Historical Background of Income Tax Law in Bangladesh (Part-1)

The history of income tax in the country dates back to 1860when it was introduced in this country by the British ruler under the title Income Tax Act, 1860. Thereafter till today various types of  changes and developments have taken the place. These changes and developments are pointed below period wise:


(a) 1860-1916:
     Under British rule, the General Income Tax in line with the English Act first introduced in the year 1860. It continued up to 1867 when it was withdrawn and suspended. In that year, however, it was reintroduced as the Licence Tax Act, 1867. In 1868 its name was changed as the Certificate Act, 1868.On 1st April, 1873 the income tax was withdrawn but reimposed in1877 under the title Licence Tax Act, 1877. Latter on the Income Tax Act, 1886 came into force with some amendment in the former Act.
(b) 1916-1922:
     In 1916 the Income Tax Act, 1886 was amended further by the Income Tax (Amendment) Act, 1916 and a graduated scale of income tax was introduced for the first time. In 1918 the said Act was superseded by Income Tax Act of 1918 and distinction was made between 'Total' and 'Taxable Income.'
(c) 1922-1947:
     In 1921 an All India Committee was formed and on the basis of its recontamination Income Tax Act 1922 was enacted. In 1935 the British Government appointed an Expert Committee and on the recommendation of the committee some amendments were made. In 1944 the provisions were made for 'Pay As You Earn' Scheme and in 1945 distinction was made between 'Earned' and 'Unearned Income'.

(d) 1947-1971:

     In 1947 the then Pakistan (of which Bangladesh was its eastern wing) after its independence adopted the Income Tax Act 1922. In June, 1958 Taxation Inquiry Committee was set up which submitted its report recommending simplification of the Act.

Definition of Income tax According Bangladeshi Law

Income tax is a typical example of a direct tax. The tax imposed on a person or entity under the orbit of Income Tax Law is called income tax. it is imposed on a person in relation to his income. It is calculated and assessed with reference to the income of an assess for a given year.
Income Tax Ordinance, 1984, that is currently in operation in Bangladesh does not directly define income tax. However, analysis of section 16 of the Ordinance provides some indication to this end. It provides that income tax is one which is imposed, charged, payable and collected in relation to the income of a person for income year/years, on the basis of tax rate of the assessment year.