Submission of VAT Return in Bangladesh: An Essential Guide

In Bangladesh, the submission of monthly Value Added Tax (VAT) returns is a crucial aspect of compliance for businesses. Understanding the process, requirements, and deadlines is essential to avoid penalties and ensure smooth business operations. This blog will guide you through the essentials of submitting your monthly VAT return in Bangladesh.

Understanding VAT in Bangladesh

Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution. In Bangladesh, the VAT system is governed by the Value Added Tax and Supplementary Duty Act, 2012 and is administered by the National Board of Revenue (NBR).

VAT is applicable to almost all goods and services in Bangladesh, with rates varying depending on the type of product or service. The standard VAT rate is 15%, but reduced rates of 10%, 7.5%, and 5% apply to specific categories.

Who Needs to Submit Monthly VAT Return?

Any business or individual registered for VAT in Bangladesh is required to submit a monthly VAT return. This includes;

• Manufacturers
• Importers
• Exporters
• Service Providers
• Traders

VAT-registered entities must maintain accurate records of their sales, purchases and VAT paid on inputs which are used to calculate the VAT payable.

Key Components of a VAT Return

A VAT return in Bangladesh typically includes the following components;

• Output Tax: VAT collected on sales during the month.
• Input Tax: VAT paid on purchases and expenses related to the business.
• Adjustments: Any adjustments related to previous periods, such as corrections or carry-forward balances.
• VAT Payable: The net VAT amount payable to the NBR, calculated as Output Tax minus Input Tax.

The submission of VAT (Value Added Tax) returns in Bangladesh is a critical task that requires businesses to be aware of the necessary information and deadlines. The deadline for VAT return submission is typically at the end of each month with the final submission date being the 15th of the following English calendar month. For instance, if the VAT return for January needs to be submitted, it must be done by the 15th of February.

However, this deadline may change in special cases or based on government directives. It is advisable to follow the guidelines of the National Board of Revenue (NBR) or relevant authorities for regular updates.

Required Information for VAT Return Submission:

• Sales or Service Collection Information
• Income and Expense Details
• Ownership Information (if applicable)
• BIN (Business Identification Number) and Certification Details
• Other necessary information, such as the type of business or service

Additionally, it is essential to maintain a proper bookkeeping system, which is crucial for accurate VAT return submission.

Steps to Submit a Monthly VAT Return

Submitting a monthly VAT return in Bangladesh involves the following steps:

1. Preparation of Records: Ensure that all sales, purchase invoices, and VAT-related documents for the month are accurately recorded and compiled.
2. Calculation of VAT: Calculate the total VAT collected on sales (Output Tax) and the VAT paid on inputs (Input Tax). The difference between these two amounts will determine the VAT payable.
3. Filling Out the VAT Form: The VAT return form (Form Mushak-9.1) must be filled out with details of sales, purchases, VAT collected and VAT paid. The form can be filled out manually or online through the VAT Online System.
4. Submission of Return: The completed VAT return must be submitted to the NBR by the 15th of the following month. For example, the VAT return for January must be submitted by the 15th of February.
5. Payment of VAT: If the VAT payable exceeds the input tax, the excess amount must be paid to the NBR at the time of return submission. Payments can be made through designated banks or online.
6. Record Keeping: After submission, businesses must keep a copy of the submitted VAT return and all related documents for at least 05 (five) years for audit purposes.
   
   
   
   

Steps for VAT Registration in Bangladesh

VAT registration in Bangladesh is managed by the National Board of Revenue (NBR) and is free of charge. To ensure smooth registration, individuals or businesses must gather all relevant documents and apply at least 15 days before their desired registration date. Here’s a step-by-step guide to the VAT registration process:

1. Choose the Registration Mode
   Decide whether to register online via the NBR’s official website or offline by obtaining the application form from the Zonal Office of the NBR.
2. Online Registration:To submit VAT (Value Added Tax) online in Bangladesh, follow these steps:

1. Registration
   • You must first register online for VAT. Follow these steps:
     • Access the VAT Online System: Go to the National Board of Revenue (NBR) VAT Online System website.
     • Registration: If you don’t already have a user ID, create a new account on the site. You will need your Business Identification Number (BIN) for account creation.
2. Login
   • Once the registration process is complete, log in using your account.
3. Filling Out VAT-9.1 Form
   • After logging in, select the ‘VAT-9.1’ form from the dashboard.
   • Fill in the required information, such as monthly sales and purchase details.
   • After filling out the form, ensure all information is accurately entered.
4. Submission
   • Click the ‘Submit’ button to submit the form.
   • Upon successful submission, you will receive a receipt or acknowledgment.
5. Payment
   • Pay your due VAT amount through online banking or mobile banking.
   • Select the banking option for VAT payment, fill in the required details, and complete the payment.
6. Document Preservation
   • Keep the submitted form and payment receipt for future reference, as this information may be needed later.

This is a brief overview of the online VAT submission process. If you face any issues or have questions, contact the National Board of Revenue’s helpline or your local VAT office.

• Offline Registration

3. Obtain the Form: Collect the application form from the Zonal Office of the NBR.
4. Fill Out the Form: Complete the form with all required information.
5. Attach Documents: Attach the relevant documents needed for VAT registration.
6. Submit the Form: Submit the filled form along with the attached documents to the Zonal Office.
7. Verification and Physical Inspection
   The NBR will verify the submitted documents at the municipal VAT office. A zonal officer may also visit the business premises for a physical inspection.
8. Obtain a Business Identification Number (BIN)
   After successful verification and inspection, the NBR will issue a Business Identification Number (BIN). This will be provided either in printed form or via email, confirming your VAT registration.

The entire VAT registration process typically takes between 7 to 15 days. Challenges such as gathering the necessary documents, understanding tax categories and the possibility of application rejection due to lack of professional experience can arise. To simplify the process, consider seeking professional assistance and maintaining well-organized records in line with tax regulations and any updates.

Penalties for Late VAT Return Submission:

Failure to submit the VAT return on time in Bangladesh may result in penalties. The National Board of Revenue (NBR) imposes these penalties, which are determined according to the VAT Act, 1991. Here are the key points regarding penalties:

Types and Amount of Penalties:

• Late Submission Penalty:
  • A penalty of 1,000 BDT per day will be imposed for failing to submit the return on time.
  • The total penalty can reach up to 10,000 BDT per month.
• Interest on Unpaid VAT:
  • Interest is charged on unpaid VAT, calculated at a rate of 2% per day on the delayed amount.

Penalty Example:

If a business submits the return 10 days late, they must pay a penalty of 10,000 BDT (10 days × 1,000 BDT).

Additionally, if the VAT is not paid within this period, interest will be charged on the unpaid VAT.

Ways to Avoid Penalties:

• Submit the Return on Time.
• If there is a risk of missing the deadline, contact NBR or your local VAT office in advance and inform them of the situation.
• Seek assistance from a professional VAT consultant if needed.

If there is an error or unintentional cause for the penalty, an appeal can be made to NBR. You will need to provide the necessary evidence and reasons.

The VAT law and NBR guidelines may change, so always stay informed about the latest updates and instructions.