Notwithstanding anything contained in this chapter, no deduction on account of allowance from income from business shall be admissible in respect of the following, namely:—

(a) any expenditure or payment in respect of which the provisions of Part 7 have not been duly complied with;

(b) interest, salary, commission or remuneration paid by any firm or an association of persons to any partner of the firm or to any member of the association of persons;

(c) any payment by way of commission paid or discount made to its shareholder director by a company;

(d) any amount in excess of Taka 10 (ten) lakh paid to an employee in respect of perquisites as defined in section 32:

Provided that the provision of this clause shall not be applicable to an employer where perquisites were paid to an employee in pursuance of any Government decision published in the official Gazette to implement the recommendation of a Wage Board constituted by the Government;

(e) any expenditure exceeding 10% (ten percent) of the net profit from business disclosed in the financial statements in relation to the total amount of expenses for royalties, license fees, technical service fees, technical know-how fees, technical assistance fees or any other fees of a similar nature incurred for the use of intangible assets;

(f) any expenditure exceeding 10% (ten percent) of the net profit disclosed in the statement of accounts by way of head office or intra-group expense, called by whatever name, by a company, not
incorporated in Bangladesh;

(g) any expenditure by way of overseas traveling for business purposes exceeding 0.5% (zero-point five percent) of the disclosed business turnover:

Provided that the limit shall not apply to the overseas traveling expenses by an assessee engaged in providing any service to the Government:

Provided further that the limit provided in this clause shall not apply if evidence is produced in support of the additional expense computed under this clause and the commercial reasonableness thereof is proved;

(h) any sum in excess of the following amount as entertainment expenses—

(i) 4% (four percent) of the first Taka 10 (ten) lakh of the computed business income before deducting entertainment expenses;

(ii) 2% (two per cent), excluding the first Taka 10 (ten) lakh, of the computed business income before deduction of entertainment expenses;

(i) any excess amount to the following for distribution of free samples—

(i) in case of a pharmaceutical industry—

(1) for a turnover up to Taka 5 (five) crore, at the rate of 2% (two percent);

(2) for a turnover in excess of Taka 5 (five) crore but up to 10 (ten) crore, at the rate of 1% (one percent);

(3) for a turnover in excess of Taka 10 (ten) crore, at the rate of 0.5% (zero-point five percent);

(ii) in case of a food, cosmetics and toiletries industry—

(1) for a turnover up to Taka 5 (five) crore, at the rate of 1% (one percent);

(2) for a turnover in excess of Taka 5 (five) crore but upto 10 (ten) crore at the rate of 0.5% (zero-point five percent);

(3) for a turnover in excess of Taka 10 (ten) crore, at the rate of 0.25% (zero-point two five percent);

(iii) in case of any other industries—

(1) for a turnover up to Taka 5 (five) crore, at the rate of 0.5% (zero-point five percent);

(2) for a turnover in excess of Taka 5 (five) crore but up to 10 (ten) crore, at the rate of 0.25% (zero-point two five percent);

(3) for a turnover in excess of Taka 10 (ten) crore, at the rate of 0.1% (zero-point one percent);

(j) any promotional expense, other than advertising, exceeding 0.5% (zero-point five percent) of the business turnover;

(k) any payment made under the head income from employment by any means other than bank transfer;

(l) any payment made under the head income from rent by any means other than bank transfer;

(m) any sum exceeding Taka 5 (five) lakh, on account of purchase of raw materials, if paid by any means other than bank transfer;

(n) any sum exceeding Taka 50 (fifty) thousand, except clauses (k), (I) and (m), if paid by any means other than bank transfer;

(o) any sum paid to any such person liable to furnish proof of submission of return under clauses 25, 26, 28, 29, 36, 37, 42 and 43 of sub-section (3) of section 264, if at the time of payment such person fails to furnish proof of submission of return;

(p) any expenditure of a capital nature or any personal expenditure of the assessee;

(q) ¹[any deduction or any deduction created against any liability] which is not clearly identified;

(r) all such expenses not related to business activities;

(s) any depreciation allowance or interest expense claimed on Right of Use assets recognized as per International Financial Reporting Standard:

Provided that in this case the rent, development and maintenance expenses payable for the ²[assets] used for business purposes shall be allowed;

(t) impairment loss;

³[(u) any contribution to any fund for which there is provision of approval under this Act but no such approval is obtained];

(v) all expenses not supported by evidence if the accounts are not maintained in the prescribed manner.

Explanation.— For the purposes of this section,—

(i) “net business profit” means the direct business profits of an entity, but does not include profits derived from any subsidiary, associate or joint venture;

(ii) “promotional expense” means any business expense claimed against any benefit in kind or cash or in any other form given to any person for the purpose of business but does not include any advertisement expense.