 |
|
Deduction from the Commission of Letter of Credit under Section 96 of the Bangladesh Income Tax Act, 2023. |
Deduction from the commission of letter of credit under Section 96 | Bangladesh Income Tax Act -2023
As per section-96(ITA-2023),
Deduction of Tax from Letter of Credit Commission
Any person responsible for opening a letter of credit for the import of goods, whether on their own behalf or on behalf of another person, shall deduct income tax at the rate of 5% (five percent) from the amount of the commission charged for opening the letter of credit at the time such commission is collected.
You may learn more-
Income from Rent under Section 36 | Bangladesh Income Tax Act -2023
Charge of additional tax under Section 19 | Bangladesh Income Tax Act -2023
Frequently Asked Question (FAQ):
1. What is the deduction from the commission of letter of credit under Section 96 of the Bangladesh Income Tax Act, 2023?
Under Section 96 of the Bangladesh Income Tax Act, 2023, tax must be deducted at source from the commission charged on opening or processing a letter of credit (LC) at the prescribed rate before payment or credit is made.
2. Who is responsible for deducting tax from the commission of a letter of credit?
The bank or financial institution responsible for paying or crediting the commission is generally required to deduct tax at source in accordance with Section 96 of the Bangladesh Income Tax Act, 2023.
3. What payments are covered under Section 96?
Section 96 applies to commissions related to letters of credit, including charges collected by banks or authorized financial institutions for LC-related services, subject to the provisions of the Income Tax Act, 2023.
4. Why is Section 96 important for businesses in Bangladesh?
Section 96 helps ensure compliance with tax deduction at source (TDS) requirements. Businesses involved in import, export, and trade finance should understand these rules to avoid penalties and maintain proper tax compliance.