VAT & SD Act 2012
Section 85 - Imposition of penalty 1[for non-compliance, irregularity or evasion of tax]
(as updated till Finance Ordinance 2025)
(1) 2[The VAT Officer mentioned in section 86] may impose a penalty specified in column (3) 3[for non-compliance, irregularity or evasion of tax] specified in column (2) of the following TABLE, namely:-
TABLE
| Sl. No. | Non-compliance or irregularity | Amount of penalty |
| (1) | (2) | (3) |
| (a) | Non-compliance or irregularity for not applying for registration or enlistment within the prescribed time-limit; | 10 (ten) thousand Taka only |
| (b) | Non-compliance or irregularity for not displaying the registration or turnover tax certificate in a visible place; | 10 (ten) thousand Taka only |
| (c) | Non-compliance or irregularity for not informing the Commissioner of the change in the information of the economic activity; | 10 (Ten) thousand taka only |
| (d) | Non-compliance or irregularity for not applying for cancellation of registration or enlistment within the prescribed time-limit | 10 (Ten) thousand taka only |
| (e) | Non-compliance or irregularity for not abiding by the provision of section 9(5); | 10 (Ten) thousand taka only |
| (f) | Non-compliance or irregularity for not filing the VAT or turnover tax return within the prescribed time period; | 4[2 (two)] thousand taka only |
| (g) | Non-compliance or irregularity for not making inclusion of the output tax in the return; | 5[At least 30 (thirty) percent and not more than 50 (fifty) percent] of output tax not included; |
| (h) | Irregularities for taking more input tax credit than entitlement in the return; | 6[Minimum half and maximum equivalent amount] of input tax irregularly taken; |
| (i) | Irregularity relating to making an increase of a decrease adjustment or making a decrease of an increasing adjustment in the return; | 7[Minimum half and maximum equivalent amount] of increased decreasing adjustment or 8[Minimum half and maximum equivalent amount] of decreased increasing adjustment; |
| (j) | Non-compliance or irregularity for not issuing tax invoice, credit note, debit note, 9[***] or withholding certificate; | 10 (ten) thousand Taka only |
| (k) | Non-compliance or irregularity for not keeping records in the prescribed manner. | 10 (ten) thousand Taka only |
| (l) | Non-compliance or irregularity for not furnishing fixed security. | 10 (ten) thousand taka only |
| (m) | Irregularity for willingly evading or attempting to evade assessment and payment of taxes. | 10[Minimum half and maximum equivalent amount] of tax evaded. |
| 11[(n) | Failure or irregularity of non-submission of Input-Output coefficient within prescribed time; | 10 (ten) thousand taka only] 12[***] |
| 13[(o) | Failure or irregularity to comply with the provisions mentioned in sections 51, 53, 54, 64 and 107 in case of the supply of exempted goods or services. | 14[25 (twenty-five) thousand taka only] ] |
15[(1A) Despite having the obligation of the VAT withholding entity to deduct VAT at source and deposit thereof under section 49, if the VAT withholding entity fails to deduct VAT at source and deposit thereof,-
a) Such VAT including interest imposed in accordance with section 127 shall be realized from the withholding entity in such manner as if he is the supplier of goods or service under the said section;
(b) Without prejudice to the provisions set out in clause (a), for the failure to deposit the VAT deducted at source in the government treasury within the prescribed time, the concerned Commissioner shall be entitled to sanction a fine not exceeding 25,000 (Twenty Five Thousand) Taka against the concerned VAT withholding entity, the person responsible to deposit the deducted VAT and the executive officer of the concerned entity.]
(2) Save and except any offence or any 16[non-compliance, irregularity or evasion of tax] specified in sub-section (1), if any person fails to do anything he is required to do under any of the provisions of this Act or the rules made thereunder, or does anything he is not permitted to do, then 17[the VAT Officer mentioned in section 86] may, considering the gravity and frequency of commission of such act of non-compliance or irregularity, impose, in the prescribed manner and of a prescribed amount of penalty on such person.
18[(2a) If a person fails to pay tax due to mistake or misrepresentation or fails to pay tax or takes refund of tax or takes excess rebate or does not make proper decreasing/increasing adjustment and subsequently pays the final tax with interest as determined under the relevant sections of the Act, no penalty shall be imposed on him in such case.]
(3) Nothing in this Act shall prevent 19[a VAT officer mentioned in section 86,] if there are elements of offence and of non-compliance or irregularity in any incident, from lodging a criminal case for the element of such offence and initiating proceedings for the element of such noncompliance or irregularity.
20[(4) VAT officer mentioned in section 86 shall, before imposing a monetary penalty under this section, by issuing a show cause notice served under section 73 or by separate notice to give the concerned person an opportunity of being heard excepting the case of serial no (f) of Column (1) of the Table of sub-section (1)].
21[(4a) If an organization is temporarily shut due to no supply and fails to submit returns at the end of each tax period and reopens after the specified period, the penalty specified in serial no. (f) of column (1) of the table to sub-section (1) shall not be levied for failure to file the return for the interim tax period or tax periods between the temporary closure and re-opening of the organization.]
(5) The penalty imposed shall be payable as additional to VAT, supplementary duty, turnover tax, interest, or fine.
1 The words “for non-compliance or irregularities” were substituted by section 50(a) of the Finance Act, 2021 (Act No. 11 of 2021) with effect from 01 July 2021.
2 The words “The Commissioner” were substituted by section 88(a) of the Finance Act, 2019 (Act No. 10 of 2019) with effect from 01 July 2019.
3 The words “for non-compliance or irregularities” were substituted by section 50(b) of the Finance Act, 2021 (Act No. 11 of 2021) with effect from 01 July 2021.
4 The figure, brackets and words “2 (two) thousand” were substituted for the figure, brackets and words “5 (five) thousand” by section 16 (a) of the Finance Ordinance, 2025 (Ordinance No. 28 of 2025) with effect from 01 July, 2025.
5 The words, figures and symbols “not less than 30 (thirty) percent and not more than 50 (fifty) percent” were substituted by section 16(b) of the Finance Ordinance, 2025 (Ordinance No. 28 of 2025) for the words “not less than half and not more than an equivalent amount”.
6 The words “equivalent amount” were substituted by section 75(a)(ii) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
7 The words “equivalent amount” were substituted by section 75(a)(ii) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
8 The words “equivalent amount” were substituted by section 75(a)(ii) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
9 The Words “combined tax invoice” were omitted by section 75(a)(iii) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
10 The words “equivalent amount” were substituted by section 75(a)(ii) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
11 This entries were Inserted by section 88(a) of the Finance Act, 2019 (Act No. 10 of 2019) with effect from 01 July 2019.
12 The “.” was omitted by section 75(a)(iv) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
13 This entries were Inserted by section 75(a) (iv) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
14 The figures, brackets and words “Taka 25 (twenty-five) thousand only” were substituted by section 16(c) of the Finance Ordinance, 2025 (Ordinance No. 28 of 2025) for the figures, brackets and words “Taka 1 (one) lakh only”.
15 Sub-section (1a) was inserted by section 88(b) of the Finance Act, 2019 (Act No. 10 of 2019) with effect from 01 July 2019.
16 The words “non-compliances or irregularities” were substituted by section 50(d) of the Finance Act, 2021 (Act No. 11 of 2021) with effect from 01 July 2021.
17 The words “the Commissioner” were substituted by section 88(a) of the Finance Act, 2019 (Act No. 10 of 2019) with effect from 01 July 2019.
18 Section 85(2a) was Inserted by section 75(b) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
19 The words “the Commissioner” were substituted by section 88(c) of the Finance Act, 2019 (Act No. 10 of 2019) with effect from 01 July 2019.
20 Section 85(4) was substituted by section 21 of the Finance Act, 2023 (Act No. 14 of 2023) with effect from 01 July 2023.
21 Sub-section (4a) of section 85 was Inserted by section 75(c) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
Disclaimer: This is the authentic English text of The Value Added Tax and Supplementary Duty Act 2012, as published under SRO No. 440-Law/2025/326-Mushak dated 05 November 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.