How to Calculate VAT in Bangladesh: Worked Examples for 2026-27

How to calculate VAT in Bangladesh: the 2026-27 arithmetic

Knowing how to calculate VAT in Bangladesh is a matter of applying a short statutory formula to the right base, at the right rate, in the right tax period. Section 15 of the Value Added Tax and Supplementary Duty Act 2012 sets VAT at 15% of the value of a taxable supply or import, but the value is defined by statute, reduced and fixed rates apply under the Third Schedule, imports carry advance tax, and the amount actually paid each month is a net figure after input tax credit and adjustments. Most VAT disputes we see are not about the rate. They are about the arithmetic around it.

This guide works through the numbers for 2026-27: standard-rated and VAT-inclusive prices, the monthly net tax computation, reduced or truncated rates, imports and imported services, supplementary duty, turnover tax, input tax credit, VAT deducted at source from service providers, the Mushak-6.3 invoice that supports every figure, and exempt and zero-rated supplies. The wider legal framework, registration, returns, compliance and audits are covered in companion TRW guides linked throughout.

Summary: VAT on a taxable supply is 15% of its value, and the value is the consideration less the tax fraction, so any price is treated as VAT-inclusive unless VAT is added on top. Reduced rates and fixed amounts in the Third Schedule carry no input tax credit, imports are taxed on assessable value plus duties with advance tax of 7.5% or 2%, and businesses between Tk 30 lakh and Tk 50 lakh pay 4% turnover tax. Each month a registered person adds output tax, deducts allowable credit, applies increasing and decreasing adjustments, and pays the net amount before filing.

Key point: The tax period is a month again. The Finance Act 2026 made quarterly returns the default from July 2026, but the Value Added Tax and Supplementary Duty (Amendment) Ordinance 2026, gazetted on 14 October 2026, restored a return within 15 days after each tax period. Every calculation in this guide therefore runs on a monthly cycle, with payment due before the return is submitted.

At a glance

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Table of Contents

The statutory formula for VAT

Every VAT calculation starts with three provisions. Section 15(2) says the VAT payable is the rate multiplied by the value of the taxable import or supply. Section 32(1) says the value of a taxable supply is the consideration for it, reduced by an amount equal to the tax fraction of that consideration. Section 2(29) defines the tax fraction as R/(100+R), where R is the VAT rate.[1] Read together, these rules mean the law treats every consideration as VAT-inclusive. If a contract is silent, the supplier is presumed to have priced VAT into the figure it receives, and must account for the tax fraction out of it.[6]

Where a registered person supplies an associate free or below fair market price, and the associate cannot recover all the input tax, the value is the fair market price less the tax fraction; a supply without consideration is valued the same way.[1] Group service charges and free samples are the usual triggers.

When the tax falls due

Section 33 fixes the time of supply as the earliest of supply, issue of the invoice, receipt of part or all of the consideration, or personal use. An advance payment therefore triggers VAT in the month it is received, not the month the work is delivered. For progressive or periodic supplies, each instalment is a separate supply taxed at the earliest of its invoice, its payment or its due date.[1] Where one invoice covers different goods and services, section 35 requires each type to be shown separately, while forbidding the artificial splitting of what is economically a single supply.[1]

How to calculate VAT in Bangladesh at the standard 15% rate

The standard rate is 15% under section 15(3).[1] Two calculations cover almost every case, and the only question is whether VAT has been added to the price or sits inside it.

Adding VAT to a VAT-exclusive price

• Value of supply: Tk 2,00,000
• VAT at 15%: Tk 2,00,000 × 15% = Tk 30,000
• Amount invoiced on Mushak-6.3: Tk 2,30,000

Extracting VAT from a VAT-inclusive price

• Consideration received: Tk 1,15,000
• Tax fraction: 15/(100+15) = 15/115
• VAT: Tk 1,15,000 × 15/115 = Tk 15,000
• Value of supply: Tk 1,15,000 − Tk 15,000 = Tk 1,00,000

The same method works at any rate. At 10% the fraction is 10/110, at 7.5% it is 7.5/107.5 and at 5% it is 5/105.[1] The most common error is to apply 15% to a VAT-inclusive receipt, which overstates the tax by 15% of the VAT itself. On Tk 1,15,000 that mistake produces Tk 17,250 instead of Tk 15,000.

Anyone learning how to calculate VAT in Bangladesh should start with the contract: a pricing clause should state whether the figure is "exclusive of VAT" and who bears any VAT deducted at source. Where the clause is silent and the buyer is a withholding entity, the supplier may find the VAT carved out of a price it had treated as net revenue.

Worked example: a monthly net tax computation

The figure that is paid is not output tax but net tax payable. Section 45(1) builds it in four steps: add all output tax and supplementary duty for the tax period, subtract the input tax credit available, add increasing adjustments, and subtract decreasing adjustments. Section 45(2) requires the net amount to be paid before the return for that period is submitted.[1] Take a registered engineering firm, billing at 15%, for October 2026.

Output tax

• Domestic fees: Tk 80,00,000 × 15% = Tk 12,00,000
• Services exported to a foreign client: Tk 20,00,000 × 0% = nil
• Reverse charge on a foreign software subscription: Tk 10,00,000 × 15% = Tk 1,50,000
• Total output tax: Tk 13,50,000

Input tax credit and adjustments

• Credit on local inputs with valid invoices, paid through a bank: Tk 3,00,000
• Credit on the imported service, supported by the treasury challan: Tk 1,50,000
• VAT of Tk 20,000 on leasing a passenger car: blocked, so not claimed
• Increasing adjustment for VAT the firm withheld from its security contractor: Tk 15,000
• Decreasing adjustment for VAT withheld by corporate clients on Tk 60,00,000 of fees, backed by Mushak-6.6 certificates: Tk 9,00,000

The net tax is Tk 13,50,000 − Tk 4,50,000 + Tk 15,000 − Tk 9,00,000 = Tk 15,000, payable before the October return is filed. The reverse-charge entry is cash-neutral only because the output tax was shown separately in the return; section 46(1)(b) denies the credit otherwise.[1] The car lease is blocked by section 46(2)(a).[1] The adjustment categories come from section 48.[1]

When the result is negative

If credit and decreasing adjustments exceed output tax, section 68 carries the excess forward for six tax periods. A balance of up to Tk 50,000 left after that continues to be carried forward; a larger balance is refundable within three months of an application. Section 69 allows earlier refunds to persons whose turnover or inputs are at least half zero-rated.[1] The procedure and the practical obstacles are covered in our guide to VAT refunds in Bangladesh.

Reduced and truncated rates and fixed VAT

The first proviso to section 15(3) allows the government to fix a "truncated VAT rate or specific amount of tax" for goods and services listed in the Third Schedule.[1] The rates in force are 1.5%, 2%, 2.4%, 4.5%, 5%, 7.5% and 10%, alongside fixed amounts for some products.[5] The truncated rate is applied to the full value of the supply, using the same tax fraction method. What changes is the credit: section 46(1)(l) denies input tax credit on inputs for supplies charged below 15%, other than exports, or at a fixed amount.[1]

Rates that matter most in practice

• 5%: information technology enabled services, internet agencies, ride sharing and English-medium schools; online advertising joined at 5% under S007.20 from July 2026.[1] [4]
• 7.5% and 10%: furniture, LP gas and goods at the local trading stage at 7.5%; construction firms and procurement providers at 10%.[1]
• Property and trading: land developers 2%, building sales 2% up to 1,600 square feet and 4.5% above; medicines 2.4% and petroleum 2% at trading stage.[1] [6]
• Fixed amounts: gold, platinum and diamond jewellery moved from 5% to Tk 2,500 per bhori, and silver to Tk 100, from 1 July 2026.[4] [7]

Worked example: a construction contract at 10%

A contractor agrees a VAT-inclusive price of Tk 1,10,00,000. VAT is Tk 1,10,00,000 × 10/110 = Tk 10,00,000, and the value of supply is Tk 1,00,00,000. If the employer is a withholding entity it deducts the full Tk 10,00,000 at source. The contractor recovers none of the VAT on its cement, steel or equipment hire, so that VAT is a cost to be priced into the bid.[1] [5]

Worked example: should an ITES firm elect 15%?

The second proviso to section 15(3) lets a registered person pay 15% instead of a reduced rate or fixed amount, in the prescribed manner.[1] Consider an ITES provider billing Tk 40,00,000 a month and paying Tk 3,50,000 of VAT on its inputs.

• At 5%: output tax Tk 2,00,000; no credit; VAT paid Tk 2,00,000, plus Tk 3,50,000 of irrecoverable input VAT.
• At 15%: output tax Tk 6,00,000; credit Tk 3,50,000; VAT paid Tk 2,50,000, with no input VAT cost.

The election raises the cash paid to the treasury by Tk 50,000 but removes Tk 3,50,000 of cost from the firm's own books, and registered clients can claim the higher VAT as credit. The break-even point is input VAT equal to 10% of fees. Below it the reduced rate produces less total tax; above it, or where the clients are registered and recover the VAT, the standard rate usually wins. Where clients are consumers or exempt businesses, the extra 10 points of VAT become their cost, and the reduced rate is usually the better commercial choice.

Traders, commercial importers and value addition

A commercial importer that pays 7.5% advance tax pays no VAT on the first sale after importation if local value addition does not exceed 50% and the invoice is properly issued.[1] New section 32(6) lets a person selling goods that were wholly or partly exempt at manufacture pay 15% only on actual value addition, with credit on those inputs denied.[3] These traders file on Mushak-9.1.1, which permits no credit claims.[4]

How to calculate VAT in Bangladesh on imports and imported services

Section 28 makes the VAT base on an import the customs value plus import duty, supplementary duty and other duties and taxes, excluding advance tax and advance income tax.[1] Section 31(2) then imposes advance tax at 2% on inputs imported for manufacturing and 7.5% in other cases, on the same base and at the same time.[1] Using illustrative rates of 15% customs duty and 5% regulatory duty on goods with an assessable value of Tk 10,00,000:

• Customs duty at 15%: Tk 1,50,000
• Regulatory duty at 5%: Tk 50,000
• VAT base: Tk 12,00,000, with no supplementary duty
• VAT at 15%: Tk 1,80,000
• Advance tax: Tk 90,000 at 7.5%, or Tk 24,000 at 2% for manufacturing inputs
• Advance income tax at 5% of assessable value: Tk 50,000

Import VAT and advance tax are recoverable, the first as input tax credit and the second as a decreasing adjustment under section 31(3) in the same or the next six tax periods. Advance income tax is set against corporate income tax. Customs duty, regulatory duty and supplementary duty are costs.[1] [5] Actual duty rates depend on the HS code, and valuation disputes are covered in our guide to customs valuation in Bangladesh.

Imported services and the reverse charge

The Finance Act 2026 substituted section 20. Every imported service, other than one exempt under the First Schedule, is taxable at 15%; the value is fixed under section 32 and the liability is the recipient's output tax. The remitting bank or authorised dealer deposits the VAT by treasury challan against the importer's codes, and the challan serves as the tax invoice for credit.[3] [4] On a Tk 10,00,000 licence fee the VAT is Tk 1,50,000, valued at fair market price where the parties are related.[1]

Supplementary duty: getting the order of calculation right

Supplementary duty applies to goods and services listed in the Second Schedule, and is part of output tax as defined in section 2(20).[1] On a local supply, section 57(b) computes supplementary duty on the section 32 value after deducting the supplementary duty itself. The VAT base therefore includes the supplementary duty. For a listed service with a hypothetical 10% supplementary duty and a value before taxes of Tk 1,00,000:

• Supplementary duty at 10%: Tk 10,000
• VAT base: Tk 1,10,000
• VAT at 15%: Tk 16,500
• Total charged: Tk 1,26,500

Supplementary duty paid on inputs is not creditable under section 46(1)(k).[1] For tobacco and alcohol, and other goods the NBR now brings into the special scheme under the new section 58, VAT and supplementary duty are calculated on the maximum retail price.[3] [5]

Turnover tax for small businesses

A business that crosses the enlistment threshold of Tk 30 lakh in twelve months but stays at or below the registration threshold of Tk 50 lakh is enlisted for turnover tax.[1] The Finance Bill 2026 proposed changing the enlistment rules, but the proposal was not enacted, so the Tk 30 lakh threshold continues.[4] Section 10, as substituted in 2026, requires an online application within 30 days of crossing the threshold, which is approved automatically.[3]

The calculation

For enlisted businesses, the question of how to calculate VAT in Bangladesh is replaced by a simpler one. Section 63(1), as substituted by the Finance Act 2026, allows the government to notify sector and region-based fixed amounts of turnover tax, capped at Tk 2 lakh; until it does, turnover tax is 4% of turnover.[3] A shop with monthly turnover of Tk 3,50,000 pays Tk 14,000 for the month, and Tk 1,68,000 over a Tk 42 lakh year. The tax is not reduced by any VAT on purchases: section 63(4) bars credit or decreasing adjustment for VAT or turnover tax paid on inputs.[1]

Documents and the commercial consequence

An enlisted person issues a turnover tax invoice on Mushak-6.9, serially numbered by fiscal year, rather than a Mushak-6.3.[2] Because a buyer cannot claim credit for turnover tax, a corporate customer that would recover 15% VAT from a registered supplier bears the full cost of buying from an enlisted one. Growing suppliers that sell mainly to companies often register voluntarily for that reason; our guide to VAT registration for companies sets out the process.

Input tax credit: the rules that change the number

Input tax is the VAT, excluding advance tax, paid on imports and local purchases used as inputs.[1] Section 46 grants input tax credit only if every condition is met, and each failed condition removes the credit entirely. The ones that most often change the arithmetic are these.[1]

• Timing: credit must be taken in the tax period of purchase or within the following six tax periods.
• Banking channel: no credit where a supply above Tk 1 lakh is not paid in full through a bank or mobile banking channel, except between registered persons under the same ownership.
• Records and invoice: the purchase must be in the purchase book, on an invoice naming both parties with their registration numbers.
• Blocked categories: passenger vehicles, entertainment and club memberships, unless these are the business itself.

The Finance Act 2026 removed "labour" from the exclusions in the definition of input. It also replaced the rule that denied all credit on a sale below input cost: credit is now denied only on input tax exceeding the output tax on that sale.[3] [4] PwC also lists office equipment, furniture, rent of premises and employee welfare among non-creditable inputs.[5] The line-by-line checklist is in our guide to VAT compliance in Bangladesh.

Worked example: mixed supplies and partial credit

Section 47 allows credit only against supplies at the standard rate and zero rate. A person making a mix of standard, reduced, exempt or zero-rated supplies may claim credit initially, but must show in an adjusted return, after the tax period, the credit relating to inputs for reduced-rate, fixed-rate or exempt supplies.[1] The prescribed apportionment formula that used to sit in rule 26 was omitted from 1 July 2025, so the method must be reasoned and documented.[2]

Suppose a business pays Tk 2,00,000 of VAT on shared IT, premises maintenance and professional fees, and 75% of its turnover is standard-rated or zero-rated while 25% is exempt. A turnover-based split, a common working method, would allow Tk 1,50,000 of credit and treat Tk 50,000 as a cost. Inputs used wholly for the exempt activity carry no credit at all, and inputs used wholly for the taxable activity are not apportioned.

Credit notes, debit notes and bad debts

Price reductions and returns are corrected by a credit note under section 52. If the VAT on the supply exceeds Tk 5,000, the note must name the recipient and give its BIN where applicable, or it cannot support a decreasing adjustment.[1] Under rule 28, where consideration stays unpaid for more than twelve months and is written off, the supplier may make a decreasing adjustment, with the Commissioner's prior approval, and the recipient reverses its credit.[2]

VAT for service providers: service codes, rates and deduction at source

For a service provider, how to calculate VAT in Bangladesh turns on the service code. Services are classified by code in the Schedules, and the code fixes three things: the VAT rate, whether supplementary duty applies, and the rate at which a withholding entity must deduct VAT from payments. A service not listed in the Third Schedule is taxed at 15%. Withholding entities are government bodies, NGOs approved by the NGO Affairs Bureau or the Department of Social Services, banks, insurers and similar financial institutions, secondary and higher educational institutions, limited companies and any person with annual turnover of Tk 10 crore or more.[1] The table shows selected codes; on a phone, scroll it sideways.

KPMG counts 45 service categories subject to mandatory deduction under the VAT Deduction and Collection Rules 2025; the Finance Act 2026 added S083.00 and S007.20, and took supplies by registered start-ups outside deduction.[4] [6]

Worked example: a consultancy invoice to a limited company

A registered consultancy (S032.00) invoices a limited company Tk 5,00,000 plus VAT of Tk 75,000. The company withholds the full Tk 75,000 and pays the consultancy Tk 5,00,000, before any income tax deduction. A registered withholding entity records the Tk 75,000 as an increasing adjustment in its own return and issues a Mushak-6.6 certificate within three working days of filing; an unregistered one deposits within 15 days of payment.[2] [6]

The consultancy still reports Tk 75,000 of output tax, then makes a decreasing adjustment of the same amount under section 50. The adjustment must be made in the period of payment or within the next six tax periods, and cannot be made at all without the certificate.[1] A supplier that does not chase its Mushak-6.6 certificates pays the VAT twice: once through the client and again through its own return.

Where deduction does not match the supplier's rate

Goods are generally outside deduction at source when bought from a manufacturer that issues a Mushak-6.3. A trader charging 7.5% to a withholding entity is, however, treated as a procurement provider, and 10% is withheld. A trader that charges 15%, issues a Mushak-6.3 and shows proof of regular returns falls outside deduction.[5] Under section 49(5), where VAT on a project service is deducted at source at the first stage, VAT does not apply to the supply by the first subcontractor, if evidence of deduction and deposit is produced; the relief does not cover goods.[1]

The cost of getting it wrong

The withholding entity and the supplier are jointly and severally liable for the VAT withheld and its deposit.[1] Arrears arising from deduction at source carry simple interest of 2% for each six months, against 1% a month on other unpaid VAT, capped at 24 months.[1] The full rate schedule is in our guide to VAT deduction at source in Bangladesh; income tax withheld from the same payment is covered in our guide to withholding tax in Bangladesh.

Mushak-6.3: the invoice that proves the calculation

Section 51 requires every registered or enlisted person to issue a tax invoice, as prescribed by the Rules, on or before the date tax becomes payable on a taxable supply.[1] For a registered person that invoice is Mushak-6.3, and rule 40(1)(c) of the 2016 Rules sets its contents.[2]

What a Mushak-6.3 must show

• the actual date and time of issue, and a serial number in a series running by fiscal year, with separate series for each place of supply;
• the supplier's name, address and BIN;
• the purchaser's name, address and BIN, where applicable, if the value of the supply exceeds Tk 25,000;
• a description of the goods, the quantity, the date and time of supply and the type and number of the transport;
• the value of supply without VAT, the rate applied, the VAT payable and the total of the two.[2]

The invoice is issued in at least two copies; the original goes to the purchaser and accompanies goods in transit. Only one original may exist, and a replacement for a lost original is marked "Duplicate". A defective or incomplete invoice, withholding certificate, credit note or debit note is not evidence for credit or adjustment.[2] Note the gap between the Tk 25,000 rule and section 46(1)(f): the buyer's name, address and registration number must appear on every invoice it relies on for credit, whatever the value.[1]

Large invoices, ERP systems and penalties

Every invoice above Tk 2 lakh, issued or received, must be reported on Mushak-6.10 unless the data already reaches the VAT system automatically.[2] Mushak-6.3 may be issued and kept through an ERP system.[6] Failure to issue a tax invoice, credit note, debit note or withholding certificate costs Tk 10,000, and an exempt supplier that ignores the invoice, return and record rules faces Tk 25,000.[1]

EFD and SDC devices

Rule 42(5) lets the NBR take sales data directly from a taxpayer's POS, cash register or software from a date it fixes by order.[2] Since August 2023 Genex Infosys has installed electronic fiscal devices and sales data controllers free of charge for listed retail and wholesale businesses in Dhaka and Chattogram. An SDC can be linked to existing POS software, and a faulty device must be replaced within 24 hours, with manual invoices entered later.[10] Take-up has been slow: in February 2025 only about 1,000 of some 40,000 jewellers had a device.[11]

Corporate buyers have a concrete reason to insist on device invoices: VAT need not be deducted at source where an EFD or SDC invoice shows the buyer's name and BIN.[5] [6] Device rules are covered in our guide to VAT compliance.

Exempt supplies and zero-rating: two ways to charge no VAT

An exempt supply and a zero-rated supply both carry no output VAT, but they produce opposite results on inputs. That difference is the single largest swing factor in how to calculate VAT in Bangladesh for exporters, hospitals, schools and financial businesses.

Exempt supplies under the First Schedule

Section 26 exempts supplies and imports listed in the First Schedule.[1] Part One lists goods by HS code, including live animals, unprocessed meat and fish and many agricultural products. Part Two lists services, including medical and health services, government education, deposit-taking by banks, life insurance, postal services, and land sales other than by developers and real estate companies. The entries carry exclusions: consultancy firms, survey organisations and architects fall outside the personal services exemptions.[1]

Further exemptions are granted by SRO, often conditional and time-limited. In 2026 the exemptions for mobile phone and computer manufacture were extended to 30 June 2030, all supplies by start-ups as defined in the Income-tax Act 2023 were exempted, and freelancers and content creators were brought within the exemption framework. Under SRO 127-AIN/2026/332-Musak, iron ore, LP gas imports, tractor tyres and unworked diamonds became taxable.[4]

Zero-rated supplies under sections 21 to 24

Section 21 sets VAT at zero for supplies covered by sections 22 to 24: exports of goods, export of services outside Bangladesh, services on goods or land located abroad, services to non-residents outside Bangladesh that are not tied to land or goods here, and specified international transport services.[1] Section 21(2) provides that a supply that is both exempt and zero-rated is zero-rated.[1] Zero-rated supplies count as taxable, so the related input tax credit is preserved.

Worked example: exporter against exempt provider

Two businesses each pay Tk 5,00,000 of VAT on inputs in a month and charge no VAT on their sales. The software exporter, whose supplies are zero-rated, claims all Tk 5,00,000 as credit, carries any excess forward and can seek a refund under section 69. The private clinic, whose services are exempt, can claim nothing, so the Tk 5,00,000 is a cost that must be built into its fees.[1]

A business dealing only in First Schedule goods and services need not register for VAT. It must still hold a BIN or enlistment certificate for bank accounts, loans, trade licence renewal and the other gateway transactions introduced in 2026. A business relying on an SRO exemption must register.[5]

Step by step: how to calculate VAT in Bangladesh each month

The sequence below reflects how we review a client's VAT position before the monthly return. It applies whether the business is a manufacturer, a trader or a service provider.

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Two controls catch most errors before they reach a return: reconcile the sales book to the Mushak-6.3 series and the bank statements, and reconcile Mushak-6.6 certificates received to the decreasing adjustments claimed.

Common VAT calculation mistakes

• Applying 15% to a VAT-inclusive receipt instead of the 15/115 tax fraction.
• Claiming credit against reduced-rate or fixed-rate outputs, which section 46(1)(l) prohibits.[1]
• Missing the six-period window for credit, advance tax or deduction-at-source adjustments; an amended return cannot cure a lapsed credit.[6]
• Paying cash above Tk 1 lakh, which forfeits the credit on that purchase.[1]
• Ignoring the reverse charge on foreign software, cloud and group charges.
• Accepting incomplete Mushak-6.3 invoices, which rule 40(3) makes unusable for credit.[2]
• Relying on an expired SRO exemption without diarising its end date.

Errors are expensive to unwind. Unpaid VAT carries simple interest of 1% a month for up to 24 months, and the Finance Act 2026 set the penalty for irregular credits and adjustments at 30% to 50% of the amount.[1] [4] A taxpayer that later pays tax underpaid through mistake, with interest, avoids the penalty under section 85(2a), so voluntary correction is usually far cheaper than waiting for an audit; see our guide to tax audits in Bangladesh.[1]

Where the calculation meets the return

The figures in this guide feed into Mushak-9.1, or Mushak-9.1.1 for persons that cannot claim credit.[4] After one quarter of quarterly filing, the October 2026 Ordinance restored a return within 15 days after each tax period, or 20 days for government and autonomous bodies, banks, insurers and nil-return filers; the NBR cited delayed deposits and complications with rebates, adjustments and refunds.[8] [9] Filing mechanics are in our guide to VAT return filing in Bangladesh, and the overall regime in our guide to VAT in Bangladesh.

Questions about how to calculate VAT in Bangladesh become legal questions when the classification of a supply, the validity of an SRO or the reading of a schedule decides the rate. TRW's tax compliance practice reviews VAT positions and pricing structures, and our tax disputes practice handles show-cause notices and appeals. To test your figures, contact TRW.

Frequently asked questions

How to calculate VAT in Bangladesh on a price at 15%?

If the price excludes VAT, multiply it by 15%: Tk 2,00,000 carries Tk 30,000 of VAT. If the price includes VAT, multiply it by the tax fraction 15/115: Tk 1,15,000 contains Tk 15,000 of VAT.[1]

What is the tax fraction in Bangladesh VAT?

Section 2(29) defines it as R/(100+R), where R is the VAT rate. Section 32 uses it to strip VAT out of the consideration to find the value of a supply.[1]

Can I claim input tax credit if I charge a reduced rate?

No. Section 46(1)(l) denies credit on inputs for supplies charged below 15%, other than exports, or at a fixed amount. A registered person may elect to charge 15% and claim credit instead.[1]

How is VAT on imports calculated?

VAT is 15% of the customs value plus import duty, supplementary duty and other duties, excluding advance tax and advance income tax. Advance tax of 7.5%, or 2% for manufacturing inputs, is charged on the same base and is recoverable.[1]

What is the turnover tax rate and threshold in 2026?

Turnover tax is 4% of turnover for businesses between Tk 30 lakh and Tk 50 lakh until the government notifies sector-based fixed amounts, which cannot exceed Tk 2 lakh. No credit is available on inputs.[1] [3]

How much VAT is deducted at source from a service provider?

It depends on the service code. Consultancy, legal, audit and manpower services generally suffer 15%, construction and procurement providers 10%, and ITES and online advertising 5%. The supplier then makes a decreasing adjustment on receiving Mushak-6.6.[5]

What must a Mushak-6.3 invoice contain?

Date and time of issue, a fiscal-year serial number, the supplier's name, address and BIN, the buyer's details where the supply exceeds Tk 25,000, a description and quantity, the value without VAT, the rate, the VAT and the total.[2]

What is the difference between exempt and zero-rated supplies?

Both carry no output VAT, but a zero-rated supplier, such as an exporter, recovers input VAT, while an exempt supplier cannot. Where a supply is both, section 21(2) treats it as zero-rated.[1]

How long do I have to claim input tax credit?

In the tax period of purchase or within the following six tax periods. The same six-period window applies to decreasing adjustments for advance tax and VAT deducted at source.[1]

Are VAT returns monthly or quarterly in 2026?

Monthly. The VAT and SD (Amendment) Ordinance 2026, gazetted on 14 October 2026, restored a return within 15 days after each tax period, reversing the quarterly default introduced in July 2026.[8] [9]