All types of employees are required to file income tax returns. For government officials, however, filing an income tax return is mandatory. The income tax manual specifies which types of income fall under the tax net.
Recently, the National Board of Revenue (NBR) published the income tax manual for the current fiscal year. According to it, 15 types of income are taxable for government employees, while private sector employees are subject to tax on 11 categories of income.
Taxable income for government employees
Government employees are liable to pay tax on 15 categories of income:
Basic salary – The basic pay of government employees is taxable.
Arrears of salary – Any outstanding salary received from previous years is taxable.
Special salary – Salary received for additional responsibilities or special assignments.
House rent allowance – House rent allowance is taxable and counted as part of income.
Medical allowance – The monthly medical allowance paid with salary is taxable.
Conveyance allowance – Like medical allowance, the conveyance allowance is also taxable.
Festival allowance – Allowances paid on occasions such as Eid or Durga Puja are taxable.
Allowance for support staff – Any allowance provided for employing a driver, guard, or other support staff is taxable.
Leave encashment – Payment received against unused leave entitlement is taxable.
Honorarium and awards – Honorarium or prize money received for special work is taxable.
Overtime allowance – Payment for working beyond office hours is taxable.
Boishakhi allowance – The Boishakhi allowance given in recent years to mark the Bangla New Year is taxable.
Interest on provident funds – Interest earned on deposits in government provident funds is taxable.
Lump grant – Any lump sum allowance is taxable.
Gratuity – Financial benefit received at retirement or on leaving service is taxable.
Taxable Income for Private Sector Employees
Private sector employees are liable to pay tax on 11 categories of income:
Salary – The basic salary or stipulated remuneration of private employees.
Allowances – Taxable allowances include conveyance, medical, and others.
Advance or arrears of salary – Any advance salary or accumulated back pay is taxable.
Gratuity, annuity, and pension – Benefits or money received after retirement are taxable.
Perquisites – Additional facilities such as free housing, utilities, or telephone bills are taxable.
Cash in lieu of salary or wages – Any alternative monetary benefits are taxable.
Income from employee share schemes – Share bonuses or dividends received under company share schemes are taxable.
Housing facility – Free or subsidised housing provided by the employer is taxable.
Motor car facility – Benefits provided for use of a company car are taxable.
Other employer-provided benefits – These include club memberships, travel benefits, and similar financial perks.
Employer’s contribution to recognised provident fund – The company’s share of contributions to provident funds is taxable.