Withholding Tax (TDS) in Bangladesh 2026-27: Rates by Payment Type, Deposit Deadlines and the Quarterly Return
Most income tax in Bangladesh is collected before the income reaches the taxpayer. If you pay salaries, suppliers, rent, fees or interest, you are a withholding entity with a deduction duty, a deposit deadline and a quarterly return — and a personal exposure if you get it wrong. Here are the rates and rules for 2026-27.
- Withholding tax (উৎসে কর, TDS) is deducted by the payer and deposited to the government; the payee claims it as a credit in their return.
- Rates differ by payment type: salary at the average rate, suppliers 3–7%, professional fees 15% (individuals) or 7.5% (firms and companies), rent 5%, bank interest 10%, dividends 10–15%.
- Deducted tax must be deposited within two weeks of the end of the month of deduction, faster in June; a quarterly withholding return is due on the 25th after each quarter.
- A payee without a proof of submission of return is deducted at 50% more; from 1 July 2026 tax on savings certificates and property registration is no longer "final" and is credited against your real liability.
In this guide: Who must deduct, and what the duty involves · Rates by payment type, 2026-27 · Deposit deadlines, certificates and the quarterly return · What changed on 1 July 2026: the end of most "final" tax · Advance tax on private vehicles
The short answer
Withholding tax is the Income Tax Act’s collection-at-source machinery: the person making a payment — an employer, a company paying a supplier, a tenant paying rent, a bank paying interest — deducts tax at the prescribed rate, deposits it by A-challan, issues a certificate and reports it in a quarterly return. The payee treats the deduction as tax already paid. The rates for 2026-27 are set by Part 7 of the Act and the Withholding Tax Rules 2024 as amended by the 2025 SROs and the Finance Act 2026. The table below covers the heads we are asked about most; the law has well over fifty.
Who must deduct, and what the duty involves
Any “specified person” making a payment of a kind listed in Part 7 must deduct — government bodies, companies, NGOs, banks, co-operatives, schools and universities, and, from 1 July 2026, individuals with business turnover above Tk 10 crore, PPP companies, e-commerce platforms, hotels and tobacco producers. In practice every limited company and every employer is a withholding entity.
The duty has five parts: register for a Withholder Identification Number (WIN) under s.263; deduct at the right rate at the time of payment or credit, whichever is earlier; deposit the tax to the government by A-challan within the deadline; certify the deduction to the payee so they can claim the credit; and report it in the quarterly withholding return under s.177. Failure at any stage makes the withholder personally liable for the tax (s.143), with interest at 2% a month, and the expense may be disallowed in the withholder’s own assessment.
Rates by payment type, 2026-27
| Payment | Section | Rate |
|---|---|---|
| Salary | s.86 | Average rate of tax on the employee’s estimated annual salary, deducted monthly |
| Supply of goods (general) — base amount up to Tk 50 lakh / Tk 50 lakh–2 crore / above Tk 2 crore | s.89 | 3% / 5% / 7% |
| Manufacturing, construction and engineering services | s.89 | 5% |
| Reduced-rate supplies (rice, fish, agricultural produce 0.5%; cement, steel 2%; cotton and yarn 1%; gold, silver and gems 0.5%) | s.89 / Rules | As shown |
| Professional, consultancy and similar fees — paid to an individual / to a firm or company | s.90 | 15% / 7.5% |
| Technical service fee; meeting, training and honorarium payments; internet services | s.90 | 10% / 20% / 5% |
| Commission or discount to distributors; marketing and distribution payments; indenting commission | s.94 | 10% / 1.5% / 7.5% |
| Interest on bank deposits and FDRs — company, fund or trust / individual and others / provident and gratuity funds | s.102 | 20% / 10% / 5% |
| Interest on savings certificates (sanchayapatra); pensioner certificates up to Tk 5 lakh | s.105 | 10%; nil |
| Rent of house, office, godown or warehouse (including selami and premium) | s.109 | 5% |
| Dividend (Finance Act 2026) | s.117 | 15% |
| Export proceeds (collected by the bank) | s.123 | 1% |
| Transfer of land, buildings or flats (collected at registration, by area and property class) | s.125 | Tiered: 6%, 4%, 3% of deed value or a per-katha / per-sq-m minimum, whichever is higher |
Three notes. First, where the payee cannot produce a proof of submission of return the rate is 50% higher (s.142) — a reason to file even when nothing is owed. Second, the rent rate is 5% under s.109 as it stands on the statute book; a figure of 10% circulates online and is wrong. Third, the 2026 amendments widened “rent” to godowns, warehouses, selami and premium, and require rent to be paid through the banking channel. The supply and professional-fee rates were last changed by the 2025 Finance Ordinance; the land-registration tiers were cut in June 2025. We are reconciling the area schedule under Rule 6 against the 2025 SROs and will publish the full table in our property guide.
Deposit deadlines, certificates and the quarterly return
| Tax deducted in | Deposit by |
|---|---|
| July to May | Within two weeks after the end of the month of deduction |
| 1–20 June | Within seven days of deduction |
| 21–30 June | The next working day (same day for 29–30 June) |
Deposit is by A-challan under the correct economic code for the tax zone — see our A-challan guide. The withholder must give the payee a certificate of deduction (the portal generates it from the challan) and file a withholding tax return under s.177 every quarter, due on the 25th of the month after the quarter: 25 October, 25 January, 25 April and 25 July. The return was monthly until tax year 2024-25; it is now quarterly with no extension. A company’s own income tax return is incomplete without the acknowledgement of its withholding returns.
Penalties: for not filing the s.177 return, the higher of 10% of the tax or Tk 5,000 plus Tk 1,000 a month (s.266); for not deducting or not depositing, personal liability for the amount with 2% monthly interest (s.143), and, under the Finance Act 2026, additional tax of 150% of the amount not deducted or not deposited where the payment is a business or professional, agricultural or capital-asset expense (no expense disallowance in the business case).
Other Finance Act 2026 changes to the table: dividend tax is 15%; export cash subsidy 5% (from 10%); electricity purchase 3% (from 4%); inward remittance for services 5% (from 7.5%); a new 0.5% on purchases of gold, silver, jewellery, precious stones and platinum; 2% on LC and financing commission for cement, iron and ferro-alloy; 0.2% advance tax collected by manufacturers, importers and distributors on sales to retailers (creditable by the retailer); freight forwarders 1% of the gross bill or 10% of commission shown separately; godown rent brought within rent withholding; and individuals with business turnover above Tk 10 crore are now "specified persons" who must withhold. Withholding suffered by a non-resident without a permanent establishment remains final.
What changed on 1 July 2026: the end of most "final" tax
Until tax year 2025-26, tax withheld on several heads was treated as the final tax on that income: you could not get it back even if your real liability was lower. Section 163 as substituted by the Finance Act 2026 reverses this for most heads. From 1 July 2026, withholding on savings-certificate interest, FDR and treasury-security interest, land and flat registration (s.125), export cash subsidy and compensation for acquired property is an advance payment: you compute the actual income or gain, credit the tax withheld, and pay the difference or claim a refund. Only the collections on commercial vehicles (s.138) and inland ships (s.139) remain final.
Two practical consequences. A landowner who sold at a loss can now recover the registration tax through the return; and a retiree living on savings-certificate interest with income below the tax-free limit can reclaim the 10% deducted. The automated refund mechanism introduced for individuals with salary, financial-asset or agricultural income is meant to pay such refunds electronically within 60 days of application.
Also new: tax on non-resident income without a permanent establishment is now final, and the 7.5% deduction on remittances for individual freelancers and content creators has been lifted. See our NRB guide and specific-income guide.
Advance tax on private vehicles
Owners of private motor cars pay advance income tax at registration and fitness renewal under s.153, set off against their liability. The Finance Act 2026 increased the amounts for larger non-electric cars and set a separate, lower schedule for electric vehicles — Tk 25,000 up to 200 kW, Tk 50,000 up to 300 kW, Tk 75,000 up to 400 kW and Tk 1,00,000 above, replacing the flat Tk 2,00,000. The cc-based schedule for 2026-27 petrol and diesel cars is in the NBR Paripatra, which at the time of writing is available only as a Bijoy-encoded PDF; we will add the table once we have confirmed it. A second car also attracts the environment surcharge described in our rates guide.
Map your payments
We list every payment head your company makes and the section and rate that applies to each.
Monthly deduction schedule
We prepare the monthly deduction and deposit sheet and the A-challans, with the June acceleration built in.
Quarterly s.177 return
We file the quarterly withholding return and the certificates to payees.
Audit defence
When the circle disallows an expense for a withholding lapse, we reconstruct the deduction trail and represent you.
Common questions
What is withholding tax (উৎসে কর)?
Tax deducted by the person making a payment — salary, supply, fees, rent, interest, dividend — and deposited to the government on the payee's behalf. The payee claims it as tax already paid in their return.
What is the TDS rate on house rent in 2026-27?
5% under s.109 of the Income Tax Act 2023. The 2026 amendments extended the rule to godowns, warehouses, selami and premium, and rent must be paid through a bank.
What is the TDS on supply of goods?
Under s.89, 3% where the base amount is up to Tk 50 lakh, 5% between Tk 50 lakh and 2 crore, and 7% above Tk 2 crore; 5% for manufacturing, construction and engineering services; lower rates for listed items such as rice, cement and steel.
What is the rate on professional fees?
15% where the fee is paid to an individual, 7.5% where it is paid to a firm or company (s.90). Technical service fees are 10%; meeting, training and honorarium payments 20%.
When must deducted tax be deposited?
Within two weeks after the end of the month of deduction for July to May; within seven days for deductions made 1–20 June; the next working day for 21–30 June.
When is the withholding tax return due?
Quarterly, on the 25th of the month after each quarter — 25 October, 25 January, 25 April and 25 July — under s.177. There is no extension.
Is the tax deducted on savings certificates final?
No longer. From 1 July 2026 it is an advance payment credited against your actual liability, so a person below the tax-free limit can claim it back through the return.
What happens if the payee has no proof of submission of return?
The withholder must deduct at a rate 50% higher than the standard rate (s.142). Filing a return, even a nil one, avoids this.
More in Tax, VAT & Customs
Income tax returns, TIN, VAT and BIN, Mushak forms, customs duty and what to do when NBR sends a notice.
Withholding is where companies get caught.
Send us your payment ledger and we will tell you what should have been deducted, what was, and how to close the gap before the circle does. A written assessment costs nothing.
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