Overview of the FY 2023–24 Audit Programme
The National Board of Revenue (NBR) of Bangladesh conducts annual tax audits as a cornerstone of its compliance strategy. For fiscal year 2023–24 (covering the income year July 2022 – June 2023), the NBR issued audit notices through circle tax offices across all eight divisions, targeting both individual taxpayers and corporate entities with high-risk profiles.
The audit programme for FY 2023–24 reflects the government's broader goal of widening the tax net and improving the tax-to-GDP ratio, which stands at approximately 7.8% — one of the lowest in South Asia. The NBR selected audit cases using a combination of risk-based criteria, random sampling, and intelligence-driven referrals from the Central Intelligence Cell (CIC).
Legal Framework and Governing Legislation
The legal basis for tax audits in Bangladesh is established under several key statutes and ordinances that empower the revenue authority to examine, verify, and reassess taxpayer returns:
- Income Tax Ordinance 1984 (ITO 1984) — The primary legislation governing income tax assessment and audit procedures, particularly Section 82BB (Universal Self Assessment) and Section 83 (Best-Judgment Assessment).
- Income Tax Act 2023 — A landmark new Act that modernises the tax framework, replaces certain provisions of ITO 1984, and introduces stricter compliance and documentation requirements effective from income year 2023–24.
- VAT and Supplementary Duty Act 2012 — Governs VAT audit procedures for registered businesses with annual turnover exceeding BDT 30 lakh.
- Money Laundering Prevention Act 2012 — Empowers tax authorities to share audit intelligence with financial intelligence units when audit findings indicate potential laundering.
Audit Selection Criteria
The NBR uses a structured risk-scoring model to select audit cases. During FY 2023–24, the following criteria carried the highest selection weight:
- Significant discrepancy between declared income and lifestyle indicators (property ownership, vehicle registration, foreign travel).
- Returns showing large, unexplained year-on-year reductions in gross income or tax liability.
- Businesses with turnover substantially below industry-average benchmarks for the same trade classification code.
- Taxpayers who claimed substantial investment rebates without corresponding documented proof.
- Referrals from customs and VAT intelligence units indicating unreported imports or under-invoicing.
- New taxpayers filing returns above BDT 50 lakh in net wealth without prior tax history.
- Entities engaging in related-party transactions with no transfer pricing documentation.
Approximately 1.2% of all filed returns are selected for formal audit each year under the NBR's risk-based selection programme. Cases flagged by the Central Intelligence Cell (CIC) are audited outside this quota and represent a further 0.3–0.5% of total returns.
Types of Tax Audits in Bangladesh
The NBR conducts several distinct categories of audit, each with a different scope, duration, and documentary burden on the taxpayer:
- Comprehensive Audit: A full examination of all income sources, deductions, exemptions, and assets declared in the return. Typically reserved for high-revenue corporate entities and high-net-worth individuals.
- Issue-Specific Audit: Targeted at a single area of concern, such as rental income, unexplained cash deposits, or investment rebate claims.
- Random Audit: Conducted on returns selected through a statistical lottery process to maintain general deterrence across the taxpayer population.
- Intelligence-Based Audit: Initiated following tip-offs or data-matching discrepancies detected by the NBR's CIC or third-party data providers (banks, land registry, BRTA).
- Transfer Pricing Audit: Applicable to multinational companies, examining whether cross-border transactions between related parties are priced at arm's-length values.
Taxpayer Rights and Obligations
Upon receiving an audit notice, taxpayers in Bangladesh are protected by specific procedural rights while also carrying clear obligations under the law:
- The right to be represented by a tax lawyer or chartered accountant during all audit proceedings.
- The right to receive a formal written notice specifying the audit scope and document requirements at least 15 days before the first hearing.
- The obligation to submit all requested books of accounts, bank statements, contracts, and supporting schedules within 30 days of the audit notice.
- The right to object to any additional tax demand through a formal appeal within 45 days of the assessment order.
- The obligation to attend scheduled hearings at the circle tax office or provide a duly authorised representative.
Income Tax Rate Structure (FY 2023–24)
For individual taxpayers, the following progressive tax slabs applied during FY 2023–24:
| Annual Taxable Income (BDT) | Tax Rate |
|---|---|
| Up to 3,50,000 (General) / 4,00,000 (Women & Senior) | Nil |
| Next 1,00,000 | 5% |
| Next 3,00,000 | 10% |
| Next 4,00,000 | 15% |
| Next 5,00,000 | 20% |
| Remaining balance | 25% |
Corporate tax rates for FY 2023–24 remained at 27.5% for publicly listed companies and 32.5% for non-listed companies. Banks, insurance companies, and financial institutions faced a rate of 37.5–40%, depending on listing status and profit level.
Common Audit Triggers and Risk Factors
Based on patterns observed in previous audit cycles, the following situations represent the most frequent triggers for audit selection in Bangladesh:
- Cash transactions above BDT 5 lakh not reflected in declared business income.
- Purchases of immovable property at values significantly below documented market rates.
- Consistent losses claimed over multiple consecutive years by a business entity.
- Large donations or CSR expenditure claimed as deductible without third-party receipts.
- Agricultural income exemptions claimed on land not registered in the taxpayer's name.
- Undisclosed foreign income or overseas assets, following implementation of the Common Reporting Standard (CRS) data exchange agreements.
Dispute Resolution and Appeals
Taxpayers who disagree with an audit assessment have access to a multi-tier appellate structure under Bangladesh tax law:
- Deputy Commissioner of Taxes (DCT): First-instance appeal. Must be filed within 45 days of the assessment order. The DCT has authority to confirm, vary, or set aside the assessment.
- Commissioner of Taxes (Appeals): Second-tier appeal body if the DCT's decision is unsatisfactory. Filing fee and security deposit may be required.
- Taxes Appellate Tribunal (TAT): Quasi-judicial body hearing appeals on points of law and significant factual disputes. TAT decisions are binding on tax officers.
- High Court Division: Constitutional writs and tax reference applications for questions of law can be brought before the High Court Division of the Supreme Court of Bangladesh.
Filing a well-prepared objection with comprehensive documentation at the DCT level resolves the vast majority of audit disputes without higher-level appeals. Engaging a registered tax practitioner early significantly improves outcome quality.
Compliance Tips for Taxpayers
To minimise audit risk and ensure a smooth process if selected, taxpayers are strongly advised to adopt the following practices:
- Maintain complete, year-round books of accounts using accounting software compliant with Bangladesh Financial Reporting Standards (BFRS).
- Retain all bank statements, purchase invoices, salary slips, and property documents for a minimum of six years.
- Reconcile cash flow statements with income tax returns before submission to identify discrepancies proactively.
- Declare all sources of income — including rental income, capital gains, interest, and dividends — accurately in the annual return.
- Consult a registered tax practitioner before claiming large deductions, exemptions, or investment rebates.
- File returns on time (30 November) to avoid additional scrutiny that late filings attract under the risk-scoring model.
- Respond promptly to any queries or notices from the circle tax office — delays increase the likelihood of a best-judgment assessment.