NBR Reference
Withholding Tax Rate
Withholding Tax Rate
in Bangladesh
An Exhaustive Guide to Tax Deducted at Source (TDS) and VAT Deducted at Source (VDS) in Bangladesh for FY 2025–2026, brought to you by LegalSeba LLP, a leading corporate law and tax advisory firm.
Govt. Schedule
Withholding Tax Rate
IN BANGLADESH
Practice Notes &
Compliance Guide
Compliance Guide
Navigating the exact schedule for the Withholding Tax Rate in Bangladesh is crucial for corporate financial compliance. This regularly updated reference details the precise TDS Rate in Bangladesh and VDS Rate in Bangladesh applicable for FY 2025–2026 across various sectors. As a leading law firm in Bangladesh, LegalSeba LLP assists domestic and foreign entities with seamless tax advisory, bookkeeping, payroll, and accounting services to ensure completely flawless regulatory adherence.
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I
TDS Rate in Bangladesh for FY 2025-2026
Sections 86 – 139| SL | Particular | Section | RATE |
|---|---|---|---|
| 1 | Salary | 86 | Average Rate |
| 2 | Deduction from payment of remuneration to members of parliament. | 87 | Average Rate |
| 3 | WPPF (Worker's Profit Participants Fund) | 88 | 10% |
| 4 | Procurement provider, service provider etc. | 89 | Annexure-1 |
| 5 | TDS on Service | 90 | Annexure-2 |
| 6 | Payment for Intangible assets | 91 | 10% on base value |
| 7 | Advertisement | 92 | 5% |
| 8 | At the time of making payment to Actor, Actress & Producer | 93 | 10% |
| 9 | Commission, Discount and Fee | 94 | 10% |
| 10 | Travel Agent | 95 | 0.30% |
| 11 | LC Commission | 96 | 5% |
| 12 | Local LC Commission | 97 | Annexure-3 |
| 13 | Payment of fees by tower sharing companies to regulatory companies | 98 | 20% |
| 14 | Excess Payment of life Insurance Premium | 99 | 5% |
| 15 | Insurance Commission | 100 | 5% |
| 16 | Fee from General Insurance Company Surveyor | 101 | 15% |
| 17 | Interest on Savings Deposit& Fixed Deposit | 102 |
|
| 18 | Deduction from resident's Interest income | 104 | 10% |
| 19 | Interest on Saving Certificate | 105 | 10% |
| 20 | Discount or interest or profit on securities of government or any person, responsible for issuing securities approved by BSEC | 106 | 10% |
| 21 | Discount on the real value of Bangladesh bank bill | 107 | Maximum |
| 22 | International Call | 108 |
|
| 23 | House Rent | 109 | 10% |
| 24 | Conference Center, Convention Hall | 110 | 10% |
| 25 | Compensation against Asset acquisition by govt. | 111 |
|
| 26 | Subsidy on cash Export | 112 | 10% |
| 27 | Electricity Purchase | 114 | 4% |
| 28 | Income By Landowner from real estate Developer | 115 | 15% |
| 29 | Paid Commission to Foreign Buyer Agent (example-Buying house commission) | 116 | 7.5% |
| 30 | Dividend | 117 |
|
| 31 | Lottery | 118 | 20% |
| 32 | Income of non-residents | 119 | Annexure-1 (Links to Annexure 4 as per gazette text) |
| 33 | Import | 120 | 20% |
| 34 | Recruiting agents | 121 | 10% |
| 35 | C & F Agent | 122 | 10% |
| 36 | Deduction of tax from export proceeds | 123 | 1% of the total export proceeds |
| 37 | Any income in connection with any service provided to any foreign person by a resident person; | 124 | 1.5% |
| 38 | Transfer of property | 125 |
|
| 39 | Real estate or land development business | 126 |
|
| 40 | Collection of tax from commission paid on Government stamps, court fees, cartridge papers. | 127 | 10% |
| 41 | Collection of Tax from lease of property | 128 |
4%
No deduction for exempted company
|
| 42 | Manufacturer of nonmechanical cigarette (Bidi) | 129 | 10% of the value of band roll |
| 43 | Brick Manufacturer | 130 |
|
| 44 | Renewal of trade license by City Corporation or Paurashava | 131 |
|
| 45 | Shipping business of a resident | 132 | |
| 46 | Sale by public auction | 133 | 10% of sale price |
| 47 | Share transfer | 134 | 15% on gain |
| 48 | Transfer of securities | 135 | 15% on difference between transfer price and acquired price |
| 49 | Transfer of shares of any Stock Exchange | 136 | 15% on gain |
| 50 | Member of Stock Exchanges | 137 |
|
| 51 | Collection of tax from motor vehicles plying commercially | 138 | Annexure 5 |
| 52 | Inland ships engaged in carrying passengers in inland water | 139 | Taka 125 per passenger (carrying capacity of an inland ship shall be the capacity of daytime plying in smooth waters) |
| 53 | Cargo, container (multipurpose) and coaster engaged in carrying goods in inland water | 139 | Taka 170 per gross tonnage |
| 54 | Dump barge engaged in carrying goods in inland water | 139 | Taka 125 per gross tonnage |
AI
Annexure-1
Section 89, Rule 3
Procurement & Industrial Supply
Rates applicable to contracts, supply of goods, manufacturing, processing, printing and binding.
| Particular | RATE |
|---|---|
| Execution of contract, other than a contract, supply of goods, manufacture, process or conversion, printing, packaging or binding:- | 5% |
| In case of an industrial undertaking engaged in the production of MS Billets and locally procured MS Scrap | 0.5% |
| In case of oil supplied by oil marketing companies engaged in marketing of petroleum oil and lubricant | 0.6% |
| In case of oil supplied by dealer or agent (excluding petrol pump station) of oil marketing companies, on any amount | 1% |
| In case of supply of paddy, rice, wheat, potato, fish, meat, onion, garlic, peas, chickpeas, lentils, ginger, turmeric, dried chillies, pulses, maize, coarse flour, flour, salt, edible oil, sugar, black pepper, cinnamon, cardamom, clove, date, cassia leaf, jute, cotton, yarn and all kinds of fruits | 0.5% |
| In case of supplying of Cotton & Yern | 1% |
| In case of supply of all types of fruites | 2% |
| In case of sub-contractor engaged by 100% export-oriented company | 1% |
| In case of an industrial undertaking engaged in producing cement, iron or iron products, ferro alloy products except MS Billets | 2% |
| In case of supply of oil by any company engaged in oil refinery, on any amount | 1.5% |
| In case of company engaged in gas transmission, on any amount | 3% |
| In case of company engaged in distribution gas, on any amount | 0.6% |
| In case of supply of Extra High Voltage Power Cable 33KV to 500KV by local manufacturers having own Vertical Continuous Vulcanization line | 3% |
| In case of supply of books to a person other than the Government, or any authority, corporation or body of the Government, including all of its attached and sub-ordinate offices | 3% |
| In case of supply of recycled lead | 3% |
| In case of supply of industrial raw materials to a manufacturer | 3% |
| Supply of raw materials used in recycled industry | 1.5% |
| In case of Manufacturing, Process or conversion, Civil work, Construction, Engineering or any other same work | 5% |
| In case of supplying Cigarette, Biri, Jorda, Tobacco Leaf and Gul | 10% |
| Goods supplied in any other cases not mentioned above from serial 1 to 18 and in all other cases per section 89 | 5% |
AII
Annexure-2
Section 90, Rule 4
TDS on Services
Applicable rates on advisory, professional, technical and operational services. Miscalculating these can lead to compliance risks; LegalSeba LLP's expert bookkeeping and tax advisory teams ensure these complex deductions are managed accurately.
| SL No | Particular | RATE |
|---|---|---|
| 1 | Advisory or consultancy service:- |
|
| 2 | Professional service:- |
|
| 3 | (i) technical services fee; (ii) technical know-how or technical assistance fee | 10% |
| 4 |
(i) Catering service; (ii) Cleaning service; (iii) Collection and recovery agency; (iv) Private security service; (v) Manpower supply service; (vi) Creative media service; (vii) Public relations service; (viii) Event management service; (ix) Training, workshop, etc.; (x) Courier service (xi) Packing and shifting service (xii) any other service of similar nature |
|
| 5 | Print and electronic media service |
|
| 6 | Indenting commission | 7.5% |
| 7 | Meeting fees, training fees or honorarium | 10% |
| 8 | Mobile network operator | 12% |
| 9 | Credit rating agency | 10% |
| 10 | Motor garage or workshop | 8% |
| 11 | Private container port or dockyard service | 8% |
| 12 | Shipping agency commission | 8% |
| 13 | Stevedoring/berth operation/terminal operation/ship handling opertion- |
|
| 14 | (i) Transport service, vehicle rental service, carrying service and repair & maintenance service; (ii) Rride sharing service, working space providing service, accommodation providing service and any sharing economic platform service | 5% |
| 15 | Wheeling charge for electricity transmission | 3% |
| 16 | Internet service | 5% |
| 17 | Agent, dirtibutor, agency or channel partner, by any names deliverying services engaged in mobile financial services | 10% |
| 18 | Gross bill excluding commission or gross bill except commission of freight forward agent | 1.5% |
| 19 | Any other service which is not mentioned in above from serial 1 to 18. | 10% |
AIII
Annexure-3
Section-97
Local L/C Commission
Rates applicable to purchases under local letters of credit and related financing agreements.
| SL | Particulars | Rate |
|---|---|---|
| 01 | If purchase of goods for the purpose of trading or reselling after process or conversion | 3% |
| 02 | If Payment against the invoice or sale of goods to distributor | 1.5% |
| 03 | If the payment related to local letter of credit (L/C) and any other financing agreement in respect of purchase or procurement of all kinds of fruits and computer or computer accessories | 2% |
| 04 | If the payment related to local letter of credit (L/C) and any other financing agreement in respect of purchase or procurement of rice, wheat, potato, onion,garlic, peas, chickpeas, lentils, ginger, turmeric, dried chilies, pulses, maize, coarse flour, flour, salt, edible oil, sugar, black pepper, cinnamon,cardamom, clove, cassia leaf, jute, cotton and yarn. | 0.5% |
AIV
Annexure-4
Section 119- Rule 5
Income of Non-Residents
Withholding rates applicable to payments made to non-resident persons. For accurate fund repatriation planning, our tax advisory division at LegalSeba offers dedicated corporate support.
| SL | Particulars | Rate |
|---|---|---|
| 1 | Advisory or consultancy service:- |
|
| 2 | Pre-shipment inspection service | 20% |
| 3 | Professional service:- |
|
| 4 | Technical services, technical know-how or technical assistance | 20% |
| 5 | Architecture interior design or landscape design fashion design or process design | 20% |
| 6 | Certification rating etc. | 20% |
| 7 | Charge or rent for satellite airtime or frequency rent for channel broadcast | 20% |
| 8 | Legal service | 20% |
| 9 | Event management service | 20% |
| 10 | Commission | 20% |
| 11 | Royalty license fee or payments related to intangibles | 20% |
| 12 | Interest | 20% |
| 13 | Advertisement broadcasting | 20% |
| 14 | Advertisement making or Digital marketing | 15% |
| 15 | Air transport or water transport not being the carrying services mentioned in section 259 and 260 | 7.50% |
| 16 | Contractor sub-contractor sub-sub contractor of manufacturing process or conversion civil work construction engineering or works of similar nature | 7.50% |
| 17 | Supply of goods | 7.50% |
| 18 | Capital gain | 15% |
| 19 | Insurance premium | 10% |
| 20 | Rental of machinery equipment etc. | 15% |
| 21 | Dividend- |
|
| 22 | Amount received by Artist singer or player | 30% |
| 23 | Salary or remuneration | 30% |
| 24 | Exploration or drilling in petroleum operations | 5.25% |
| 25 | Survey for Coal oil or gas exploration | 20% |
| 26 | Fees etc. of surveyors of general insurance company | 5.25% |
| 27 | Any service for making connectivity between oil or gas field and its export point | 5.25% |
| 28 | Bandwidth payment | 10% |
| 29 | Courier Services | 15% |
| 30 | Any other payments | 20% |
AV
Annexure 5
Section 138
Tax on Commercial Vehicles
Annual tax amounts collected from motor vehicles plying commercially.
| Sl No. | Description of the vehicle | Rate (Tk) |
|---|---|---|
| 1 | Bus having seats exceeding 52 | 25,000 |
| 2 | Bus having seats not exceeding 52 | 20,000 |
| 3 | Air-conditioned bus | 50,000 |
| 4 | Double decker bus | 25,000 |
| 5 | Air-conditioned (AC) minibus/coaster | 25,000 |
| 6 | Non-AC minibus/coaster | 12,500 |
| 7 | Prime mover | 35,000 |
| 8 | Truck, lorry or tank lorry having payload capacity exceeding five tons | 30,000 |
| 9 | Truck, lorry or tank lorry having payload capacity exceeding one and half tons but not exceeding five tons | 15,000 |
| 10 | Truck, lorry or tank lorry having payload capacity not exceeding one and half tons | 7,500 |
| 11 | Pickup van, human hauler, maxi or auto rickshaw | 7,500 |
| 12 | Air-conditioned taxicab | 15,000 |
| 13 | Non-AC taxicab | 7,500 |
II
VDS Rate in Bangladesh for FY 2025-2026
Service codes and Descriptions. Partner with LegalSeba LLP for expert accounting service integration with your VDS reporting.| SL | Service Code | Service Description | VDS Rate |
|---|---|---|---|
| 1 | S001.10 | AC Hotel | 15.0% |
| 2 | S001.10 | Non-AC Hotel | 10.0% |
| 3 | S001.20 | Restaurant | 5.0% |
| 4 | S002.00 | Decorators and Caterers | 15.0% |
| 5 | S003.10 | Motor Garage and Workshop | 10.0% |
| 6 | S003.20 | Dockyard | 15.0% |
| 7 | S004.00 | Construction Firm | 10.0% |
| 8 | S007.00 | Advertising Agency | 15.0% |
| 9 | S008.10 | Printing Press | 15.0% |
| 10 | S009.00 | Auction Firm | 15.0% |
| 11 | S010.10 | Land Development Organization | 2% |
| 12 | S010.20 | Building Construction Organization |
|
| 13 | S014.00 | Indenting Organization | 15.0% |
| 14 | S015.10 | Freight Forwarders | 15.0% |
| 15 | S017.00 | Community Center | 15.0% |
| 16 | S020.00 | Survey Agency | 15.0% |
| 17 | S021.00 | Plant or Capital Machinery Rental Agency | 15.0% |
| 18 | S024.00 | Furniture Manufacturer (VAT shall be @ 15%, If manufacturer directly sells to customer) | 7.5% |
| 19 | S024.00 | Furniture Sales Centre (Subject to having challan for VAT paid@ 7.5% at the manufacturing stage, otherwise VAT shall be @ 15%) | 7.5% |
| 20 | S028.00 | Courier and Express Mail Service Provider | 15% |
| 21 | S031.00 | Repair and maintenance | 15% |
| 22 | S032.00 | Consultancy and Supervisory Firm | 15% |
| 23 | S033.00 | Izaradar (Lessor) | 15% |
| 24 | S034.00 | Audit and Accounting Firm | 15% |
| 25 | S037.00 | Procurement Provider | 10% |
| 26 | S040.00 | Security Service | 15% |
| 27 | S043.00 | Television and Online Broadcasting Media Program Supplier | 15% |
| 28 | S045.00 | Legal Advisor | 15% |
| 29 | S048.00 | Transport Contractor: |
|
| 30 | S049.00 | Rent-a-Car Provider | 15% |
| 31 | S050.10 | Architect Interior Designer or Interior Decorator | 15% |
| 32 | S050.20 | Graphic Designer | 15% |
| 33 | S051.00 | Engineering Firm | 15% |
| 34 | S052.00 | Sound and Lighting Equipment Rent Provider | 15% |
| 35 | S053.00 | Participant in Board Meetings | 15% |
| 36 | S054.00 | Advertisements In Satellite Channel Programs | 15% |
| 37 | S058.00 | Chartered Aeroplan or Helicopter Rent Provider | 15% |
| 38 | S060.00 | Purchaser of Auction Goods | 15% |
| 39 | S065.00 | Building Floor and premises Cleaning or Maintenance Agency | 15% |
| 40 | S066.00 | Lottery Ticket Seller | 15% |
| 41 | S067.00 | Immigration Advisor | 15% |
| 42 | S071.00 | Event Management | 15% |
| 43 | S072.00 | Man Power Supply or Management Organization | 15% |
| 44 | S074.00 | House rent, Office rent | 15% |
| 45 | S099.10 | Information Technology Enabled Services | 5% |
| 46 | S099.20 | Other Miscellaneous Services | 15% |
| 47 | S099.30 | Sponsorship Services | 15% |
| 48 | S099.50 | Credit Rating Agency | 15% |
| 49 | S099.60 | Product sale on online marketplace | 15% |
Compliance
Penalties for Non-Compliance
Consequences of failing to deduct or deposit TDS and VDS in BangladeshBased on the tax laws and regulations of Bangladesh, the penalties for not deducting Tax Deducted at Source (TDS) and VAT Deducted at Source (VDS) are strictly outlined in their respective Acts.
1. Penalty for Not Deducting TDS (Income Tax)
Under the Income Tax Act, 2023, a person who fails to deduct or collect tax at source faces severe financial and penal consequences:
- Assessee-in-Default: The person failing to deduct the tax is legally deemed to be an "assessee-in-default".
- Liability to Pay Un-deducted Amount: The defaulter is personally liable to pay the amount of tax that was not deducted.
- Additional Monthly Interest/Penalty: The defaulter must pay an additional amount at the rate of 2% (two percent) per month on the un-deducted amount, calculated from the due date of deduction up to the date of deposit (maximum up to 24 months).
- Monetary Penalty: An additional penalty not exceeding Taka 10 (ten) lakh can be imposed for failing to comply with deduction provisions.
- Imprisonment and Fine: If the amount of tax not deducted or deposited exceeds Taka 25,000, the defaulter can be punished with rigorous imprisonment for a term extending up to 1 (one) year, or with a fine, or both.
Legal References:
• Section 143 of the Income Tax Act, 2023 (Consequences of failure to deduct, collect, etc.).
• Section 315 of the Income Tax Act, 2023 (Penalty for failure to deduct or collect tax at source and deposit the same in the Government treasury).
2. Penalty for Not Deducting VDS (Value Added Tax)
Under the VAT laws, an entity designated as a "Withholding Entity" that fails to deduct VAT at source (VDS) or fails to deposit it into the Government Treasury faces the following consequences:
- Personal Liability: The withholding entity and its responsible officers become personally liable to pay the amount of VAT that they failed to deduct or deposit.
- Late Payment Interest: The defaulter is liable to pay simple interest at the rate of 2% per month on the payable VAT amount, calculated from the next day after the payment became due until the date the actual payment is made.
- Monetary Penalty: For failing to fulfill the responsibilities of a withholding entity (which includes non-deduction or non-deposit of VDS), the VAT Commissioner can impose a monetary penalty not exceeding BDT 25,000 for the irregularity/non-compliance.
Legal References:
• Value Added Tax and Supplementary Duty Act, 2012 (specifically the provisions on Withholding VAT obligations, Interest on late payment, and Section 85 which deals with the imposition of monetary penalties for non-compliance and irregularities).
Additional Resources
Helpful tax guides, calculators, and services from LegalSebaVAT Registration
Obtaining VAT Registration Certificate in BangladeshCompany Tax Guide
Comprehensive Corporate Tax GuidePersonal Tax Guide
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A Complete Guide for BangladeshDouble Taxation Policy
Double Taxation Avoidance Procedure in BangladeshTransfer Pricing Policy
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Bookkeeping and Payroll Services in BangladeshForeign Company Formation
Foreign Company Formation in BangladeshEnsure Flawless Compliance with a Leading Law Firm in Bangladesh.
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Legal Disclaimer: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or financial advice on any subject matter. While we strive to keep the information up to date and correct based on the National Board of Revenue (NBR) Schedule for FY 2025-2026, regulations and rates are subject to change. You should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice from a licensed attorney or tax consultant in Bangladesh. LegalSeba LLP expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this site.
