Bangladesh Gift Tax Framework: An In-Depth Guide

Bangladesh Gift Tax Framework

An In-Depth Guide

Disclaimer: The following compilation is based on the Gift Tax Act, 1990, the Income Tax Act, 2023, and the Finance Ordinance, 2025.

🏛️ An Enhanced Overview of Gift Tax in Bangladesh

This document provides a comprehensive and meticulously organized analysis of the Gift Tax framework in Bangladesh. It incorporates the foundational principles of the Gift Tax Act, 1990, and integrates relevant provisions from the Income Tax Act, 2023, and the latest amendments introduced by the Finance Act, 2023. This guide is intended for individuals, legal practitioners, and financial consultants seeking a detailed understanding of the legal obligations, exemptions, and procedural requirements associated with the transfer of assets as gifts in Bangladesh.

1Defining a "Gift": The Legal Foundation

The cornerstone of the gift tax regime is its definition as articulated in the Gift Tax Act, 1990.

Legal Citation: Section 2(d), Gift Tax Act, 1990

A "gift" is defined as the transfer by one person to another of any existing movable or immovable property that is made:

  • Voluntarily: The transfer must be of the donor's own free will, without coercion or undue influence.
  • Without Consideration: The transfer must be gratuitous, meaning it is made without any expectation or receipt of money or anything that can be valued in monetary terms ("money's worth").

This broad definition encompasses a wide array of transfers, including but not limited to direct dispositions, conveyances, assignments, settlements, and the delivery or payment of property.

2The Chargeability of Gift Tax: When Does the Tax Apply?

The liability to pay gift tax is triggered by the act of making a gift.

Legal Citation: Section 3, Gift Tax Act, 1990

Key provisions regarding chargeability include:

  • Scope: Gift tax is applicable to all gifts made during any financial year, commencing from July 1, 1990.
  • Basis of Calculation: The tax is levied on the market value of the property at the time the gift is made, calculated according to the prescribed slab rates.
  • Essential Conditions for a Valid Gift: For a transfer to be considered a taxable gift, it must meet the following criteria:
    • There must be a transfer of existing property.
    • The transfer must be voluntary.
    • It must be made without any or with inadequate consideration.
    • The transaction must involve a clearly identified donor and donee.

The Finance Act, 2023, maintains these core principles, with the National Board of Revenue (NBR) periodically issuing circulars to clarify valuation methodologies.

3Valuation of Gifts: Determining the Taxable Amount

Accurate valuation is critical for determining the correct gift tax liability.

Legal Citations: Section 5, Gift Tax Act, 1990 & Rule 6, Gift Tax Rules, 1990 (supplemented by NBR Circulars)

Type of Property Valuation Methodology
Cash The face value of the currency transferred.
Movable/Immovable Property The market value on the date the gift is made. In instances where the market value is not readily ascertainable:
Insurance Policies The encashable or surrender value on the date of transfer.
Shares in Private Companies The value as determined by the financial statements for the relevant year.
Other Assets To be determined by the NBR in accordance with prescribed valuation rules.

4Rates of Gift Tax: A Progressive Structure

The gift tax is levied based on a progressive slab system.

Legal Citation: Section 3, Gift Tax Act, 1990 (as currently in force)

Slab of Taxable Gift Value Rate of Tax
On the first BDT 500,000 5%
On the next BDT 1,000,000 10%
On the next BDT 2,000,000 15%
On the balance exceeding BDT 3,500,000 20%

5Exemptions from Gift Tax

Legal Citation: Section 4, Gift Tax Act, 1990

Section 4 enumerates exemptions. Gift tax is not chargeable on:

  • Property situated outside Bangladesh.
  • Gifts to the Government or any local authority.
  • Gifts to approved charitable or educational institutions:
    • Any university established under law.
    • Any government-recognized educational institution.
    • Any hospital recognized or operated by the Government.
  • Disaster relief funds approved by the Government.
  • Donations to religious or charitable institutions up to the lower of 20% of total income or BDT 100,000.
  • Gifts to dependent relatives up to BDT 20,000 on marriage.
  • Payment for insurance policies or annuities up to BDT 20,000 (for dependents other than spouse).
  • Gifts under a valid will.
  • Gifts under contemplation of death.
  • Gifts to close family (sons, daughters, parents, spouse, siblings).
  • In addition, gifts up to BDT 20,000 in any financial year are exempt.
  • Government may, by notification, exempt further classes of gifts or persons.

6Exclusion for Certain Entities

Legal Citation: Section 20, Gift Tax Act, 1990

The provisions of the Act are not applicable to:

  • Gifts made by statutory bodies or corporations established by an Act of Parliament.
  • Institutions or funds whose income is explicitly exempt from income tax under the Income Tax Act, 2023.

7Return Filing and Procedural Compliance

  • Filing of Return (Section 7): Every person liable for gift tax must file a return with the Deputy Commissioner of Taxes (DCT) by September 15th following the end of the financial year in which the gift was made. The tax due must be paid on or before the filing date.
  • Notice for Filing (Section 7): If the DCT has reason to believe that a person is liable to pay gift tax but has not filed a return, the DCT can issue a notice requiring the individual to file within 30 days.
  • Delayed Returns (Section 9): A person may file a late or revised return at any time before the assessment proceedings are finalized.

8Assessment Procedures: The Scrutiny Process

The tax authorities employ three primary modes of assessment:

Assessment Mode Description
Correct Return Basis If the DCT is satisfied with the accuracy and completeness of the filed return, the assessment is finalized without a hearing.
Assessment After Hearing If the DCT is not satisfied, the assessee is summoned to appear and produce evidence to substantiate the return. The final tax liability is determined after this hearing.
Best Judgment Assessment If the assessee fails to file a return, respond to notices, or produce evidence, the DCT will assess the taxable gift and the tax payable to the best of their professional judgment.

9Penalties for Non-Compliance

Strict penalties are in place to deter non-compliance. If an assessee is found to have:

  • Furnished inaccurate information, or
  • Failed to submit a return after receiving a notice,

The penalty can be up to 50% of the determined gift tax, in addition to the tax itself. The assessee must be given an opportunity to be heard before any penalty is imposed.

10Demand and Collection of Tax

Once an assessment is finalized, a Notice of Demand (Form 3) is served on the assessee. This notice will specify the total amount of tax and/or penalty due and the deadline for payment.

🔁The Appeals Process: Avenues for Redressal

An assessee who is aggrieved by an order has the right to appeal.

  • First Appeal: An appeal can be filed with the Additional Joint Commissioner of Taxes (AJCT) using Form 4.
  • Second Appeal: If the assessee is dissatisfied with the AJCT's decision, a further appeal can be made to the Appellate Tribunal using Form 5.

All appeal applications must be accompanied by a certified copy of the order being challenged.

📘Current Legal References

  • The Gift Tax Act, 1990
  • The Income Tax Act, 2023
  • The Finance Ordinance, 2025 (Published in the Bangladesh Gazette)
  • Relevant SROs (Statutory Regulatory Orders) and Circulars issued by the National Board of Revenue (NBR).

✅Practical Advisory for Taxpayers

To ensure compliance and mitigate risks, individuals planning substantial gift transactions should:

  • Verify Exemption Status: Before making a gift, confirm whether the recipient or the nature of the gift qualifies for an exemption.
  • Document Valuation: Contemporaneously document the basis for the market value assessment of the gifted property. This is crucial for defending the valuation during an audit.
  • Maintain Records: Retain all documentary evidence related to the gift, including transfer deeds, valuation reports, and proof of payment of any associated duties.
  • Seek Professional Counsel: Consult with a qualified tax professional or legal counsel to structure gift transactions in a tax-efficient manner and ensure full compliance with the law, thereby avoiding potential penalties.
Gift Tax in Bangladesh: An Infographic

Gift Tax in Bangladesh

A Visual Guide (as per Finance Act 2023)

What is a Gift?

A transfer of existing property from one person to another that is:

Voluntary: Done by free will, without pressure.
Without Consideration: No money or monetary value is exchanged.

How Much Tax to Pay?

Gift tax is calculated using a progressive slab system on the property's market value.

Slab of Taxable Gift Value (BDT) Rate of Tax
On the first 500,000 5%
On the next 1,000,000 10%
On the next 2,000,000 15%
On the balance exceeding 3,500,000 20%

When is Gift Tax NOT Charged? (Key Exemptions)

To Close Family: Spouse, parents, children, or siblings.
Property located outside Bangladesh.
Gifts to the Government or local authorities.
Gifts made under a valid will.
Gifts in contemplation of death.
Gifts up to BDT 20,000 in a financial year.

The Compliance Process

1

File Return

Submit gift tax return by Sept 15th and pay the due tax.

2

Assessment

The tax authority (DCT) reviews your return. A hearing may be required.

3

Appeal

If you disagree with the assessment, you can appeal to the AJCT and then the Tribunal.

Penalties for Non-Compliance

Failure to comply can be costly:

Inaccurate information or failure to file can lead to a penalty of up to 50% of the tax due, plus the tax itself.

Practical Advisory

Verify Exemptions: Always check if your gift is exempt before the transaction.
Document Value: Keep records of how you determined the market value of the gift.
Seek Counsel: Consult a tax professional for substantial gifts to ensure compliance and tax efficiency.

This infographic is for informational purposes only and does not constitute legal or financial advice. It is based on the Gift Tax Act, 1990, and Finance Ordinance, 2025. Please consult with a qualified professional for advice tailored to your specific situation.

 

Different Types of Non-profit Organizations in Bangladesh

Any group of individuals intending to establish a charitable organization in Bangladesh for social welfare may opt for one of the following legal entities, based on their specific objectives, long-term goals, and operational capacities, as stipulated under the relevant laws:

  1. As a Society or Foundation: Register under the Societies Registration Act, of 1860, suitable for organizations focused on social, cultural, and educational activities. See detail guide>
  2. A Charitable Trust: Established under the Trust Act, of 1882, appropriate for entities aiming to provide financial assistance, healthcare, and educational support. See detail guide>
  3. As a Social Welfare Organization: Register under Voluntary Social Welfare Agencies (Registration and Control) Ordinance, 1961 (Ord. No. XLVI of 1961). See detail guide>
  4. A Non-profit Trade Association:: Incorporated under the Companies Act, 1994, suitable for non-profit organizations intending to operate on a larger scale without issuing shares. See detail guide>

 

Contact Us

For more information or to begin the process of setting up a non-profit organization in Bangladesh, contact LegalSeba LLP today. Our team is ready to provide you with tailored assistance to ensure a seamless setup.

Choose LegalSeba LLP for expert guidance and support in establishing your charitable organization in Bangladesh. Our comprehensive services will ensure that you meet all legal requirements efficiently and effectively. Contact us today to get started on your journey to establishing a successful presence in Bangladesh.