Withholding Tax Rules, 2026

These rules shall be called the “Withholding Tax Rules, 2026” and shall take effect from 1 July 2026.

Defines the key terms used in these rules — such as “Act” (Income Tax Act, 2023), “person responsible for making payment”, “raw material”, “contract”, “developer or real estate developer”, “specified person”, “payment”, “person”, “bank transfer” and “base value” — by reference to the relevant sections of the Income Tax Act, 2023.

Under section 89, tax must be deducted at source on the base value of any amount at the rates below. Rates range from 0.5% to 10% depending on the goods; for goods on which tax has already been paid at the import stage (section 120) or under section 94, the deductible tax is determined by the (B − A) method.

• •No tax is deducted at source on supply of oil or gas by petrol pumps or CNG stations.
• •If the recipient's income is tax-exempt or taxable at a reduced rate, payment may be made without deduction / at the reduced rate, subject to a Board certificate.

Under section 90, where a specified person pays a resident for a service, tax must be deducted at source at the time of payment at the rates below.

• •Except serials 1–18, tax is not deductible under this rule on any other service provided by a bank, insurance company, financial institution or mobile financial service provider.

Under section 119, where a specified person makes a payment to a non-resident that is taxable in the non-resident's hands, tax must be deducted or collected at the time of payment at the rates below.

• •Where a capital gain arises on transfer of a company's shares, the transfer cannot be given effect until tax on that gain is paid.
• •Exemptions: payments to a foreign government authority; subscription fees to international professional bodies; liaison/branch office expenses; AD-verified tuition fees per Bangladesh Bank guidelines; international marketing/product development expenses; security deposit; arbitration fee; remittance for Hajj; priority pass.

Under section 125, before registration of the deed the transferor of property must pay tax at the prescribed rate (with A-challan/pay-order attached). The rate is 5% of the land value stated in the deed (3%/2% in Chattogram/other areas) by mouza class (A to F), or a fixed amount per decimal — whichever is higher. If there is a structure/flat on the land, additional tax applies.

• •Registration cannot be completed without proof of return submission (PSR) of both the transferor and the transferee.
• •Exemptions: mortgage deeds; transfers by the UN/embassies/missions; no-claim deeds; partition deeds; waqf/debottar gifts; will/bequest/exchange deeds.

Under section 126, before registering the deed transferring a building or apartment constructed by a developer or real estate developer, tax must be paid at the prescribed rate per square metre (with A-challan attached); residential and commercial buildings carry separate rates.

• •The actual per-square-metre rate by area and residential/commercial type is set out in full in the SRO schedule.

Under section 120, the Customs Commissioner or appropriate officer collects tax on the value of imported goods according to an HS-code-based schedule. Imports under Schedule-1 and from Bhutan are 0%; the general rate for other goods is 5%.

All amounts deducted/collected must be deposited to the government treasury via A-challan — deductions from July to May: within the next 2 weeks after month-end; days 1–20 of June: within the next 7 days; other days of June: the next day; last working day of June: on the day of deduction itself.

Certificates of deduction/collection must be issued in the prescribed schedule — Schedule-1 for “income from employment”, Schedule-2 for deductions other than under section 86, Schedule-3 for collections under Part 7. The A-challan must be filed with the certificate; bills of entry, registration deeds, bank statements, etc. may also be treated as certificates.

If the price quoted in a tender, or the goods value stated in a supply contract, already includes the withholding tax amount, then any tax exemption certificate presented by that person will have no effect.

For tax-free payments, deduction must be made after grossing up: C = (100 × A) ÷ (100 − B); where A = the tax-free payment amount, B = the applicable tax rate, and C = the amount computed for deduction. If the recipient fails to provide proof of return submission or to use bank transfer, B is determined under Part 7.

Under section 177, the withholding tax return must be filed in the form described in Schedule-4.

On commencement of these rules the “Withholding Tax Rules, 2024” is repealed. However, acts done / measures taken under the repealed rules are deemed done under these rules, and pending proceedings will be disposed of as if those rules had not been repealed.