TCF Monthly Newsletter - April 2023

Income Tax Rule-18: Statement of Tax Deducted or Collected under Chapter VII of the Income Tax Ordinance, 1984 (XXXVI of 1984)

Introduction:

The Statement of Tax Deducted or Collected at Source is a summary of tax deducted from various expenses, excluding salaries. The individual or entity responsible for deducting tax at source, known as the "Withholding Agent," must provide this statement to the relevant tax authorities.

The statement should include details of all transactions during the relevant period, such as the name and taxpayer identification number of the individual or entity from whom tax was deducted, the amount of tax deducted, and any other relevant information required by the Income Tax Rules 1984 (Rule 18).

It is crucial for the Withholding Agent to ensure that the statement is precise and complete, as any error or omission may result in penalties or legal consequences.

Therefore, Withholding Agents are highly encouraged to maintain accurate records and accounting systems to facilitate the preparation of these statements.

Documentation:

According to Rule 18 of the Income Tax Rules 1984, the following information is required for the statement of tax deducted or collected at source:

1. Details of the person from whom tax is deducted/collected, including their name, address, and Taxpayer Identification Number (TIN).
2. Date of tax deduction or collection.
3. Source of deduction/collection.
4. Section reference of deduction of tax on a particular expense.
5. Payment/credited amount.
6. Amount of tax deducted or collected.
7. Particulars of payment to the credit of the Government, such as challan number, challan date, bank name, and deposited amount.
8. Additional information that can be added in the remarks column.

To avoid penalties or legal issues, it is essential to ensure that these details are accurately and completely reported in the statement of tax deducted or collected at source.

Once the statement is prepared, an authorized person of the company should sign and seal it, providing the following information:

1. Name of the authorized person signing and sealing the statement.
2. Designation of the authorized person.
3. Tax deduction and collection account number (TCAN) of the company.
4. Phone number and email address of the authorized person.
5. Date of signature.

Providing this information ensures that the statement is authentic and has been prepared and verified by an authorized person. It also makes it easier for the tax authorities to contact the company if any clarification or additional information is required.

Submission & Remarks:

According to the Income Tax Rules 1984, the statement of tax deduction or collection at source must be submitted to the Deputy Commissioner of Taxes no later than the 20th day of the following month in which the tax was deducted or collected.

Recommendation:

Therefore, in conclusion, Withholding Agents are highly encouraged to maintain accurate records and accounting systems to facilitate the preparation of these statements.

Reference:

i) Income Tax Ordinance 1984; and ii) Income Tax Rules 1984.

Bangladesh Labour Rules 2015 Amendment (Vol. 3)

The government has amended the Bangladesh Labour Rules 2015. The government issued a gazette of amended Labour Rules on September 1, 2022, bringing changes in 99 rules and repealing two rules. In this newsletter, we would like to enlighten some important areas of Labour regulations which are affected by the recent amendment of Bangladesh Labour Rules 2015.

Calculation of the annual Encashment

Annual leave is one of the beneficiary leaves for employees from the organization. In the case of calculating the Earned leave or annual leave, the presence of a worker in the workplace for the previous 12 (Twelve) months has to be considered. Any worker can encash the annual leave of not more than half of his total availed and unspent annual leave in a year and it can be encashed only one time in a year.

The calculation of Annual leave encashment will be :

The Total wages of the latest month (accepting overtime & Bonus) shall be divided by 30 (Thirty) and the amount shall be multiplied by the number of days of annual leave.

Calculation of compensatory wages (For working on Festival Holidays)

If any worker asks to work on a festival holiday, in this case, the worker shall be eligible to get one alternative holiday and shall be paid compensatory wages for Two days.

The calculation of one-day compensatory wages will be

The basic wages of the month including the dearness allowance & Ad hoc allowance (if any) shall be divided by 30 (Thirty)???????????????????????????????????????????????????????????????????????????????????????????????????

?Reference:

Bangladesh Labour Rules (Amended): Rules No- 107

?Bangladesh Labour Act 2006(Amended): Section-118 (3)???

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Appointment and Removal of Auditors for Private Limited Company?

?Auditors

An auditor is a person or company who undertakes a formal inspection and verification of someone or something's records and accounts, finances, or compliance with a set of standards is called an auditor. Often, this person or company is an accountant or accounting firm.

Appointment of Auditor

Every company needs to appoint an auditor as per the Companies Act, 1994 under Section 210 -

a.?????After incorporation of a company, the first auditors of the company shall be appointed by directors within one month (30 days)

b.????The auditors are appointed until the conclusion of the next general meeting.

Purpose for Appointment of Auditor

The purpose of the auditors in the company is to protect the interests of the shareholders. The auditor is required by law to review the directors' accounts and notify them of the company's actual financial situation. In order to safeguard and maintain the firm in sound financial shape, the auditor provides his impartial assessment to the owners or shareholders of the company.

To fulfill the purpose auditors are entitled to notice of and to attend the annual general meeting. (Section 217)

Who can be auditors?

Under section 212, a person can be an auditor if –

a.?????A Chartered Accountant to be appointed as auditor of a company;

b.?????A firm whose all the partners practicing in Bangladesh are qualified for appointment as auditors.

Who cannot be auditors?

Under section 212, disqualification of auditors are-

a.?????Any officer or employee of the company;

b.?????Any partner or employee of such officer or employee of the company

c.?????Any person indebted to the company for an amount exceeding taka one thousand;

d.?????Anyone related to a body corporate or firm which is the managing agent of the company;

e.?????Any director with more than 5% of shares of the company engaged as managing agent of the company;

f.??????Any director of the company.

Rights of Auditors

As per the Company Act 1994 under section 213, Rights of Auditors are as follows:

a.?????Have free and complete access to the books and records of the company at all times

b.????To have information and explanations of all that might come their way and to enquire. ?

Duties of Auditors

As per the Company Act 1994 under section 213, The primary duty of the auditor is to make a report to the shareholders of the company on the accounts examined by him. This relates to the –

a.?????Balance sheet;

b.?????Profit and loss account;

c.?????Every other document forming part of or annexure to such a balance sheet or profit and loss account of the company.

Appointment of New Auditors

According to section 211 of the Companies Act, 1994, there are steps where a new auditor is proposed to be appointed.

a.?????A member of the company must declare such as the name of the person or firm so nominated for appointment

b.?????Declare a special notice before the annual general meeting

c.?????To send a notice copy to the retiring auditor

d.?????Notice should be sent at least 21 days before

e.?????If the existing auditor gave any response on the notice, it must be informed to all members

f.??????Auditor need to be informed before 7 days of his appointment

g.?????A company can appoint Two or more Auditors if needed.

Re-appointment of Auditors

Under section 210, after completing the appointment period, a retired auditor can be re-appointed.

But a person who is not a retiring auditor, cannot re-appoint as an auditor unless the existing auditor-

a.?????Not qualified for re-appointment

b.?????Given the notice in writing of his unwillingness to be reappointment Re-appointment by an express resolution of the meeting which appoints someone else in his stead. But this decision can happen if the auditor’s death, incapacity, disqualification or not dishonesty – Section 211.

Removal of auditors

Under section 210, a special resolution can remove an auditor. The provision notice should be given by a member of the company same as stipulated in section 211 that notice must be sent to auditor’s and all members of the company.

Remuneration of auditors

Under section 210 (10), the remuneration of auditors -

??Fixed by the company in the general meeting or in a process by decided by the general meeting or

??If appointed by the government then it will be fixed by the government.

Consequences

If any company default to made this complying with section 211 to 217, the company and also who are involved with this activity, shale have to pay fine up to one thousand taka.

Reference:

1.?????Companies Act 1994 (210 to 218)?

Power of Attorney guideline for foreign individuals in Bangladesh??

The purpose of this article is to provide a complete guideline on the laws related to Power of Attorney in Bangladesh, in particular, and to explain the important points to remember when drafting a Power of Attorney.

Definition: ?

Power of Attorney is a legal document that allows a person to legally give authority to another to act on his behalf. The POA gives legal authority to a person (i.e., called power receiver) to take legal decisions on behalf of the power giver.

Usages and Types: Basically, this document is designed for people living outside Bangladesh who wish to deal with legally protected assets through an agent or attorney. A foreign power of attorney in Bangladesh works similarly to a regular power of attorney in most ways but must follow a different set of procedures and protocols.

Power of Attorney can be divided into two types, namely, General Power of Attorney and Special Power of Attorney.

A general power of attorney gives broad authorizations to the agent as well as grants an agent virtually unfettered powers of decision-making, from tax payment to entering contracts, from managing operations to legal choices from settling claims to buying a new property, everything.

A Special Power of Attorney is issued for creating special power of attorney to make the decision on a specific matter on behalf of the power giver such as collecting rent for a particular property or granting a business partner the ability to use certain assets

It is an irrevocable Power of Attorney when the power giver gives up the right to revoke it. Irrevocable Power of Attorney denotes those power of attorney, which relate to selling, buying, mortgaging, or transferring of immovable properties.

Based on the circumstance a foreigner can choose any type of Power of Attorney

The procedure of preparation of a Power of Attorney:

There are some vital terms that need to be followed during the preparation of a Power of Attorney:

·???????The type of power of attorney must be mentioned in the title of the deed.

·???????Date of execution must be mentioned in the power of deed.

·???????The deed must mention the identity of the parties, in particular, their names, occupation, religion, nationality, NID/passport number, and their present and permanent addresses.

·???????The purpose should be written clearly and specifically. ?

·???????Details of powers, responsibilities, and duties must be mentioned in detail

·???????The type of POA deed must specify the special, general, or irrevocable power to be granted

·???????If the power is conditional, then the conditions should be defined. Schedule: the deed must mention the schedule of the said property.

·???????Name and signature of two witnesses

·???????Name, seal, and date of an authorized officer

·???????Validity of the POA or the date of Termination must be mentioned

·???????Photocopy of valid Bangladeshi passport or Bangladeshi National ID card.

·???????Two copies of passport-size photographs.

·???????Must be attestation by putting signature or thumb Impression.

·???????Non-judicial stamp papers must be used.

·

Limitation of Power of Attorney:

The power of Attorney Act specified some limitations of Power of Attorney. Such limitations include execution of the will, Execution of adoption certificate, execution of trust instrument, execution of gift, donations, and heba deed, and execution of power pertaining to adoption.

Execution of Foreign Power of Attorney:

Power of Attorney Act 2012 has also created a scope for individuals residing outside Bangladesh to execute power of attorney. Power of Attorney must be registered under section 52A of the Registration Act 1908 to be legally enforceable

Power of Attorney has to be executed and signed in the presence of the appropriate officer, which in the context of individuals residing outside of Bangladesh is the concerned officer of the Embassy of Bangladesh in that country. The document must be Notarized and attestation by the Embassy of Bangladesh. The documents must be verified by the Ministry of Foreign Affairs for counter-verification.

Execute POA by individuals residing outside Bangladesh. For individuals residing outside of Bangladesh, this Power of Attorney must be executed and signed in the presence of the Bangladesh Consulate or Mission in that country.

In Bangladesh, the executed power of attorney must be submitted to the Ministry of Foreign Affairs for attestation within two months of reaching Bangladesh, and then duly stamped within three months.

If the power of attorney needs to be registered, it must be submitted to the concerned sub-registry office within four months of receiving it.

Further attestation is required by the District Commissioner of the concerned area in addition to registration at the local Sub-registrar’s office if the PoA relates to the selling or buying of land. After the MoFA attestation, the PoA is considered mature if it does not concern land.

Revocation Of Power of Attorney: Power of Attorney can be revoked by notifying the power receiver with a 30 days’ notice in writing. POA can be revoked by the principal himself or it can be Revocation by mutual agreement of the power giver and the power receiver.

Conclusion: According to section 7 of The Power of Attorney Act 2012, any act performed by an agent is considered to be performed by the principal. Any person or company shall be liable if any work is done through a power of attorney. In real-life practice sometimes authorities and some organizations (e.g banks) accept PoA on company letterhead (for foreign companies) instead of non-judicial stamp paper. Creating a foreign power of attorney is an arduous process. For that reason, it is essential to check all the documents with the help of an expert's opinion, advice, or assistance.

Reference:

Power of Attorney Act, 2012

Power of Attorney Rules, 2015

Registration Act, 1908??????????

Disclaimer

*** The Newsletter has been written based on the rules and regulations, laws, and ordinances set by the Government from time to time, so sometimes the newsletter can be found outdated as laws and regulations are regularly updated. Please feel free to contact us if you found any outdated information and we will try to publish the latest