How to Handle Income Tax Cases if Your Return Falls Under Audit in Bangladesh

Introduction

When a taxpayer's income tax return is selected for audit in Bangladesh, the experience can feel intimidating. Some assume the selection itself proves wrongdoing; others lose valuable time deciding how to respond. In reality, selection for an income tax audit does not mean the taxpayer has committed an offence. It is a statutory verification process through which the tax authority examines whether the income, expenses, assets, liabilities, bank transactions and other information reported in the return are correctly disclosed under the law.

The income tax administration in Bangladesh is gradually moving towards risk-based and automated processes. The National Board of Revenue (NBR) has issued the Income Tax Return Audit Guideline, 2025, which explains audit selection, audit conduct and disposal. To ensure transparency and neutrality, risk-based audit selection criteria may be applied.

According to news reported by the state news agency BSS based on NBR press releases, 72,341 income tax returns were selected for audit through an automated process in the second phase for the 2023–2024 assessment year; earlier, 15,494 returns were selected randomly in the first phase. As a result, careful record-keeping, timely responses and an understanding of the legal process are more important for taxpayers than ever before.

Legal Background: Income Tax Audit Framework in Bangladesh

The core statutory framework for income tax audit in Bangladesh is the Income Tax Act, 2023. The authentic English text of the Act and its subsequent amendments are published on the NBR website.

Under section 180 of the Income Tax Act, 2023, a taxpayer may submit a self-assessment return, computing income, expenses, assets, liabilities and tax liability on their own. However, filing a self-assessment return does not mean it will never be verified. The law allows for processing, audit and assessment of returns.

Section 181 empowers the Deputy Commissioner of Taxes to address arithmetic errors, incorrect claims, refund issues or higher tax liability while processing a return. If processing changes the income, tax or refund figures, the taxpayer must be notified and given an opportunity to provide a written explanation, and where applicable, to file a revised return.

The principal audit provision is section 182. Under this section, the NBR or its authorised subordinate authority may select a return for audit. Selected returns are forwarded to the concerned Commissioner of Taxes, who then appoints the inquiry team, audit team and audit curator, and the Deputy Commissioner of Taxes issues the audit notice.

How Audit Selection Works

Audit selection may take place in several ways. Under the NBR guideline, risk-based audit selection criteria may be applied for automated selection. Until the full data of offline returns is incorporated into the database, random selection may also be used for individual taxpayers.

For businesses, companies and other taxpayers, selection may occur where the return shows legal or factual inconsistencies, the business's financial statements show mismatches, bank deposits do not match declared income, income is shown abnormally low, losses are claimed, exemptions or reduced rates are claimed, or where a large variation in income from previous years lacks a reasonable explanation. The NBR guideline refers to verification of business income, bank deposits, turnover, import documents, loans, expenses, balance sheets and profit-and-loss accounts.

Practical Issues Clients Commonly Face

• Confusion or anxiety on receiving an audit notice without clarity on what is being asked.
• Unexplained or insufficiently documented bank deposits, loans, gifts or remittances.
• Mismatch between declared turnover and business banking activity.
• Missing supporting documents — invoices, ledgers, TDS certificates, asset papers or salary records.
• Late, incomplete or informal responses that weaken the taxpayer's position.
• Difficulty in explaining the source of large investments, property purchases or capital introduction.

Step-by-Step Practical Guidance After Receiving an Audit Notice

Required Documents / Evidence

The documents needed depend on the nature of the audit and the issues raised in the notice. The following are commonly required:

• Income tax return copy and acknowledgment receipt;
• TIN certificate;
• Copy of the audit notice;
• Bank statements for the relevant assessment year;
• Salary certificates, pay slips and TDS certificates;
• Challans and proof of tax payment;
• Trade licence, invoices, books of accounts, sales and purchase registers for businesses;
• Audited financial statements, balance sheet, profit-and-loss accounts (for companies);
• Loan documents, gift deeds, remittance evidence and asset/property papers;
• Any other document specifically called for in the notice.

Common Mistakes to Avoid

• Ignoring or delaying the audit notice.
• Relying only on verbal explanations instead of written replies supported by documents.
• Submitting documents in a disorganised, incomplete or inconsistent manner.
• Filing a revised return or making admissions without first obtaining professional advice.
• Failing to keep separate records for personal and business transactions.
• Not preserving evidence of the source of large bank deposits, loans, gifts or asset purchases.

When to Seek Legal Assistance

Professional legal assistance should be considered where the audit involves large bank deposits, mismatched business turnover, questions about the source of assets, penalty exposure, complex company accounts, refund disputes, TDS issues, or where an adverse assessment, demand or penalty order has been or is likely to be passed.

FAQ: Income Tax Audit Cases in Bangladesh

Conclusion

An income tax audit is not, by itself, an accusation. With timely action, properly organised documents and a careful written response, many audit matters can be resolved without escalation. Where the issues are complex — large deposits, source of assets, business turnover mismatches, penalty exposure or adverse orders — early professional advice helps protect the taxpayer's rights and preserve appeal options within statutory time limits.

References

• National Board of Revenue (NBR), Income Tax Act, 2023 and subsequent amendments.
• Income Tax Act, 2023, provisions including sections 180, 181, 182, 286 and 291.
• National Board of Revenue, Income Tax Return Audit Guideline, 2025.
• BSS, news report on NBR selecting 72,341 income tax returns for audit.