Legal Framework
1. VAT Registration Thresholds
Under Section 4 of the 2012 Act, every person carrying on an economic activity is required to register for a Business Identification Number (BIN) if they meet specific turnover criteria.
| Registration Type | Turnover Threshold (Annual) | Statutory Requirement |
|---|---|---|
| Enlistment (Turnover Tax) | BDT 5 Million to 30 Million | 4% Turnover Tax |
| Mandatory VAT Registration | Above BDT 30 Million | Standard VAT (15% or Reduced) |
| Voluntary Registration | Below BDT 5 Million | Optional under Section 8 |
2. Standard and Reduced Rates
While the standard VAT rate is 15% as per Section 15, the Third Schedule of the Act provides for reduced rates (5%, 7.5%, and 10%) for specific goods and services, provided that Input Tax Credit (ITC) is not claimed.
3. Core Compliance Documents
Failure to maintain the following records constitutes a non-compliance under Section 107:
- Mushak 6.3: Tax Invoice issued at the time of supply (Mandatory for all).
- Mushak 6.1 & 6.2: Purchase and Sales accounts.
- Mushak 9.1: The Monthly VAT Return, which must be filed by the 15th of the following month.
4. Common Mistakes and Penalties
Under Section 85, failure to apply for registration may result in a penalty of BDT 10,000. However, more severe penalties apply for tax evasion or fraudulent Mushak 6.3 issuance, which can be up to twice the amount of tax evaded.
Consult LegalBD
For expert assistance in VAT planning, BIN registration, and representation before the Commissioner (Appal) or Appellate Tribunal, contact our chambers.
Schedule ScopingFrequently Asked Questions
What is the deadline for filing monthly VAT returns?
According to Section 64 of the Value Added Tax and Supplementary Duty Act 2012, the return (Mushak 9.1) must be submitted within 15 days following the end of the tax period.
Can I claim Input Tax Credit (ITC) on all purchases?
No. Under Section 46, ITC can only be claimed if the purchase is directly related to taxable supplies, a Mushak 6.3 is held, and payment is made via banking channels for transactions exceeding BDT 100,000.
What is the penalty for late filing of VAT returns?
Under Section 85(1)(f) of the 2012 Act, a person who fails to file a return by the due date is liable to pay a penalty of BDT 10,000.
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