VAT Penalty under VAT Act Bangladesh – VAT penalty refers to the imposition of financial penalty by the National Board of Revenue (NBR) under the Value Added Tax & Supplementary Duty Act 2012 for non-compliances or irregularities. National Board of Revenue (NBR) generally imposes penalty for violation of provisions of Value Added Tax & Supplementary Duty Act 2012. Please note as per Section 85(5) of VAT & SD Act 2012, VAT penalty is imposed in addition of VAT payable amount.
Why VAT Penalty imposed by the VAT Authority?
Imposition of penalty signifies the consequences faced by those who fail to comply with VAT regulations, such as:
- Failure to keep books of accounts as per VAT law;
- Failure to pay the required VAT amount;
- Providing false information to the VAT authorities;
- Conducting business activities without adhering to VAT related rules and polices;
- Taking undue VAT benefit by misleading information or documentation; and
- Furnishing incorrect details in VAT-related documentation, and many more.
Different types of penalties are imposed under the VAT & SD Act 2012 for different types of non-compliances or irregularities.
VAT Penalty under VAT Act Bangladesh
Penalties related to VAT are imposed under Section 85 of the VAT & SD Act 2012. The provisions regarding VAT penalties under Section 85 are as follows:
SL. No. | Failure or irregularity | Amount of penalty |
(1) | (2) | (3) |
(a) | Non-compliance or irregularity for not applying for registration or enlistment within the prescribed time-limit; | 10 thousand taka only |
(b) | Non-compliance or irregularity for not displaying the registration or turnover tax certificate in a visible place; | 10 thousand taka only |
(c) | Non-compliance or irregularity for not informing the Commissioner of the change in the information of the economic activity within the prescribed time-limit; | 10 thousand taka only |
(d) | Non-compliance or irregularity for not applying for cancellation of registration or enlistment within the prescribed time-limit; | 10 thousand taka only |
(e) | Non-compliance or irregularity for not abiding by the provision of section 9(5); | 10 thousand taka only |
(f) | Non-compliance or irregularity for not filing the VAT or turnover tax return within the prescribed time period; | 5 thousand taka only |
(g) | Non-compliance or irregularity for not making inclusion of the output tax in the return; | Not less than half and up to equal of the amount of output tax not included |
(h) | Irregularities for taking more input tax credit than entitlement in the return; | Not less than half and up to equal of the amount of input tax irregularly taken |
(i) | Irregularity relating to making an increase of a decreasing adjustment or making a decrease of an increasing adjustment in the return; | Twice of the increased decreasing adjustment or half of the decreased increasing adjustment and up to equal of the amount |
(j) | Non-compliance or irregularity for not issuing tax invoice, credit note, debit note and withholding tax certificate; | 10 thousand taka only |
(k) | Non-compliance or irregularity for not keeping records in the prescribed manner; | 10 thousand taka only |
(l) | Non-compliance or irregularity for not furnishing fixed security; | 10 thousand taka only |
(m) | Irregularity for willingly evading or attempting to evade assessment and payment of taxes; | Not less than half and up to equal of the amount of tax evaded |
(n) | Non-Compliance or irregularity of not submitting the input-output coefficient within the prescribed time-limit; | 10 thousand taka only |
(o) | Non-Compliance or irregularity to comply with the provisions mentioned in Section 51, 53, 54, 64 and 107 of the Act in respect of supply of exempted goods or services; | 1 lakh taka only |
Imposition of Interest on VAT payable amount
Please note VAT Authority can impose interest on VAT Payable amount. Generally, interest is imposed in addition to VAT payable amount. As per Section 127 of VAT & SD Act 2012, if any person fails to pay the required VAT on or before the due date of payment, he shall be liable to pay interest. The provision of imposition of interest is as follows:
- If a person fails to pay a VAT payable on or before the due date of payment, he shall be liable to pay an interest at a simple rate of 1% per month on the amount of VAT payable, from the next day of due date to the date of payment.
Please note that “the date of payment” mentioned above shall not exceed 24 months.
Imposition of interest in case of collection of arrear of withholding VAT
As per Rule 6 of VDS Rules 2021, the withholding entity shall deposit the withholding VAT to the government ex-chequer within 7 days from the end of the month in which such deduction of collection was made.
If payment of VDS was not made within such time limit, then the responsible person is liable to pay simple interest @2%/ bi-annually
Personal penalty in case of failure to pay deducted VAT
In case of failure to deposit deducted VAT into the government treasury within the specified time as mentioned under Rule 6 of VDS Rules 2021, individuals responsible for VAT deduction, persons liable for depositing the deducted VAT, and the concerned officials of the respective entity may be liable to pay a personal penalty not exceeding 25,000 (twenty-five thousand) taka under Section 85(1)(ka) of the VAT Act.
Conclusion - VAT Penalty under VAT Act Bangladesh
According to the VAT & SD Act 2012, the National Board of Revenue (NBR) usually imposes VAT penalties due to non-compliance with various rules and policies. In addition to penalties, the NBR may also impose interest under Section 127 of the VAT Act in applicable cases.
VAT Penalty under VAT Act Bangladesh are intended to enforce compliance with tax laws and ensure fair taxation practices. They serve as a deterrent against non-compliance and aim to maintain the integrity of the tax system by penalizing those who attempt to evade their tax obligations.
We hope the detailed discussion above on VAT Penalty under VAT Act Bangladesh helps you understand in which scenarios VAT-related penalties may be imposed and how to navigate the aspect of interest payments. If you need further guidance on this matter, we’re here to assist you. Please drop your query in comment section.
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