How can advance tax paid at import be adjusted or refunded?

A registered person can adjust advance tax paid at import by deducting it from payable tax in their return. If the importer is the final consumer, they may apply for a refund within 60 days via Form MUSAK-4.1.

How is VAT calculated on residential building sales?

The taxable value is 50% of the supply value. In joint ventures, the transfer of possession to landowners is treated as a supply, valued at 50% of fair market value.

What is the procedure for the sale of a going concern?

Both buyer and seller must jointly apply in Form MUSAK-4.2 at least 15 days before sale, with a bank guarantee equal to total payable tax. The Commissioner verifies and approves within 7 days.

Can prepaid telecom service users claim input tax credit?

Yes, if supported by supplier’s receipt, banking proof for amounts above 25,000 taka, and valid documents showing fair market value. The supplier-recipient contract must be notified to the Commissioner.

How do unregistered creditors pay VAT when selling property to recover debt?

Unregistered creditors must request the Commissioner to assess applicable tax. Tax must be paid before sale. If not complied, the creditor is treated as a registered person under the law.

Value Added Tax and Supplementary Duty Rules, 2016 Notes-P4

VAT Collection Procedures - English Version

Chapter Four
VAT Collection Procedures

19. Adjustment and Refund of Advance Tax Paid at the Import Stage

(1) A registered or enlisted person who pays advance tax at the import stage may adjust the total advance tax paid in the return of the tax period as mentioned in sub-section (3) of section 31.

(2) For the purpose of sub-rule (1), the registered or enlisted person shall adjust by deducting the total advance tax paid from the total payable tax of the concerned tax period.

(3) A person paying advance tax at the import stage may apply to the Commissioner for a refund of the total advance tax paid subject to the following conditions and procedures:

(a) He must be the final consumer of the imported goods and may not transfer those goods to others;
(b) Within 60 (sixty) days from the date of payment of advance tax, he shall apply online in Form “MUSAK-4.1” to any nearest Commissioner;
(c) Upon verification and due satisfaction, the Commissioner shall, within 15 (fifteen) days of receiving the application, approve the refund and issue a crossed cheque or instruct transfer of the sanctioned amount to the applicant’s bank account.

20. Determination of the Value of Taxable Supplies without Goods

(1) In the case of supply under sub-section (4) of section 32, a registered person may provide supplies as samples up to a maximum value of 20,000 (twenty thousand) taka in a financial year.

(2) For the purpose of sub-rule (1), a registered person may provide such samples in one or more supplies during a financial year and declare them as zero-valued goods.

(3) The value mentioned in sub-rule (1) shall be determined based on fair market value.

21. VAT Payment on Sale of Residential Buildings

(1) Except as provided in sub-rule (2), the taxable value of supply in relation to the sale of residential buildings shall be 50% (fifty percent) of the value of such supply.

(2) In case of development of residential buildings through joint ventures, the transfer of possession of immovable property by the developer to the landowner shall be considered a supply, and the value of such supply shall be 50% (fifty percent) of the fair market value of the supply.

Note: The transfer of possession of property by a joint venture developer to the landowner shall be considered as the sale of immovable property.

22. Procedure for Sale of a Going Concern

(1) The buyer and seller of a going concern shall jointly apply in Form “MUSAK-4.2” and submit to the Commissioner, at least 15 (fifteen) days prior to the sale, an unconditional and continuing bank guarantee from a scheduled bank equal to the total payable tax and arrears.

(2) The Commissioner, upon verification and due satisfaction, shall approve the sale within 7 (seven) days of receiving the application.

(3) The seller of the going concern shall provide the buyer with the following information:

(a) Latest updated ownership information;
(b) Complete financial statements;
(c) List of all assets;
(d) List of all liabilities;
(e) Information on ongoing litigations;
(f) Details of registrations, licenses, etc., from government offices;
(g) Any other relevant information.

23. Procedure for Input Tax Credit by Prepaid Telecom Service Users or Goods Consumers

(1) Subject to the following evidence and compliance with subsequent rules, a person may claim input tax credit for prepaid taxes:

(a) A receipt issued by the supplier acknowledging payment against supply;
(b) For prepaid amounts exceeding 25,000 (twenty-five thousand) taka, proof of payment through banking channels;
(c) Valid documents proving that the prepaid value reflects fair market value.

(2) The commercial contract between the supplier and the recipient, along with the value mentioned therein, shall be notified to the Commissioner in advance.

24. Procedure for Sale of Property to Repay Debt by Unregistered Creditors

(1) Prior to selling property for recovery of debt, the unregistered creditor shall request the concerned Commissioner to determine applicable tax.

(2) The Commissioner, within 7 (seven) days of receiving the request, shall determine the amount of tax applicable under the law and rules and inform the unregistered creditor along with the time and method of payment.

(3) The unregistered creditor shall pay the tax and inform the Commissioner accordingly.

(4) If the unregistered creditor violates the provisions of this rule, the provisions of the law and these rules shall apply to him as if he were a registered person.

Chapter Five
Procedure for Determining and Paying Net Tax Payable by Taxpayers, Withholding and Adjustment

25. Method of Tax Payment

(1) A registered or enlisted person shall determine the net tax payable for a specified tax period and deposit it into the government treasury under the designated account code.

(2) In case of online payment, the acknowledgement slip generated from the VAT computer system shall be considered proof of payment.

(3) For payment methods other than online, authentic proof of payment must be submitted along with the return.

26. Partial Input Tax Credit

(1) For the purpose of determining partial input tax under sub-section (2) of section 47 using the formula in sub-section (3):

(a) Supplies made in Bangladesh from a place outside Bangladesh through conducting economic activities shall not be included in ‘A’ or ‘T’ of the formula;
(b) The fraction T/A shall be rounded as follows:
- (i) If greater than 0.90, it shall be rounded up to 1 (one);
- (ii) If less than 0.10, it shall be rounded down to 0 (zero).

(2) The input tax credit granted under sub-section (3) of section 47 in any tax period shall be provisional and shall be adjusted at the end of each calendar year as follows:

(a) By adding the total input tax credits granted under sub-section (3) of section 47 for all 12 (twelve) tax periods of that calendar year;
(b) Applying the formula in sub-section (3) of section 47 in such a way that references to ‘T’, ‘A’, and ‘T’ relate to the calendar year;
(c) Subtracting the amount obtained in (b) from the amount obtained in (a);
(d) If the result in (c) is positive, the corresponding amount shall be shown as an increasing adjustment in the return for the third tax period of the following year or such earlier period as determined by the Commissioner;
(e) If the result in (c) is negative, the corresponding amount shall be shown as a decreasing adjustment in the return for the third tax period of the following year or such earlier period as determined by the Commissioner.

(3) Where a registered person provides financial services that are partly taxable and partly exempt due to supplies involving both fee and profit, the values included in ‘T’ and ‘A’ of the formula in sub-section (3) of section 47 shall accurately reflect the actual use of inputs for taxable supplies.

(4) The Board may determine a special method for claiming input tax credit for taxable supplies of financial service providers, which shall prevail over the method prescribed in these rules.

Chapter FourVAT Collection Procedures