Real Estate Sector under the Income Tax Act 2023 of Bangladesh

The real estate sector is a key driver of economic growth in Bangladesh, contributing significantly to employment, urbanization, and infrastructure development. Recognizing its importance, the Income Tax Act 2023 outlines specific tax policies for real estate businesses, aiming to ensure greater transparency and proper revenue collection.

Taxation of Real Estate Income

Under the new Act, income earned from real estate activities — including buying, selling, developing, and renting properties — is fully taxable. This includes:

  • Profit from the sale of land and apartments
  • Rental income from residential or commercial properties
  • Income from real estate development projects

Real estate companies must calculate their taxable income by deducting allowable business expenses, such as construction costs, financing costs, and marketing expenses.

Advance Income Tax (AIT) on Property Transactions

The Income Tax Act 2023 imposes Advance Income Tax (AIT) on property transactions. When purchasing land, flats, or commercial spaces, buyers must pay AIT at prescribed rates based on:

Deed Value

Actual transaction price

Government Value

Official assessed value

Note: Tax is calculated on the higher of these two values and is adjustable against the buyer's final tax liability.

Withholding Tax Obligations

Real estate developers must deduct tax at source when making payments to:

  • Contractors
  • Suppliers
  • Service providers

Proper deduction and timely deposit of Tax Deducted at Source (TDS) are critical for maintaining compliance.

Special Provisions

  • Capital gains from properties held >5 years may qualify for reduced rates
  • Tax benefits for first-time homeowners and affordable housing projects

Conclusion

The Income Tax Act 2023 strengthens the regulation of the real estate sector by enforcing fair taxation. Real estate businesses must maintain accurate records, ensure timely tax payments, and comply with all reporting requirements to avoid penalties and support sustainable growth in Bangladesh's booming property market.

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