Income from

Agriculture

Dr. Nikhil Chandra Shil, Associate Professor, East West University

 Heads of Income
Income from Salary

Income from Interest on

Securities
7 heads of Income from House Property
income
Income from Agriculture

Under section 20 of Income from Business and

Income Tax Ordinance, Profession
1984 Income from Capital Gain

Income from Other Sources

 Background
In Bangladesh, agricultural income was non-assessable up to the year 1976. It has
brought under the tax net through the Finance Act 1976.

Agricultural income earned by a taxpayer in India is exempt under Section 10(1) of the
Income Tax Act,1961. What is more shocking and surprising is that this so-called
agricultural income is tax-free without any limit.

Agriculture is not the main source of income of farmers in Bangladesh, a country with
agriculture as its economic base, according to a government study.
Major part of income of families of the farmers now comes from non-agro sectors, while
their earning from agriculture sector amounts to only 38 percent.
The rest 62 percent of their income comes from service, industry, trade, various types of
rents, remittance, sale of labor in non-agro sector, and transport business.
Presently just 13 percent of the families of the farmers are fully dependent on
agriculture.
The farming families in Rangpur earn the highest from the agriculture sector. Their
income from agriculture stands at Tk. 92,522, which is Tk. 15,000 higher than the income
of the farmers in other parts of the country.
The farmers in Chattogram earn the highest (Tk. 1, 63, 798) from the non-agro sector.
Source: Report on the Agriculture and Rural Statistics 2018, Bangladesh Bureau of
Statistics (BBS)
 Scope of Agricultural Income

According to Section 2(1) of the Income Tax Ordinance, 1984, ‘agricultural income’
means
• any income derived from any land in Bangladesh and used for agricultural purposes–
(a) by means of agriculture; or
(b) by the performance of any process ordinarily employed by a cultivator to render
marketable the produce of such land; or
(c) by the sale of the produce of the land raised by the cultivator in respect of which
no process, other than that to render the produce marketable, has been performed;
or
(d) by granting a right to any person to use the land for any period; or
• any income derived from any building which-
(a) is occupied by the cultivator of any such land as is referred to in sub-clause (a) in
which any process is carried on to render marketable any such produce aforesaid;
(b) is on, or in the immediate vicinity of such land; and
(c) is required by the cultivator as the dwelling house or store-house or other out-
house by reason of his connection with such land.
 Scope of Agricultural Income
Gain from the sale of the machinery or plant exclusively used for agricultural purpose –
Here such a gain is the excess of sale proceeds over written down value of any
machinery or plant exclusively used for agricultural purpose. But it is to be noted here
that, such a gain cannot be more than the difference between original costs and written
down value of the machinery or plant [Section – 19(17)].

Compensation money received against demolished machinery or plant exclusively used

for agricultural purpose – Where any insurance, salvage or compensation moneys are
received in any income year in respect of any machinery or plant which having been
used by the assessee exclusively for agricultural purpose is discarded, demolished or
destroyed and the amount of such moneys exceed the written down value of such
machinery or plant, shall be deemed to be the income of the assessee for that income
year classifiable under the head "Agricultural income". It is to be noted here that such
compensation money does not exceed the difference between the original cost and the
written down value less the scrap value [Section – 19(19)].
Income from sale of tea – Agricultural income derived from the sale of tea grown and
manufactured by the assessee shall be computed in the prescribed manner [Section –
26(2)]. At present, 60% of the sale proceeds from the sale of tea are considered as
agriculture income and rest of the 40% is as income from business and profession [Rule –
31].
 Scope of Agricultural Income
Other agricultural income by notification – Where the Board, by notification in the
official Gazette, so directs, agricultural income from the sale of rubber, tobacco, sugar or
any other produce grown and manufactured by the assessee may be computed in the
manner prescribed for the purpose [Section – 26(3)]. At present, 60% of the sale
proceeds from the sale of rubber are considered as agriculture income and rest of the
40% is as income from business and profession [Rule – 32]
Provided that in computing such income an allowance shall be made in respect of the
expenditure incurred in the income year by the assessee in connection with the
development of the new areas for bringing them under tea and rubber cultivation.
 Agricultural Income - Types
Income From
Agriculture

Land Building

Fully Partly Other

Granting
Tea, rubber, rights to other
Sale of tobacco,
agricultural sugar etc. Gain on sale
produce of assets
60:40 Rule
Other Income
 Agricultural Income - Other
• Income from cattle rearing
• Income from sale of palm juice and Date juice
• Income from sale of seeds and grass, if grown by human effort
• Income from agricultural cooperative society which was organized for farming and
cattle rearing
• Income from land or assets used for processing the agricultural commodities to
make them marketable
• Income from land leased for agricultural purposes
• Income from any system of sharing of crop generally known as adhi, barga or bhag.
• Income from sale of herbal or medicinal plants
• Income from cultivation of flower and fruits
• Income from sale of honey if produced in agricultural land using special
technologies like special box for Honey-comb.
• Income from dairy farm, provided (a) assessee is the owner of the cattle (b) cattle
are reared in cattle rearing field (c) Milk is processed by the assessee
• Income from poultry farm if they are reared in agricultural land
 Admissible Expenses
Land Development Tax
Any tax, local rate or cess paid
Cost of Production Actual or 60% depending on
maintenance of books of account
Insurance Premium
Maintenance Cost for Irrigation or protective
work or other capital assets
Depreciation at the rate as provided in the Third
Schedule
Interest on Mortgage
Interest on Borrowed Capital
Losses from the Sale of Demolished
Machineries
Losses on Sale or Exchange of Machineries
Other Expenses Not of capital nature
Admissible Expenses – Cost of Production
Does the assessee
maintain proper Yes
books?

Cost of Production
(a) for cultivating the land or raising livestock
thereon
No (b) for performing any process ordinarily employed
by a cultivator to render marketable the produce
of the land
(c) for transporting the produce of the land or the
livestock raised thereon to the market and
Sixty per cent of (d) for maintaining agricultural implements and
the market value machinery in good repair and for providing
of the produce of upkeep of cattle for the purpose of cultivation,
the land processing or transportation as aforesaid
No deduction on account of cost of production shall be admissible if the agricultural
income is derived by the owner of the land from the share of the produce raised
through any system of sharing of crop generally known as adhi, barga or bhag
 Admissible Expenses – Depreciation
Rate of depreciation: [As per the Third Schedule]

Assets Rate
1. Pucca building 10%
2. Kutcha and 15%
3. Kucha building 20%
4. Temporary structure N/A*
5. Pucca walls 5%
6. Fencing of substantial material 10%
7. Tube-well 15%
8. Tanks 10%
9. Pucca irrigation channel 15%
10. Kucha irrigation channel 20%
11. Kucha irrigation wells 33.33%
12. Pucca irrigation wells 5%
13. Bullock drawn iron implements 15%
14. Bullock drawn wooden or leather implements and small other hand/implements 25%
15. Weighing machine 10%
16. Tractors and oil engines and thin implements 15%
17. Power pumping machinery 20%
18. Factor made cart of iron material with rubber tyre 15%
19. Country cart 20%
20. Steam engine 10%
21. Workshop tools 15%
22. Others (machinery, implements, plants and other assets) 10%
 Gain on Assets
Situation 1: Gain on sale of any machinery or plant used for agricultural purposes

Written Down Value

Gain on = Sales
Sale Proceeds - Original Accumulated
Costs - Depreciation

If Sales Proceeds > Written Down Value = Gain on Sale of Assets

If Sales Proceeds < Written Down Value = Loss on Sale of Assets
Maximum Limit of Gain: Original Costs – Written Down Value

Situation 2: Gain on any machinery or plant used exclusively for agricultural purposes
which has been discarded, demolished or destroyed and on which insurance or
compensation money has been received

Salvage or Written Down Value

Gain on =
Disposal
Compensation - Original Accumulated
Money Received Costs - Depreciation

Maximum Limit of Gain: Original Costs – [Written Down Value – Scrap Value]
 Loss on Assets
Situation 1: Loss on any machinery or plant used exclusively for agricultural
purposes which has been discarded, demolished or destroyed and on which no
insurance or compensation money has been received

Written Down Value

Scrap
Loss = Original Accumulated -
- Value
Costs Depreciation

Situation 2: Loss on any machinery or plant used exclusively for agricultural

purposes which has been discarded, demolished or destroyed and on which
insurance or compensation money has been received

Written Down - Scrap - Compensation

Loss =
Value Value Received

Situation 3: Loss on any machinery or plant used exclusively for agricultural

purposes which has been sold or transferred by way of exchange

Written Down - Sale Proceeds or Value at

Loss =
Value which the asset is transferred
 Gain or Loss on Assets
Example 1: Mr. Tareq had a Tractor which was purchased for Tk. 40,000. Due to an accident, the
tractor was destroyed and the insurance company has given a compensation of Tk. 30,000. At the
time of destruction accumulated depreciation of the tractor was Tk. 15,000 and the scrap value is Tk.
1,000. Agricultural income from the insurance claim proceeds should be:
Cost of the machine : Tk. 40,000
Accumulated Depreciation (at the time of sale) : Tk. 15,000
Written down value : Tk. 25,000
Compensation received : Tk. 30,000
Scrap value : Tk. 1,000
Amount to be considered as agricultural income
[Total compensation – (WDV – Scrap value)] : Tk. 6,000

Example 2: Mr. Bisu is the owner of a pump machine which was purchased for Tk. 40,000. Now to
acquire an advance technology in the irrigation plant he sold the pump machine for Tk. 42,000. At the
time of sales the amount of accumulated depreciation of the pump machine was Tk. 18,000.
Agricultural income from the sale proceeds should be:
Cost of the machine : Tk. 40,000
Accumulated Depreciation (at the time of sale) : Tk. 18,000
Written down value : Tk. 22,000
Sale proceeds : Tk. 42,000
Total gain : Tk. 20,000
Capital gain [Sale proceeds – Cost price] : Tk. 2,000
Gain to be considered as agricultural income
[Total gain – Capital gain] : Tk. 18,000
Set-Off and Carry-Forward of Losses
According to Section 37 of the ITO, 1984, any loss from agriculture can be set
off against his income from any other head excluding “Capital Gain”. According
to Section 41 of the ITO, 1984, where, for any assessment year, such loss has
not been so set off, it shall be carried forward to the next following assessment
year, and
•it shall be set off against agricultural income, if any, of the assessee assessable
for that assessment year; and
•if the loss cannot be wholly so set off the amount not so set off shall be
carried forward to the next assessment year and so on for not more than six
successive assessment years.

Decision Rule
Does the assessee Adjust such losses against
Set
have income from Yes income from other sources
any other sources? except ‘Capital Gain’ Off

Carry forward the loss for six Does it fully

No successive years for set off No adjusted? Yes
Non-Assessable Agricultural Income
Agricultural income not exceeding Tk. 200,000 is non-assessable for an individual
assessee, where only source of his income is agriculture [6th Schedule, Part A, Para 29].

Any income thus including agricultural income of an indigenous hillman of any of the hill
districts of Rangamati, Bandarban and Khagrachari, which has been derived solely from
economic activities undertaken within the said hill districts [Sixth Schedule, Part A, Para
27].

Concept Check
Assessable Assessable
Sale of agricultural produce If agricultural production is
Income from building used for made for self-consumption,
agriculture without any commercial
Agricultural Income from borga, adhi, bhag motive
Income Gain on sale of assets
Income from tea, rubber, Upto Tk. 200,000 if agriculture
tobacco, sugar etc. is the only course of income
Income from poultry, fisheries,
honey, floriculture, sericulture, Any income of indigenous
horticulture, cattle rearing etc. hillman from selective areas
Reduced Tax Rate
Any income from production of pelleted poultry feed, production of pelleted feed for
fish, shrimp & cattle, production of seeds, marketing of locally produced seeds, cattle
farming, dairy farming, frog farming, horticulture, Silk tree plantation, Bee keeping, Silk
worm firming, mushroom farming, floriculture is taxable at a reduced tax rate as
follows:
Income Tax Rate
On first Tk. 10 lac 3%
On next Tk. 20 lac 10%
For the rest of the amount 15%

Income from poultry firm will be taxed at following rate:

Income Tax Rate
On first Tk. 20 lac nil
On next Tk. 10 lac 5%
For the rest of the amount 10%

Reduced tax rate on income from Poultry, Shrimp & fish hatchery, fisheries Firm:
Income Tax Rate
On first Tk. 10 lac nil
On next Tk. 10 lac 5%
For the rest of the amount 10%
Specimen Format
Income from Agriculture (Section – 26 & 27): Tk. Tk.
Sale of crops XX
Income from any land or building used for agricultural purposes XX
Income from granting a right [‘Borga’, “adhi” or “bhag”] XX
Income from tea garden or rubber garden [60%] XX
Revenue profit by sale of discarded or demolished agri. machines XX
Other income relating to agri. [sale of palm juice, rearing of cattle] XX XX
Less: Admissible expenses –
(a) Land development tax XX
(b) Any other taxes [local taxes, cess etc] XX
(c) Production costs [If proper books kept – actual, otherwise 60% of sale XX
proceeds]
(a) Insurance Premium XX
(b) Repair and Maintenance of irrigation plant XX XX
(c) Depreciation XX
(d) Interest on Mortgage Loan XX
(e) Interest on Borrowed Capital XX
(f) Losses due to sale of cultivable land XX
(g) losses due to discard or demolish of agri. machineries XX
(h) Other revenue expenses XX
Total Income XX
Less: Exemption (if agriculture is the only source of income) 200,000
Total Taxable Income XX
Problem 1
Mr. Rahman is a farmer whose only income is from agriculture. Compute taxable income
for Mr. Rahman for the year ended on 30th June, 2020 considering: Sale of rice 150
maunds @ Tk. 710 per maund; Sale of potato 300 maunds @ Tk. 150 per maund;
Income from Borga Tk. 40,000; lease of agricultural land Tk. 300,000.

Expenses relating to all these income are: Cost of seeds and fertilizer Tk. 36,500; labor
charge Tk. 40,000; maintenance costs of agricultural equipments Tk. 4,000; union
parisad tax Tk. 5,800; crop insurance premium Tk. 8,200; depreciation on tractor @ 20%
Tk. 14,000. Mr. Rahman has borrowed fund from Krisi Unnayon Bank by Tk. 40,000 at an
annual interest rate of 15% on 15th October 2019. Allowable depreciation for tractor as
per the 3rd Schedule of the ITO, 1984 is at the rate of 15%. Cost of seeds and fertilizer
includes Tk. 1,500 spent against Borga. He maintains books of accounts properly.
Solution 1
Mr. Rahman
Income year: 2019 – 2020; Assessment year: 2020 – 2021
Calculation of Total Income

Income from Agriculture (Section – 26 & 27): Tk. Tk. Tk.

Income from sale of rice (150 × 710) 106,500
Income from sale of potato (300 × 150) 45,000
Income from borga 40,000
Income from lease of agricultural land 300,000 491,500
Less: Admissible expenses:
1. Production costs 79,000
2. Union parisad tax 5,800
3. Crop insurance premium 8,200
4. Allowable depreciation 10,500
5. Interest on borrowed fund 4,250 107,750
Total 383,750
Less: exemption (up to 200,000) 200,000
Total 183,750
Problem 2
Income of Mr. Hossain for the year ended 30th June, 2020 includes, sale of jute 300
maunds @ Tk. 700 per maund; sale of rice 225 maunds @ Tk. 550 per maund; income
from lease of agricultural land Tk. 48,000; income from ferry ghat Tk. 27,000; income
from tea garden Tk. 80,000 and income from sale of honey Tk. 20,000.
Expenses relating to all these income are: Land revenue paid Tk. 9,000; Union parisad
tax Tk. 6,800; Crop insurance premium Tk. 11,500; Allowable depreciation Tk. 8,000;
Interest on mortgage loan Tk. 4,750 and Maintenance costs for irrigation plant Tk.
7,200. Mr. Hossain had a weighing machine which was purchased at Tk. 18,000. It has
become obsolete and has been discarded at Tk. 9,500. At the time of sales the written
down value of the machine was Tk. 13,000. Moreover, he has also sold a tractor at a
price of Tk. 42,000 (cost Tk. 40,000, Accumulated depreciation Tk. 3,000). In addition to
this he had a pump machine which was destroyed by fire and the Insurance
compensation amount Tk. 10,000 (cost 20,000; Acc. Dep. Tk. 12,000, Scrap Tk. 2,000).
When asking for proper books of accounts Mr. Hossain failed to provide any supporting
documents for production costs, although he claimed Tk. 210,000 as production costs.
Compute taxable income for Mr. Hossain.
Solution 2
Income from Agriculture (Section – 26 & 27): Tk. Tk. Tk.
Income from sale of Jute (300 × 700) 210,000
Income from sale of Rice (225 × 550) 123,750
Income from lease of agricultural land 48,000
Income from tea garden (80,000 × 60%) 48,000
Income from sale of honey 20,000
Gain on sale of tractor 3,000
Gain on insurance compensation 4,000 456,750
Less: Admissible expenses:
1. Production costs 200,250
2. Land revenue paid 9,000
3. Union parisad tax 6,800
4. Crop insurance premium 11,500
5. Allowable depreciation 8,000
6. Interest on mortgage loan 4,750
7. Maintenance cost of irrigation plant 7,200
8. Losses due to discard of machine 3,500 251,000 205,750
Income from Business or profession (Section – 28):
Income from tea garden (80,000 × 40%) 32,000
Capital gain (Section – 31):
Capital gain from tractor 2,000
Income from other sources (Section – 33):
Income from ferry ghat 27,000
Total income 266,750
Problem 3
Compute taxable income of Mr. Masum from the given particulars related to the year
ended 30th June, 2020: Sale of Rice 205 maunds @ Tk. 675 per maund; Income from
lease of agricultural land Tk. 78,000; Income from salt production Tk. 15,000; Income
from rubber garden Tk. 92,000; Sale of forest tree Tk. 20,000; and income from sale of
fish from pond Tk. 35,000. He didn’t maintain the books of accounts properly.
Expenses relating to all these income are: Production costs Tk. 85,000; Land revenue
paid Tk. 8,000; Interest on loan Tk. 2,300; Union parisad tax Tk. 4,275; Purchase of
tractor Tk. 70,000; Repair and Maintenance cost of tractor Tk. 3,000; Maintenance of a
kutcha irrigation plant Tk. 12,000 and donation to co-operative society Tk. 6,000.
Solution 3
Mr. Masum
Income year: 2019 – 2020; Assessment year: 2020 – 2021
Calculation of Total Income

Income from Agriculture (Section – 26 & 27): Tk. Tk. Tk.

Income from sale of Rice (205 × 675) 138,375
Income from lease of agricultural land 78,000
Income from rubber garden (92,000 × 60%) 55,200 271,575
Less: Admissible expenses:
1. Production costs (138,375 × 60%) 83,025
2. Land revenue paid 8,000
3. Interest on loan 2,300
4. Union parisad tax 4,275
5. Maintenance of kutcha irrigation plant 12,000 109,600 161,975
Income from Business or Profession (Section – 28):
Income from rubber garden (92,000 × 40%) 36,800
Income from other sources (Section – 33):
Income from salt production 15,000
Income from sale of forest tree 20,000
Income from sale of fish from pond 35,000 70,000
Total 268,775
Problem 4
From the given particulars of Mr. Adib Ahsan, compute taxable income for the income year 2019 –
2020: Sale of Rice 250 maunds @ Tk. 600 per maund; Sale of Jute 100 maunds @ Tk. 400 per
maund; Sale of Rabi Crops Tk. 50,000; Yearly lease of agricultural land Tk. 20,000; Sale of forest
timber and bamboo Tk. 6,000; Income from Tea garden Tk. 30,000; Income from Rubber garden Tk.
40,000; Income from Tobacco industry Tk. 30,000; Income from Sugar industry Tk. 50,000; Income
from cattle rearing Tk. 3,000; Income from sale of Palm and Date Juice Tk. 6,000 and income from
sale of Honey Tk. 5,000. Expenses for cultivation are as follows:

Cultivation Expenses Rice and Rabi crops Jute

Cost of seeds and fertilizer Tk. 25,000 Tk. 7,000
Labor charge 5,000 2,000
Cost of pump machine hire 3,000 1,000
Repair expense of agri equipments 500 -
Transportation cost 2,000 500

When the income tax authority asked for books of accounts regarding cultivation expenses, Mr.
Adib failed to provide proper records for Jute. Other related expenses for the year were: Union
parisad tax Tk. 2,000; land revenue Tk. 1,000; crop insurance premium Tk. 2,500; Allowable
depreciation Tk. 5,000; and maintenance cost of irrigation plant Tk. 4,000. He had a pump machine
which was purchased at Tk. 25,000. It has become obsolete and has been discarded at Tk. 12,000.
The written down value after charging depreciation on the basis of prescribed rate at the ITO, 1984
estimated at Tk. 10,000. He has taken agricultural loan of Tk. 50,000 @ 8% interest per annum.
Solution 4
Income from Agriculture (Section – 26 & 27): Tk. Tk. Tk.
Sale of rice (250 × 600) 150,000
Sale of Jute (100 × 400) 40,000
Sale of rabi crops 50,000
Yearly lease of agricultural land 20,000
Income from tea garden (30,000 × 60%) 18,000
Income from rubber garden (40,000 × 60%) 24,000
Income from Tobacco industry (30,000 × 60%) 18,000
Income from Sugar industry (50,000 × 60%) 30,000
Income from cattle rearing 3,000
Income from sale of Palm and Date juice 6,000
Income from sale of honey 5,000
Gain from sale of obsolete equipment 2,000 366,000
Less : admissible expenses
1. Production expenses 59,500
1. Union parisad Tax 2,000
1. Land Revenue 1,000
1. Crop insurance premium 2,500
1. Allowable Depreciation 5,000
1. Maintenance cost of irrigating plant 4,000
1. Interest from borrowed fund (50,000 × 8%) 4,000 78,000 288,000
Income from Business or profession:
Income from tea garden (30,000 × 40%) 12,000
Income from rubber garden (40,000 × 40%) 16,000
Income from Tobacco industry (30,000 × 40%) 12,000
Income from Sugar industry (50,000 × 40%) 20,000 60,000
Income from Other Sources
Sale of forest timber and bamboo 6,000
Total Income 354,000
Problem 5
Compute taxable income and tax liability of Mr. Taleb Ali, from for the income
year ended on 30th June, 2020 considering his income from the following
sources:
Sale of Paddy 1,000 maunds @ Tk. 400 per maund; sale of Jute 500 maunds @
Tk. 600 per maund sale of Rabi Crops Tk. 160,000; income from lease of
agricultural land; Tk. 100,000; income from Fisheries Tk. 125,000; income from
mushroom farming Tk. 130,000; income from Sale of tea Tk. 200,000; and
income from Dairy farming Tk. 120,000.
He didn’t maintain the books of accounts properly but claimed expenses for
production costs Tk. 200,000; land revenue paid Tk. 8,000; interest on loan Tk.
2,500; union parisad tax Tk. 4,000; Purchase of tractor Tk. 70,000; and
maintenance of the irrigation plant Tk. 12,000. In addition to it, during the year
Mr. Taleb Ali also incurred investments and expenses, which includes: family
expenses Tk. 50,000; life Insurance premium (policy value Tk. 200,000) Tk.
25,000; purchase of cow for dairy firm Tk. 125,000; donation to prime
minister’s higher education fund Tk. 20,000; purchase of 5 year Bangladesh
Savings Certificate Tk. 100,000; donation to Government Zakat fund Tk. 30,000;
and purchase of gold Tk. 27,000.
Solution 5
Mr. Masum
Income year: 2019 – 2020; Assessment year: 2020 – 2021
Calculation of Total Income
Income from Agriculture (Section – 24): Tk. Tk. Tk.
Income from sale of Paddy (1,000 × 400) 400,000
Income from sale of Jute (500 × 600) 300,000
Sale of Rabi Crops 160,000
Income from lease of agricultural land 100,000
Income from Sale of tea (200,000 × 60%) 120,000
Income on which reduced tax rates are applicable: 1,080,000
Income from fisheries 125,000
Income from mushroom farming 130,000
Income from dairy farming 120,000 375,000
Less: Admissible expenses: 1,455,000
1. Production costs 516,000
2. Land revenue paid 8,000
3. Interest on loan 2,500
4. Union parisad tax 4,000
5. Maintenance of kutcha irrigation plant 12,000 542,500
Income from Agriculture 912,500
Income from Business and Profession :
Income from Sale of tea (200,000 × 40%) 80,000
Total 992,500
Solution 5
Computation of Investment Allowance
Insurance premium (own) Tk. 25,000
Maximum limit: 2,00,000 X 10% 20,000 Tk. 20,000
Donation to PM’s higher education fund 20,000
Purchase of 5 year Bangladesh Savings Certificate 100,000
Donation to Government Zakat fund 30,000
Actual Investment 170,000
Maximum limit of investment:
Lower of Tk. 15,000,000 and 25% of total income i.e., 25% of (992,500 – 375,000)
or Tk. 154,375. As actual investment is Tk. 175,000, investment allowance allowed
for tax credit is on Tk. 154,375 @ 15% i.e., investment tax credit is Tk. 23,156.
Computation of Tax Liability
Rate Tk.
On the first Tk. 3,00,000 0% Nil
On the next 1,00,000 5% 5,000
On the next 2,17,500 10% 21,750
On reduce rate income 3,75,000 0% Nil
Total 9,92,500 26,750
Less: investment tax credit 23,156
Net tax liability 3,594
Department of Business Administration
East West University

01819 289 589

[email protected]