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Section 94 of the Bangladesh Income Tax Act 2023 explains the deduction or collection of tax at source (TDS/TCS) on commission, discounts, fees, brokerage, and similar payments. |
Deduction or collection of tax at source from commission, discount, fee, etc under Section 94 | Bangladesh Income Tax Act -2023
As per section-94(ITA-2023),
Deduction or Collection of Tax at Source from Commission, Discount, Fees, and Similar Payments
(1) Where a company or firm makes any payment or allows any amount to a distributor or any other person, by whatever name called, as commission, discount, fees, incentive, performance bonus, performance-related incentive, or any other payment or benefit of a similar nature in connection with the distribution or marketing of goods or services, the person responsible for making the payment or allowing the amount shall, at the time of payment or allowance, deduct or collect tax at the rate of 10% (ten percent) of the amount paid, the amount allowed, or the value of the benefit provided, as applicable.
(2) Where a company or firm makes any payment to a person engaged in the distribution or marketing of its goods in connection with the promotion of the company or its goods, the person responsible for making the payment shall, at the time of payment, deduct tax at the rate of 1.5% (one point five percent) of the payment.
(3) Any company or firm, other than an oil marketing company, that sells goods—
(a) to a distributor; or
(b) to any other person under a contract,
at a price lower than the retail price fixed by the company, firm, or any other person, shall collect tax from the distributor or other person at the rate of 5% (five percent) of an amount calculated as follows:
Taxable Amount = B × C
Where—
- B = the selling price charged by the company or firm to the distributor or other person; and
- C = 5% (five percent).
Provided that, a cigarette manufacturing company or firm shall, at the time of sale of its goods to such distributor or other person, collect tax at the rate of 3% (three percent) of the difference between the sale price charged to the distributor or other person and the retail price fixed by the company or firm.
You may learn more-
Duties and functions, and jurisdiction of income-tax authorities under Section 08
Special agricultural income under Section 41 | Bangladesh Income Tax Act -2023
Frequently Asked Question (FAQ):
1. What is Section 94 of the Bangladesh Income Tax Act 2023?
Answer: Section 94 of the Bangladesh Income Tax Act 2023 requires the deduction or collection of tax at source (TDS/TCS) on specified payments such as commission, discounts, fees, and similar income. It outlines who must deduct or collect the tax, the applicable circumstances, and compliance requirements.
2. Who is responsible for deducting tax under Section 94?
Answer: Any person or entity required by law to make payments covered under Section 94 must deduct or collect tax at source before making the payment or crediting the amount, subject to the conditions and exemptions provided in the Act.
3. Which payments are covered under Section 94?
Answer: Section 94 generally applies to payments including commission, discounts, service fees, brokerage, incentives, and other prescribed payments that are subject to tax deduction or collection at source under the Bangladesh Income Tax Act 2023.
4. Why is tax deducted at source under Section 94?
Answer: Tax deduction at source helps the government collect income tax efficiently while improving tax compliance. It also ensures that tax is paid at the time income is earned rather than waiting until the annual tax return is filed.