ACKNOWLEDGEMENT
Education involves not only reading books and doing exercises but also acquiring knowledge through doing something practically. This report has designed only for considering that objective. In this period of time, we enjoyed the study of tax system of Bangladesh in various aspect of tax. First of all, we are indebted to our guide teacher Ms.Rehana Frowzier Lecturer, Department of Business Administration, Stamford University Bangladesh. His views, suggestions save us from more difficulties. We are also grateful to our group members’ most valuable cooperation, inspiration and suggestions.

EXECUTIVE SUMMARY
This dissertation report highlights on our practical experience in different types and categories ‘Tax System’ especially Tax System Of Bangladesh. During our short working period, we tried to gather information from News Paper, web sites. But the NBR does not provide information in the web site directly and even it does not publish tax structure implement in Bangladesh. So, we take much information about tax in our personal concept and view of Tax System of Bangladesh. To complete this report, we have gained practical knowledge about various type of Tax System. For example, Tax System Of Bangladesh, canon of taxation and implementation the canon of Bangladesh in Tax System Of Bangladesh. In this way, we are getting knowledge not only the tax system but also the implementation of canon on tax system of Bangladesh. As, tax is an important part of our country development. so, day by day, people are getting more conscious and informed about tax.
Object of this study
We can gain knowledge about the tax system of Bangladesh by studying this topic. As following aspects of tax we can learn from this study:
1. To get the idea about the collection of revenue, as context of Bangladesh.
2. How distribute the income of people in Bangladesh is allocated.
3. How economic control to achieve their micro economic control.
4. Effect of the tax system of Bangladesh to economic development.
5. How national income is raised in desired level.
Limitation of this study
There are some limitations of this study. Therefore the assignment may lack some crucial data. 1. Necessary data and information an neither adequate nor well finished. 2. The duration that is for assignment program is not enough to learn about the tax system of Bangladesh. 3. This assignment does not analyze the critical analysis of different sectors in the tax system of Bangladesh in details.

The assignment has encountered these limitations that may have hinder progress. But with constant effort, our goal was to minimize the negative efforts of these limitations.

METHODOLOGY OF THIS STUDY
Basically there are two types of methodology. One is Primary sources and another is
Secondary sources.
Primary source:
Primary source are those type of source that we collect information or survey directly from the organization.
Secondary source:
Secondary source are those type of source that we collect information from online or any reference books.
To make this overall assignment we followed the secondary sources like, online, reference book, and journal.

ABOUT
TAX
Tax is a compulsory levy imposed by the Government. People pay taxes to the Government on the basis of what they earn, what they own and what they purchase. A tax is a compulsory payment levied on the persons or companies to meet the expenditure incurred on conferring common benefits upon the people of a country. Two aspects of taxes follow from this definition:
A tax is a compulsory payment and no one can refuse to pay it.
Proceed from taxes are used for common benefits or general purposes of the state.
Classification Of Tax:
On the basis of tax rate
Progressive Tax
Proportional Tax
Regressive Tax On the basis of impact and incidence
Direct Tax
Indirect Tax on the basis of base
Single Tax
Multiple Tax

Multiple Taxes
TAX SYSTEM OF BANGLADESH Major heads of tax-revenues of Bangladesh are as follows:
A. Taxes on Income and Profit
1. Income tax-Companies2.Income tax-Other than Companies
B. Taxes on Property & Capital Transfer
1. Estate Duty and Gift Tax
2. Wealth Tax
3. Narcotics Duty
4. Land Revenue
5. Stamp duty-non-judicial
6. Registration
C. Taxes on goods and services
1. Customs Duties
2. Excise Duties
3. Value Added Tax (VAT)
4. Supplementary Duty (On luxury items and in addition to VAT)
5. Taxes on Vehicles6.Electricity Duties
7. Other Taxes and Duties (travel tax, turn over tax, etc.)
Major heads of non-tax revenues are as follows:
D. Interest, Dividend and Profit

E. General Administration and Services.
F. Social and Community Service.
H. Economic Services.
I. Agriculture and Allied Services.
J. Transport and Communication.
K. Other non-tax revenue. L. Capital Revenue
The characteristic of Bangladesh Tax System comprised of the following factors:
(a) Revenue GDP Ratio:
A key component of fiscal policy of the government is to strengthen the effort to mobilize domestic resources to generate a larger share of resources for investment. The strategy involves both revamping tax management and providing the right incentives to stimulate domestic savings. Domestic resource mobilization through the tax effort is not outstanding, but is a significant improvement over the past. The following table gives the ratio of tax revenue, non-tax revenue and revenue to GDP over the years.

Figure: Ratio of GDP
b. Realization of taxes vis-à-vis budget:
The apex organization which controls the bulk of revenue receipts and taxes in Bangladesh is the National Board of Revenue (NBR), which was established in 1972. In Bangladesh, it has been observed that over the years, realization of revenue (NBR portion) exceeds or comes closer to budget target. The actual realization of revenue (NBR portion) was 2.16% higher than the target. This may be seen clearly from the following table (1990-91 to 1994-95). Actual Realization of tax revenue vis-à-vis target

(c) NBR Tax Vis-a-is Total Revenue:
(d) Trend of Revenue Receipts:
(e) Domination of Indirect Tax over Direct Tax:
Despite the progress for ensuring self-reliant development in a global climate of free economy, a major thrust of fiscal policy in Bangladesh has to be on raising the revenue-GDP ratio. Further, there is an urgent need for shift in the composition of revenues away from tax on international trade, goods and services towards direct taxes on income and profit, whose share in total revenue in Bangladesh is appallingly low, even compared to other developing countries in Asia.
Forecast of Tax-Revenue:
The introduction of VAT in 1991 was a bold move. It now covers manufacturing at the wholesale and retail stage and some selected services. Efforts are on to make VAT as comprehensive as possible. Though VAT is now recognized as an efficient and non-distorting means of taxation by economists and policy makers alike, its introduction in many countries is held up due to political reasons. Thus Bangladesh can take credit of introduction of VAT within so short a period of time. Due to computerization in progress at NBR, it is now possible to predict revenues and their composition with much more precision than in the past.

Tax revenues have recently shown unusual buoyancy and responsiveness to tax reforms and rate adjustments. Imports responded vigorously in 1994-95 to the sharp reductions in tariffs yielding significantly higher revenues from import taxation with tariffs rates at an all-time low. As most revenue targets except those of direct taxes were exceeded in 1994/95, it warranted upward revision of targets for the following year. This optimistic trend is expected to continue into the year 2000 with tax revenues posing a higher trajectory, than would have been the case without tax-reforms.
1. DIRECT TAX CONTRIBUTES ONLY SMALL PORTION OFTOTAL TAX REVENUE:
Tax revenue structure of Bangladesh can be divided into direct and indirect taxes. A direct tax is paid by a person to the revenue authority. Direct tax is borne by the tax payer and cannot be passed on to any person, whereas indirect tax is passed on by the tax payer so that the burden of the tax is ultimately borne by another, for example Value Added Tax(VAT) which, although paid by the businessmen, is passed on to the customers. That is, indirect tax is charged on consumption in one way or another. Indirect tax is regressive because it takes higher portion of a poor person’s income than of a reach person’s. VAT is the same for all people. Indirect taxes do not develop any civil consciousness in the minds of tax payers because nobody feels that he is paying a tax as it is concealed in price, whereas direct tax create a civic consciousness among the tax payer; they feel that they are contributing towards the state expenditure. In the case of direct taxes, the relation between the tax payer and the revenue authorities is direct personal. But there is an indirect relation between the tax payer and tax authorities in the case of indirect taxes, for the taxes are collected unofficially through the agency of merchants.
2. PREDOMINENCE OF INCOME TAX AMON THE DIRECTTAXES:
According to the income tax Ordinance, 1984, income may generate from different sources, namely, salary, business & profession, house property, interest on security, agriculture, capital gains, and other sources.
3. NEGLIGIBLE DIRECT CONTRIBUTION OF THEAGRICULTURAL SECTOR TO TAX REVENUE:
Direct taxation on agricultural sector normally takes two forms; land revenue tax and tax on agricultural income. This sector accounted for more than 50% of total direct tax revenue in the early sixties, but now agricultural income tax is very negligible. It accounts for only0.01% of the GDP, although the average contribution of agriculture to the GDP is 35%.Agriculture, more specifically, non-farm activity, still remains an untapped source of revenue to the government. In most cases, income from agriculture does not exceed the ceiling of non-taxable limit primarily due to subdivision and fragmentation of holdings for which income is distributed to different hands. Furthermore, tax administration is not expanded down to village, and therefore, current information on this source of income cannot be easily collected for making assessment. Placing more emphasis on the collection of income tax from agriculture may augment the price of our main food and may create socio-political unrest. Government does not like others to do politics with food. High cost of collection of agricultural tax may be another consideration. All these factors may contribute to the poor tax performance of agriculture sector.
4. HEAVY RELIANCE ON DIRECT TAX BASED:
Bangladesh relies too much on indirect taxes, which accounts for nearly 80% of the total tax revenue. On the other hand, the developed countries rely less on indirect taxes and more indirect taxes. For example, indirect taxes account for 45% of total tax revenue of UK (Stain, 1997). Our dependence on indirect taxes is increasing gradually. Indirect tax is comprised of mainly three types: Value Added Tax (VAT), Customs Duty, and Excise duty. The government of Bangladesh introduced the VAT system in 1991-92. It was imposed at the import cum manufacturing stage and replaced the prevailing excise duty on domestic production at the production stage and sales tax on imports at the import stage. It is also imposed on domestic services and its coverage of domestic goods has gradually increased in the recent times. Value added is defined as the difference between the value of a firm’s sale (outputs) and purchases of inputs.
5. IMPORT DEPENDENCY OF INDIRECT TAX BASE:
Our tax structure is heavily dependent on imports. It is, however, obvious that the indirect taxes on international trade composed almost entirely of taxes on imports, account for the lion’s share of our tax yield. That is, the system of indirect taxation in Bangladesh is heavily dependent upon import trade. Total import-based indirect tax is around 50% of total tax revenue.

6. POOR TAX- GDP RATIO:
The ratio of tax revenue to GDP is an indicator of the government’s performance in generating resources at its disposal through the taxation machinery. The higher this ratio, the higher the effectiveness of the taxation system in terms of revenue yields. The contribution of tax revenue to the GDP of Bangladesh was less than 4% in FY 1972-73 against 9.35% in1995-1996. As per Periodic Economic Update of the World Bank of June 2002, tax revenue – GDP ratio of Bangladesh is 9.7% in FY 2001-02. The Government claims that the current tax revenue- GDP ratio is 10.40% and is expected to increase to 12% within the FY 2004-05.

5.IMPORT DEPENDENCY OF INDIRECT TAX BASE:
Our tax structure is heavily dependent on imports. It is, however, obvious that the indirect taxes on international trade composed almost entirely of taxes on imports, account for the lion’s share of our tax yield. That is, the system of indirect taxation in Bangladesh is heavily dependent upon import trade. Total import-based indirect tax is around 50% of total tax revenue.
6. POOR TAX- GDP RATIO:
The ratio of tax revenue to GDP is an indicator of the government’s performance in generating resources at its disposal through the taxation machinery. The higher this ratio, the higher the effectiveness of the taxation system in terms of revenue yields. The contribution of tax revenue to the GDP of Bangladesh was less than 4% in FY 1972-73 against 9.35% in1995-1996. As per Periodic Economic Update of the World Bank of June 2002, tax revenue – GDP ratio of Bangladesh is 9.7% in FY 2001-02. The Government claims that the current tax revenue- GDP ratio is 10.40% and is expected to increase to 12% within the FY 2004-05.
CANNON OF TAXATION
The four canons of taxation as prescribed by Adam smith are the following:
1. Canon of equality:
“The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the Revenue which they respectively enjoy under the protection of the State.” This cannon tries to observe the objective of economic justice. It dictates that in absolute terms the richer should pay more taxes because without the protection of the State they could not have earned and enjoyed that extra income. If we interpret this principle in terms of disutility which the tax- payers suffer by paying taxes, it follows that the tax should impose equal marginal disutility upon every tax-payer. Two possibilities emerge in this case. If incomes are subject to constant marginal utility, then both the rich and the poor should be subjected to proportional taxation—each person paying a given percentage of his income as tax. On the other hand, if we agree with the more realistic proposition that income is subject to diminishing marginal utility, then the richer should pay a larger proportion of their income as taxes (that is, the taxes should be progressive).

2. Canon of Certainty:
This canon is meant to protect the tax-payers from unnecessary harassment by the ‘tax officials’. “The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person.” The tax-payers should not be subject to arbitrariness and discretion of the tax officials, since that breeds a corrupt tax administration. With a scope for arbitrariness even honest tax machinery will become unpopular. Smith is so emphatic about this principle as to claim “that a very considerable degree of inequality… is not near so great an evil as a very small degree of uncertainty.”
3. Canon of Convenience:
The mode and timings of tax payment should be, so far as possible, convenient to the tax- payer. This canon recommends that unnecessary trouble to the tax-payer should be avoided; otherwise various ill-effects may result:
4. Canon of Economy:
This canon recommends that cost of collection of taxes should be the minimum possible. It issueless to impose taxes which are too widespread and difficult to administer. These taxes entail an unnecessary burden upon the society in the form of additional administrative expense. The productive efforts of the people suffer due to this wastage. Realizing that the tax collections are being wasted, the tax-payers also tend to evade them. These canons of taxation have a sound philosophy behind them and exhibit an insight into the practical aspects of tax administration and its effect. However, in view of developments in economic philosophy and problems of a modern state, a few additional principles were also suggested by latter writers. A brief description of these is as follows:
5. Canon of productivity:
It is also called the canon of fiscal adequacy. According to this principle, the tax system should be able to yield enough revenue for the treasury and the government should have no need to resort to deficit financing.
6. Canon of Buoyancy:
The tax revenue should have an inherent tendency to increase along with an increase in national income, even if the rates and coverage of taxes is not revised.
7. Canon of Flexibility:
It should be possible for the authorities, without undue delay, to revise the tax structure, both with respect to its coverage and rates, to suit the changing requirements of the economy and of the treasury.
8. Canon of Simplicity:
The tax system should not be too complicated. That makes it difficult to understand and administer and breeds problems of interpretation and legal disputes.
9. Canon of Diversity:
It is risky for the State to depend upon too few a source of public revenue. Such a system is bound to breed a lot of uncertainty for the treasury. It is also likely to be inequitable as between different sections of the society. On the other hand, if the tax revenue comes from diversified sources and then any reduction in tax revenue on account of any one cause is bound to be very small. However, too much multiplicity to taxes is also to be avoided. That leads to unnecessary cost of collection and violates the canon of economy. In general, we must remember that the tax structure is a part of the economic organization of a society and should, therefore, fit in its overall economic philosophy. No tax system that does not satisfy this basic condition can be termed a good one. Over time, therefore, ideas regarding what should form a good tax system have undergone an evolution. In the following section we would briefly discuss the characteristics of a good tax system in the light of modern economic philosophy.

Bound to be very small. However, too much multiplicity to taxes is also to be avoided. That leads to unnecessary cost of collection and violates the canon of economy. In general, we must remember that the tax structure is a part of the economic organization of a society and should, therefore, fit in its overall economic philosophy. No tax system that does not satisfy this basic condition can be termed a good one. Over time, therefore, ideas regarding what should form a good tax system have undergone an evolution. In the following section we would briefly discuss the characteristics of a good tax system in the light of modern economic philosophy.
APPLICATION OF CANNON IN THE TAX SYSTEM OF BANGLADEH
There are so many tax system remains in Bangladesh. Among this tax system some cannons are followed, some are not.
1. Canon of equality:
In these cannon it imposes of tax according to ability to pay. So under these circumstances this is usually followed in the tax system of Bangladesh.2.
2. Canon of certainty:

This canon describe that the tax which each individual is bound to pay or to be certain and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, all ought to be clear and playing to the contributor and to every other person. This canon is not to be followed in the tax system of Bangladesh. So many corruptions are seen here.
3. Canon of economy:
Every tax has a tax of collection. It is important that the cost of collection should be as small as possible. It will be useless to imposed tax which is too widespread and difficult to administer.
4. Canon of productivity:
According to this principle, the tax system should be able to yield enough revenue for the treasury and the Government should not be forced to resort to deficit financing.
5. Canon of elasticity:
As the need of the country increases, the revenue should also increase. To meet emergency, the govt. should be in a position to augment its financial revenue through increasing tax rate.
6. Canon of simplicity:
The tax system should be simple and plain so that everyone can easily understand it. The assessment of tax must be simplified. To avoid corruption taxation should be simple.
7. Canon of diversity:
In line of productivity, canon of diversity also gives importance to adequate collection of tax through diversification. Such a system breeds a lot of uncertainty for the treasury. On the other hand, if the tax revenue comes from diversified sources, then any reduction in tax Revenue on account of any one is likely to be very small on total tax revenue. However, too much multiplicity of taxes is also to be avoided.
CONCLUSION
After finishing this assignment successfully, we have learnt the canon of taxation, the various tax systems in Bangladesh and the implementation of canon in the tax system of Bangladesh. There are many problems in tax system of Bangladesh which is created by us. So under these circumstances we all should reach on amalgamate decision with a view to solving the problem immediately for the sake of the welfare of the whole nation.