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Salary Tax in Bangladesh: The One-Third Exemption, Worked
Almost everything about salary tax (বেতন আয়কর) follows from one rule most payslips never print: one third of your employment income is tax-free, up to ৳5,00,000. Here is the whole mechanism, with the numbers filled in.
The rule
The exempt part of employment income is the lower of one third of what you earn and the cap. On the current card the cap is ৳5,00,000 (Sixth Schedule of the Income Tax Act 2023; the cap was ৳4,50,000 until the Finance Ordinance 2025 raised it). So the one-third limb decides for salaries up to ৳15,00,000 a year; above that, the cap decides.
Worked example 1 — the one-third limb binds
Gross salary ৳9,00,000. One third is ৳3,00,000 — below the cap, so the exemption is ৳3,00,000 and total income is ৳6,00,000. Above the general tax-free limit of ৳4,00,000, that leaves ৳2,00,000 at 10%: tax ৳20,000.
Worked example 2 — the cap binds
Gross salary ৳18,00,000. One third would be ৳6,00,000, but the cap cuts the exemption to ৳5,00,000; total income ৳13,00,000. Slabs: ৳30,000 (to ৳7,00,000) + ৳60,000 (to ৳11,00,000) + ৳40,000 (the last ৳2,00,000 at 20%) = tax ৳1,30,000. Both examples are acceptance tests for the salary tax calculator — monthly ৳1,50,000 must produce exactly the second one.
Bonuses, and why the bonus month looks brutal
A festival or performance bonus is employment income in the year it is received. It joins the annual total before the one-third exemption is computed, so it is partly shielded by the exemption — but it can still push the top slice of your income into a higher slab. Employers often deduct the whole expected effect in the bonus month, which makes that month's payslip look savage; across the year it evens out, and the return settles any difference.
TDS: the deduction is a payment, not the tax
What your employer deducts each month is an advance against the year's tax, spread by formula. Your actual tax is the yearly figure — after the exemption, the slabs, your rebate and the minimum-tax check. The return credits every taka deducted; if too much was deducted, the excess stands to your credit on assessment, and if too little, you pay the difference. The flagship calculator has a “tax already paid” field precisely so you can see your own position before filing.
Salary tax questions
My payslip shows house rent and medical allowances separately. Are they tax-free?
Not separately, not any more. Under the old Ordinance each allowance had its own exemption; the Income Tax Act 2023 swept them into one rule — one third of total employment income is exempt, up to ৳5,00,000. If your employer’s payroll still itemises “tax-free” allowances, the label is a leftover; the exemption that matters is the one-third rule.
How do I get credit for the tax my employer deducted?
The deductions (TDS) are credited against your tax payable in the return — enter the total in the “tax already paid” field of the flagship calculator to see the same effect. Keep the salary certificate your employer issues; it is the evidence of the credit. If deductions exceeded the tax, the excess is dealt with on assessment.