentils, ginger, turmeric, dried chillies, pulses, maize, coarse flour, flour, salt, edible oil, sugar, black pepper, cinnamon, cardamom, clove, date, cassia leaf, jute, cotton and yarn	1%
5	In case of supply of all kinds of fruits	2%
6	In case of an industrial undertaking engaged in producing cement, Ceramic products, ferro alloy product iron or iron products except MS Billets	2%
7	In case of supply of oil by any company engaged in oil refinery	2%
8	In case of company engaged in gas distribution	2%
9	In case of company engaged in gas transmission	3%
10	In case of supply of Extra High Voltage Power Cables ranging from 33 KV to 500 KV by local manufacturers having own Vertical Continuous Vulcanization line	3%
11	In case of supply of books to a person other than the Government, or any authority, corporation or body of the Government, including all of its attached and sub-ordinate offices	3%
12	In case of supply of recycled lead	3%
13	In case of supply of industrial raw materials to a manufacturer	3%
14	a) In case of supply of goods not mentioned in the serial no. 1-12 in the table b) In any other cases mentioned under section 89	5%

Section wise TCS rates for FY 2024-2025

Section	Particulars	ITA 2023 Rate	TDS Rules Ref	Rate as per TDS Rules
94(3)	From Distributors or any other person (where sale to distributor lower than MRP)	Price × 5% × 5%	N/A	N/A
120	From importers	Maximum 20%	Rule 8	Refer to Rule 8
121	Export manpower	10%	N/A	N/A
122	Clearing and Forwarding Agents	10%	N/A	N/A
123	Export income	1%	N/A	N/A
125	In case of Land transfer	Maximum 20%	Rule 6	Refer to Rule 6
126	Real Estate or Land Developer in case of Buildings or Apartments constructed for residential purposes	Maximum 20%	Rule 7	Refer to Rule 7
127	Commission on Govt. stamp, court fees and cartridge paper	10%	N/A	N/A
128	Lease of property	4%	N/A	N/A
129	Cigarette manufacturers	10%	N/A	N/A
130	Brick manufacturers	80,000 120,000 160,000 220,000	N/A	N/A
131	Issuance or Renewal of Trade License	500 1,000 2,000	N/A	N/A
132	Shipping business of a Resident	3% 5%	N/A	N/A
133	Sales by public auction	10% 1%	N/A	N/A
134	Transfer of share	15%	N/A	N/A
135	Transfer of securities including placement share	Refer to Section 135	N/A	N/A
136	Transfer of share of shareholder of stock exchanges	15%	N/A	N/A
137	Member of stock exchanges	0.05%	N/A	N/A
138	Motor vehicles plying commercially	Refer to Section 138	N/A	N/A
139	Operations of marine vessels	Refer to Section 139	N/A	N/A
153	Tax Collection from Motor vehicle owners	Refer to Section 153	N/A	N/A

No TDS for Services Provided by Banks, Insurance, Financial Institutions, or Mobile Financial Service Providers

According to the proviso of Rule 4 of the TDS Rules 2024, tax deduction is not applicable for services rendered by banks, insurance companies, financial institutions, or Mobile Financial Service (MFS) providers. This means that any services provided by these financial entities are exempt from TDS, and no tax will be deducted.

No Tax Deduction for Petrol or Gas Purchases

According to Clause 4 of Rule 3 of the TDS Rules 2024, no tax deduction is required for oil purchases from petrol stations. Additionally, the same clause specifies that tax deduction is not applicable for gas purchases from gas stations also.

50% Higher TDS for Cash Payments and Lack of PSR

According to Section 142 of the Income Tax Act 2023 and Rule 14 of the TDS Rules 2024, the tax deduction rate will be 50% higher if the payment is made in cash (i.e., not via bank transfer). Furthermore, the TDS rate will be an additional 50% higher if the recipient is required to present a Proof of Submission of Return (PSR) but fails to do so at the time of payment. Please refer to the table below to understand the TDS implications for cash payments and the absence of PSR.

Nature of transactions	Normal TDS Rate	Bank Transfer	PSR	Applicable TDS rate
Purchase of Goods	5%	Yes	Yes	5%
Purchase of Goods	5%	No	Yes	7.50%
Purchase of Goods	5%	Yes	No	7.50%
Purchase of Goods	5%	No	No	10%
Internet Service Provider (ISP)	10%	Yes	Yes	10%
Internet Service Provider (ISP)	10%	No	Yes	15%
Internet Service Provider (ISP)	10%	Yes	No	15%
Internet Service Provider (ISP)	10%	No	No	20%

Gross Up Method for Non-Deduction of Tax

According to Section 141 of the Income Tax Act 2023 and Rule 13 of the TDS Rules 2024, when a payment is made without tax deduction, the base amount on which tax deduction would have been applicable is determined using the following formula:

Base amount = (100 × Payment) / (100 – TDS rate)

This method is known as the gross up method. Please refer to the example below to understand how the gross up method works in the case of payment without tax deduction:

For instance, ABC Limited purchased office furniture from Jashim Furniture for Tk. 100,000 with no tax deducted at source. The possible scenarios are as follows:

Amount	Bank Transfer	PSR	Normal TDS Rate	Applicable TDS rate	Base amount (100 × Payment) / (100 – TDS rate)	TDS Amount
(a)	(b)	(c)	(d)	(e)	(f)=(100×a)/(100-e)	(g)=f×e
100,000	Yes	Yes	5%	5%	105,263	5,263
100,000	Yes	No	5%	7.50%	108,108	8,108
100,000	No	Yes	5%	7.50%	108,108	8,108
100,000	No	No	5%	10%	111,111	11,111

Penalty for Non-Deduction of Tax

If an organization is required to deduct tax but fails to do so, it will be treated as an assessee in default. The organization must then pay the due deducted amount along with interest at a rate of 2% per month on the unpaid amount until the payment is made. Additionally, the tax authority may impose a personal penalty of Tk. 10 lakh on individuals liable to deduct tax at source. Please read out below section of Income Tax Act 2023 to know more on penalty:

Section 143 – Penalty for TDS non-compliance

Conclusion - TDS rate FY 2024-2025 in Bangladesh

Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) are crucial day-to-day tax obligations for businesses operating in Bangladesh. Tax is deducted from payments at rates determined based on the nature of the transaction. If a payment is made without tax deduction, the gross up method is applied to determine the exact TDS amount.

To understand TDS requirements thoroughly, it is essential to refer to Chapters 1, 2, and 3 of Part 7 of the Income Tax Act 2023. Additionally, familiarity with the TDS Rules 2024 issued by the National Board of Revenue (NBR) is necessary. Please note TDS Rules 2024 specify various TDS rates in addition to those mentioned in the Income Tax Act 2023.