Individuals who have obtained income tax registration must file income tax returns within the stipulated time for each tax year, according to the directives of the National Board of Revenue (NBR).

Although the Income Tax Act declares November 30 of every calendar year as Tax Day and requires taxpayers to submit their income tax returns by that date, the NBR often extends the deadline, subject to government approval.

In such cases, taxpayers must file their returns within the extended time. However, where filing a return is mandatory under the law, it must be submitted within the prescribed time limit.

According to Section 166 of the Income Tax Act, 2023, a person is required to file an income tax return if his income exceeds the tax-free limit for the relevant income year, or if income tax has been assessed on him in any of the preceding three years.

In addition, any person who is an owner, partner, director, manager, or shareholder of a company or firm; a public servant; or a non-resident having a permanent establishment in Bangladesh is mandatorily required to file a return.

Similarly, persons enjoying special tax exemptions or reduced tax rates, those required to obtain taxpayer registration, or those legally required to submit proof of return filing must also submit income tax returns.

In practice, many taxpayers miss the deadline simply due to workload, negligence, or oversight. But the Income Tax Act 2023 gives very clear instructions in this regard.

Under Section 174, if a taxpayer fails to file a return on or before the due date, special provisions apply to the assessment of tax.

In such cases, the amount of tax payable as if the return had been filed on the due date is first determined (excluding deductions, minimum tax, surcharge, interest, or penalties, except allowable tax exemptions).

From this amount, advance tax and tax deducted at source for the relevant income year are adjusted.

On the remaining unpaid tax, additional tax at the rate of 2 percent per month is imposed for the period of delay, subject to a maximum of 24 months, where even a part of a month is treated as a full month. Other applicable provisions of the law remain in force.

In addition, Section 266 of the Income Tax Act, 2023 provides for a separate penalty for late submission of returns. If a taxpayer fails to file a return within the stipulated time without reasonable cause, a penalty of 10 percent of the last assessed tax is imposed, which shall not be less than Tk 1,000.

Furthermore, for continued default, an additional fine of Tk 50 per day may be imposed. However, the law also prescribes a maximum limit for such penalties.

Where no tax has previously been assessed for taxpayers in default at return filing, the maximum penalty shall be Tk 5,000. Where tax has already been assessed, the maximum penalty shall be 50 percent of the last assessed tax or Tk 1,000, whichever is higher.

According to the guidelines issued by the NBR, income tax returns must be submitted within the prescribed deadline.

Notably, if a general taxpayer fails to file an income tax return for the 2025-2026 tax year within the stipulated time, he will be deprived of the benefit of the investment tax rebate.

In such cases, the final tax liability will be determined without allowing any tax rebate against the total income tax payable.

Moreover, according to the income tax guidelines for fiscal year 2025-26, if the return is not submitted on time, certain services may be disconnected, and tax officials may have the authority to disconnect government services, including electricity, gas, and water connections.

On the other hand, it has been made mandatory for both government and private sector employees to submit income tax returns if their salary and allowances fall within the prescribed limit.

As a result, if the return is not submitted within the stipulated time, complications may arise in receiving salary and allowances.

Therefore, failure to file an income tax return within the prescribed time exposes a taxpayer to additional tax under Section 174 and penalties under Section 266, significantly increasing financial liability.

To avoid unnecessary complications and additional expenses, taxpayers should ensure timely submission of their income tax returns.

The writer is an FCA and a financial sector analyst. He can be reached at [email protected]