Income Tax Act 2023 3rd Schedule Part 1

Income Tax Act 2023

The Third Schedule - Depreciation Allowance, Depletion Allowance and Amortization [ See Section 42, 49 and 50 ]

Part 1 - Computation of Depreciation Allowance

(as updated till Finance Act 2024)

1. Depreciation allowance on assets used in agriculture.—

(1) Depreciation allowance in respect of any capital asset, works or physical infrastructure owned by an assessee and used for agricultural purposes, shall be admissible on the written down value at the rates prescribed in the following Table, namely:-

Table

Serial No.	Capital Resources	Rate of depreciation (percentage)
(1)	(2)	(3)
1.	Buildings or structures constructed of brick, concrete, steel or similar materials	5
2.	Houses constructed of tin, bamboo, hay or similar materials	10
3.	Permanent fence	10
4.	Tube well	10
5.	Tank	10
6.	Irrigation wells, channels, pipes	10
7.	Agricultural implements made of wood or bamboo	20
8.	Weighing machine	10
9.	Tractors, oil engines and light machinery	10
10.	Trucks, delivery vans and other motor vehicles	10
11.	Fiber pumping machinery (written as “Piber” in image, likely typo)	20
12.	Non-motorized van	15
13.	Steam engine	10
14.	Factory machinery	15
15.	Such general machinery, tools, plant and other assets not mentioned in this table	10

(2) Where in any income year any capital asset, civil or physical infrastructure is not wholly used by the assessee for the purpose of agriculture, the depreciation allowance under sub-paragraph (1) for that income year shall be admissible at an appropriate proportional rate on the amount of depreciation allowance that would have been admissible if the said asset had been wholly used for the purpose of agriculture.

2. Depreciation allowance on assets used in business.—

(1) Depreciation allowance for the concerned income year on any asset owned and used by an assessee for the purpose of business shall be admissible subject to the basis, rates and limitations, qualifications and conditions set out in this part.

(2) The depreciation allowance referred to in sub-paragraph (1) shall be the normal depreciation allowance and the initial depreciation allowance for the concerned income year on any asset owned and used by the assessee for the purpose of business, and that shall be admissible on the written down value of the said asset subject to the basis, rates, limitations, qualifications and conditions laid down in this part.

(3) Where in any income year such asset is not wholly used for the purpose of the business of the assessee, the depreciation allowance allowed under subparagraph (1) for that income year shall be admissible at a reasonable proportionate rate on the amount of depreciation allowance that would have been admissible if the said asset had been wholly used for the purpose of the business.

(4) Depreciation allowance shall not be admissible on any asset under this paragraph, unless the return of the assessee reflects a claim that the asset is used for the purpose of business.

(5) Where the asset is not fully used for business purposes, in calculating the written down value of the said asset, the asset shall be deemed to have been fully used for business purposes.

(6) The aggregate of the allowed allowances in respect of any asset shall not exceed the purchase value of the asset.

(7) Depreciation of assets owned by a specified leasing company and leased to any person shall be deductible only against the lease rental income arising from such assets.

(8) No allowance shall be admissible to the lessor company or institution under this paragraph in respect of any machinery, plant, vehicle or furniture which has been leased to any lessee as finance lease.

(9) No allowance shall be admissible under this paragraph if—

(a) the description specified by the Board or other information and documents required by the Deputy Commissioner of Taxes is not submitted at the time of submission of return; and

(b) assets which have not been used in the concerned income year.

(10) For the purposes of this part, ”specified leasing company” means a leasing company, banking company or any other ¹[finance company] engaged in leasing business.

3. Determination of the purchase price of an asset.—

(1) The purchase price of a motor vehicle of an assessee shall be deemed to be not more than 30 (thirty) lakhs if the said motor vehicle for which depreciation allowance is payable is any passenger motor vehicle other than a bus or minibus engaged in the transportation of students, teachers or employees of the assessee’s business.

(2) In computing the purchase price of an asset, the value of any allowance, subsidy, rebate or commission and assistance (other than interest-bearing or interest-free loans) received by the assessee from the Government or any authority or person shall be excluded.

(3) Where the assessee acquires any used assets other than those mentioned in sub-paragraph (1), the acquisition value of the said asset shall not exceed its fair market value.

(4) Where the acquisition of an asset involves a foreign currency loan or foreign currency exposure, the acquisition value of an asset shall be computed after making the following adjustments, namely:-

(a) by adding exchange rate fluctuation or exchange rate hedging expense;

(b) by deducting exchange rate fluctuation gain.

4. Rate of normal depreciation allowance.—

Normal depreciation allowance shall be computed on the written down value of an asset at the rate specified in the following table namely:—

Table

Serial No.	Class of assets	Rate (on written down value %)
(1)	(2)	(3)
1.	Building (other than those specified in this table)	5
2.	Factory building	10
3.	Furniture and fittings	10
4.	Office equipment	10
5.	Machinery, plant and equipment (other than those specified in this Schedule)	10
6.	Ocean-going ship
	(a) New	5
	(b) Second hand, age at the time of purchase:
	(i) Less than 10 years	10
	(ii) 10 years or more	20
7.	X-ray and electrotherapeutic apparatus and accessories thereto	20
8.	Battery operated apparatus and rechargeable batteries	30
9.	Equipment used for production and display of audio-visual products	20
10.	Motor vehicles all sorts not plying for hire	10
11.	Motor vehicles all sorts plying for hire	20
12.	Computer hardware including printers, monitors and ancillary items	25
13.	Professional and reference books	25
14.	Aircraft, aeroengines and aerial photographic apparatus	30
15.	Moulds used in the manufacture of glass or plastic goods or concrete pipe	30
16.	Mineral oil concern:
	(a) Below ground installations	100
	(b) Above ground installations, that is to say, portable boilers, drilling tools, well-head tanks and rigs	25
17.	Bridge	2
18.	Road	2
19.	Flyover	2
20.	Pavement runway, taxiway	2.5
21.	Apron, tarmac	2.5
22.	Boarding bridge	10
23.	Communication, Navigation aid and other equipment	5
24.	All such physical assets not mentioned in this table	10

5. Initial Depreciation Allowance.—

(1) Where a building is newly constructed or an asset including machinery or plant is used in Bangladesh for the first time, initial depreciation allowance shall be admissible at the rate specified in sub-paragraph (4), subject to the limits and conditions set out in this paragraph.

(2) No initial depreciation allowance shall be allowed in respect of the following assets, namely:—

(a) any motor vehicle not plying for hire, and

(b) any machinery or plant which has previously been used in Bangladesh.

(3) Initial depreciation allowance shall be allowed in respect of the income year in which any asset is first used by the assessee for the purpose of business or profession or in the income year in which commercial production is first commenced, whichever occurs later.

(4) Initial depreciation allowance shall be computed on the purchase cost of the concerned asset at the rates specified in the following table, namely:—

Table

Serial No.	Asset	Initial depreciation rate
(1)	(2)	(3)
1.	Any type of building	10%
2.	In the case of machinery or plant other than ships or motor vehicles not plying for hire	25%

6. Accelerated depreciation allowance on machinery or plant.—

(1) Where any asset comprising machinery or plant is used in any industrial undertaking situated in Bangladesh, subject to the limits and conditions set out in this paragraph, accelerated depreciation shall be allowed at the rate specified in sub-paragraph (3).

(2) Accelerated depreciation allowance shall be allowed for up to 3 (three) years from the year of commencement of commercial production of the industrial undertaking.

(3) Accelerated depreciation shall be computed on the purchase price of the asset concerned at the following rates, namely:—

Table

Serial No.	Income Year of Commencement of Commercial Production	Accelerated Depreciation Rate
(1)	(2)	(3)
1.	First income year	50%
2.	Second income year	30%
3.	Third income year	20%

(4) Allowance of accelerated depreciation shall be allowed subject to the following conditions, limits and qualifications, namely:—

(a) the relevant asset is owned by the industrial undertaking referred to in sub-paragraph (1) and has not previously been used in Bangladesh;

(b) ownership and management of industrial undertaking—

(i) is carried on by any body corporate established under any law for the time being in force having its head office in Bangladesh; or

(ii) is carried on by a company as defined in the Companies Act, 1994 (Act No. 18 of 1994) having its registered office in Bangladesh and having an authorized and paid-up capital of not less than Taka 20 (twenty) lakh on the date of commencement of commercial production;

(i) holds TIN;

(ii) maintains accounts in accordance with the provisions of this Act;

(iii) maintatins separate and distinct accounts;

(vi) submits returns in accordance with the provisions of this Act;

(d) follows the procedure described below, namely:-

(i) apply to the Board, in the prescribed form and manner, for accelerated depreciation allowance within 6 (six) months from the last day of the month of commencement of commercial production;

(ii) the application shall be accompanied by a declaration to the effect that the industrial establishment is not exempted from tax under any section of this Act, and has not and shall not make any application to the Board for exemption from tax.

(5) If accelerated depreciation allowance is allowed on any asset in any income year, no normal or early depreciation allowance under this Act shall be allowed in favour of that asset.

7. Provisions relating to sale or transfer of assets and gain or loss thereof.—

Where any asset is sold or transferred by an assessee in any income year, no depreciation allowance under this Part shall be allowed in that income year against such asset.

8. Explanation.—

For the purposes of this part—

(1) “asset” means tangible movable property owned by a person, immovable property (other than waste land), or structural improvements on immovable property—

(a) whose normal useful life exceeds 1 (one) year;

(b) whose value reduces or renders unusable by normal use; and

(2) “furniture” includes fittings;

(3) “structure” includes vessels, vehicles, books, scientific instruments, and surgical instruments used for business purposes;

(4) “ship” includes a steamer, motor vessel, sail, tug boat, iron or steel flat for cargo, wooden cargo boat, motor launch and speed boat;

(5) “structural development” (in relation to immovable property), means any building, road, driveway, car park, railway line, pipe line, bridge, tunnel, airport runway, canal, dock, wharf, retaining wall, fence, power line; and shall also include water or drainage pipes, drains, landscaping or dams;

(6) “written down value” means—

(a) in case the asset is acquired in any income year, the purchase value of the asset after deduction of any allowed initial allowance in respect of the asset;

(b) in other cases, the purchase cost of the asset as reduced by the aggregate of the allowances for depreciation allowed, in respect of the assessments for earlier year or years.

1 The words “finance company” were substituted for the words “Financial Institution” by section 14(a) of the Finance Act, 2024 (Act No. V of 2024) with effect from 1st July 2024.

Disclaimer: This is the authentic English text of the Income Tax Act 2023, as published under SRO No. 404-Law/2025 dated 08 October 2025. In the event of any inconsistency or conflict between the content on this website and the official Government publications or gazette notifications relating to laws, rules, regulations or SROs, the official Government publications and notifications shall prevail.