How much you will get tax rebate amount to reduce your tax liability has been mentioned in the Income Tax Act 2023. But what your investment allowance is not specified.
Investment allowance is very important for an individual taxpayer. Because, an individual taxpayer’s tax liability is calculated on his taxable income after deducting the allowable exemptions which he earned throughout the income year. And tax rebate is one of the ways to save taxpayers tax.
If a taxpayer wants to reduce the tax by availing this tax credit, he has to invest or donate in the particular areas mentioned in the Income Tax Act. If this investment or donation is as per income tax law then it is considered under investment allowance. And on this amount, an individual taxpayer gets the tax rebate facility which is deducted from the tax liability.
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So, an individual taxpayer keeps small investments or donations in the specified sectors throughout the year. Therefore, if the amount of investment allowance is known at the beginning of the year, then the taxpayer can plan and invest or donate throughout the income year.
Now the question is how much you can invest or donate for tax saving?
As I said at the beginning, the Income Tax Act 2023 does not specify the amount of investment allowance. Previously, what will be the investment allowance was mentioned and then in the second step, the taxpayer could calculate his tax credit amount using the tax rebate rates.
Jasim Uddin Rasel is a best-selling author in Bangladesh who published books in Tax Deduction, Tax Compliance for corporate sector and Tax Return Preparation for individual taxpayers. He has also an online training platform, taxpertbd.com, where participants can start training immediately after paying the course fee.
