কামরুল হাসান নূর 
The National Board of Revenue (NBR) outlines specific limitations on deductible business expenses under Section 55 of the Income Tax Act 2023. These limitations prevent certain expenses from being used to reduce your taxable income. In simpler terms, the NBR disallows these expenses when calculating your business or professional profits for tax purposes.
Here’s a breakdown of the disallowed expenses as per the Income Tax Act in Bangladesh:
- Any expenditure or payment which is non-compliant with respect to Part 7 of ITA 2023
- Payment of interest, salary, commission, or gratuity by any firm or association of persons to any partner of the firm or any member of the association
- Payment of commission or discount to shareholder director
- Perquisites must not surpass Tk. 10 lakhs (Sec 32(C) refers to perquisites other than basic salary, festival bonus, leave encashment, overtime, PF, Pension Fund, GF, ASF)
- Payment of royalty, license fee, technical service fee, technical know-how fee, and technical assistance fee that exceed 10% of net profit disclosed in the financial statements
- Head office or intra-group expenses of a company not incorporated in Bangladesh that exceed 10% of net profit disclosed in the financial statements
- Overseas traveling expenses exceeding 0.50% of the disclosed turnover will be disallowed, although exceptions may be considered if the expenses prove to be commercially viable
- Allowable entertainment expense is 4% for the first 10 lakh and 2% for the rest of the amount. If the company incurs a loss, the entertainment expenses head is considered a disallowed expense
- Companies are permitted to present free sample expenses based on their business category, as outlined below:
| Turnover Range | Pharmaceutical | Food, Cosmetics & Perfume | Others |
|---|---|---|---|
| Turnover up to 5 crore | 2% | 1% | 0.5% |
| Turnover between 5 crore to 10 crore | 1% | 0.5% | 0.25% |
| Turnover exceeding 10 crore | .5% | 0.25% | 0.10% |
10. Promotional expenses that exceed 0.50% of the disclosed turnover will be considered as disallowed expense
11. Payment of salary via any method other than bank transfer
12. Payment of rent via any method other than bank transfer
13. Allowable cash payment for raw materials is Tk. 500,000
14. The allowable cash payment limit for expenses other than raw materials, salary, and rent is Tk. 50,000
15. Payment to any person who fails to furnish proof of filing of return as per clauses 25, 26, 28, 29, 36, 37, 42 and 43 of section 264 (3)
16. Any capital or personal expenditure
17. Any liability not expressly set forth
18. Expenditure not related to business activities
19. Amortization and interest on Right of Use assets except lease of land and space for business purposes and their development and maintenance
20. Impairment loss on conceptual assets
21. Payment to any fund not approved by the Board
22. Expenses not properly accounted for and having inadequate supporting evidence
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