Written by Md Rakib Hassan — Income Tax Practitioner with 10+ years of tax compliance and audit experience across Bangladesh and the UK. Former accounts manager at a UK chartered accounting firm managing 1,000+ clients, with direct experience resolving multi-year tax audit disputes with HMRC and the NBR. Currently Finance Controller at a UK-based multinational tech group.
Every financial year, Bangladesh’s National Board of Revenue updates its withholding tax framework through SROs and Finance Acts. For FY 2025–26, the changes are more substantive than most years. Driven by the Finance Ordinance 2025, S.R.O. No. 157-Law/Income Tax-12/2025 (dated 26 May 2025), S.R.O. No. 269-Law/Income Tax-14/2025 (dated 24 June 2025), and the newly introduced VDS Rules 2025 (S.R.O. No. 182-Ain/2025/310-Mushak), the TDS VDS rates Bangladesh FY 2025–26 landscape has seen targeted revisions across key sectors.
This blog provides a comprehensive, section-referenced rate comparison — current FY 2025–26 versus prior FY 2024–25 — so finance teams can update payment procedures without delay.
Legal Framework for TDS VDS Rates Bangladesh FY 2025–26
The current rate structure derives from:
- TDS Rules, 2024 — as amended by SRO 157-Law/Income Tax-12/2025 (26 May 2025) and SRO 269-Law/Income Tax-14/2025 (24 June 2025)
- VDS Rules, 2025 — introduced through SRO 182-Ain/2025/310-Mushak (27 May 2025)
- Finance Ordinance, 2025 — effective 1 July 2025
Any payment processed from 1 July 2025 must apply these revised TDS VDS rates Bangladesh FY 2025–26 or risk a 50% surcharge under Section 142 for incorrect deductions.
Table A: Key TDS Rate Changes for FY 2025–26
Section 89 — Contractors and Suppliers
This is the most widely applicable TDS section for companies making payments for goods and services.
| Particulars | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|
| General supply of goods / manufacturing / conversion / printing / packaging | 5% | 5% | No change |
| Supply of cigarettes, bidi, tobacco and tobacco products | 10% | 10% | No change |
| Oil supplied by oil marketing companies (petroleum/lubricant) | 0.60% | 0.60% | No change |
| Oil supplied by dealer/agent (ex. petrol-pump stations) | 1% | 1% | No change |
| Oil supplied by oil refinery companies | 1.5% | 2% | Reduced |
| Gas transmission companies | 3% | 3% | No change |
| Gas distribution companies | 0.6% | 2% | Reduced |
| Supply of paddy, agricultural commodities, jute, salt, edible oil, sugar, spices, cotton, yarn, and all fruits | 0.5% | 1% | Reduced |
| Supply of books (non-government) | 3% | 5% | Reduced |
| Supply of trading goods to a trader | 5% | 5% | No change |
| Supply of industrial raw materials to a manufacturer | 3% | 3% | No change |
| Sub-contracts by 100% export-oriented garment industries | 1% | 5% | Significantly Reduced |
| Supply of raw materials used in recycling industry | 1.5% | 5% | Significantly Reduced |
The reductions for export-oriented garment sub-contractors (5% → 1%) and recycling industry raw materials (5% → 1.5%) represent meaningful policy changes that directly affect cash flow for these sectors. Finance teams in RMG and recycling businesses must update their payment templates immediately.
Section 90 — Deduction from Services
The service sector carries the highest volume of TDS transactions for most businesses. These are the key TDS VDS rates Bangladesh FY 2025–26 for service payments:
| Particulars | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|
| Advisory/consultancy — Individual | 15% | 10% | Increased |
| Advisory/consultancy — Other than individual | 7.5% | 10% | Reduced |
| Professional fees — Individual | 15% | 10% | Increased |
| Professional fees — Other than individual | 7.5% | 10% | Reduced |
| Technical service fee, know-how, technical assistance | 10% | 10% | No change |
| Catering, cleaning, security, manpower supply, event management, courier, packing — Commission | 10% | 10% | No change |
| Same as above — Gross bill | 2% | 2% | No change |
| Indenting commission | 7.5% | 8% | Reduced |
| Internet service | 5% | 10% | Significantly Reduced |
| Freight forward bill (including commission) | 1.5% | 2.5% & 10% | Reduced and simplified |
| Any other service not mentioned above | 10% | 10% | No change |
The most significant change for day-to-day operations is the individual vs non-individual split for advisory and professional fees. Previously a flat 10%, the rate now depends entirely on whether the service provider is an individual (15%) or a company/firm (7.5%). Finance teams must obtain confirmation of supplier entity type before processing any advisory or professional service payment.
The reduction in internet service TDS from 10% to 5% also has wide applicability — essentially every business paying ISP bills is affected.
Section 109 and 110 — Rent
| Particulars | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|
| Rent of property | 10% | 5% | Doubled |
| Rent of convention hall, conference centre etc. | 10% | 5% | Doubled |
This is one of the most impactful rate changes in the TDS VDS rates Bangladesh FY 2025–26 update. Companies paying commercial rents must immediately adjust their payment processes — failure to deduct 10% where 5% was previously applied creates a full shortfall liability for the withholding entity.
Section 114 — Purchase of Electricity
| Particulars | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|
| Purchase of electricity power | 4% | 6% | Reduced |
Section 116 — Agent Commission for Foreign Buyers
| Particulars | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|
| Commission/remuneration to agent of foreign buyer | 7.5% | 10% | Reduced |
Section 135 and 106 — Securities and Government Bonds
| Particulars | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|
| Interest on securities | 15% | 10% | Increased |
| Interest on Government Securities | 10% | 5% | Doubled |
Section 91 — Royalties and Franchise
| Particulars | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|
| Royalties, franchise, patents, trademarks etc. | 10% | 10%–12% | Simplified |
Table B: Key VDS Rate Changes for FY 2025–26
The new VDS Rules 2025 bring significant changes to the rates applicable under the TDS VDS rates Bangladesh FY 2025–26 framework. The following are the most notable movements:
| Service | Code | FY 2025–26 | FY 2024–25 | Change |
|---|---|---|---|---|
| Non-AC Hotel | S001.10 | 10% | 7.5% | Increased |
| Dockyard | S003.20 | 15% | 10% | Increased |
| Construction Firm | S004.00 | 10% | 7.5% | Increased |
| Printing Press | S007.00/S008.10 | 15% | 10% | Increased |
| Indenting Organisation | S014.00 | 15% | 5% | Tripled |
| Community Centre | S017.00 | 15% | N/A | New |
| Procurement Provider | S037.00 | 10% | 7.5% | Increased |
| Transport Contractor (non-petroleum) | S048.00(b) | 15% | 10% | Increased |
| Participants in board meetings | S053.00 | 15% | 10% | Increased |
| Clearing and maintaining of premises | S065.00 | 15% | 10% | Increased |
| Repairing/servicing of taxable goods | S031.00 | 15% | 10% | Increased |
| Credit Rating Agency | S099.50 | 15% | 7.5% | Doubled |
The most dramatic VDS change is the indenting organisation rate tripling from 5% to 15%. Any business in the trading or import facilitation sector that uses indenting agents must immediately apply the new 15% VDS rate and reissue supplier agreements if payment terms were based on the prior rate.
Goods and Services Exempt from VDS
Understanding what is not subject to VDS is equally important for applying the TDS VDS rates Bangladesh FY 2025–26 correctly. Exemptions under SRO 182-Ain/2025/310-Mushak include:
- Goods supplied by manufacturers with a Tax Invoice (Mushak 6.3) at any VAT rate
- Services subject to VAT at any rate not included in the mandatory VDS list
- Supply of utilities: fuel, gas, water (WASA), electricity, telephone, and mobile bills
- Goods and services exempt under the 1st Schedule of the VAT & SD Act 2012
- Zero-rated supplies under Section 21 of the VAT & SD Act 2012
- Where a furniture manufacturer, advertising agency, or satellite channel broadcaster issues an invoice duly attested by the Revenue Officer at 15%
- Invoices issued through EFD or SDC incorporating the purchaser’s name and BIN
The 50% Surcharge — Still Applies in FY 2025–26
Regardless of which rate applies, the TDS VDS rates Bangladesh FY 2025–26 surcharge rules remain unchanged under Section 142:
- If the payee cannot produce Proof of Submission of Return (PSR), the TDS rate is 50% higher than the applicable rate.
- If payment is not made by bank transfer, the TDS rate is 50% higher.
Both conditions can apply simultaneously, meaning a standard 10% rate could become 15% (PSR absent) or even higher where both conditions apply.
Under the Finance Ordinance 2025, this surcharge is now more rigorously enforced, with disallowed expenses for improper TDS taxed at the regular rate even for entities otherwise eligible for reduced rates.
TDS Deposit Deadlines — FY 2025–26
| Period of Deduction | Deposit Deadline |
|---|---|
| July to May (any deduction) | Within 2 weeks following the end of the deduction month |
| 1st–20th June | Within 7 days from the day of deduction |
| 21st–28th June | Next day after deduction |
| 29th–30th June | Same day as deduction |
VDS Deposit and Certificate Issuance — FY 2025–26
Deposit deadline: VDS must be deposited on or before filing the VAT return of the relevant tax period.
Mushak 6.6 Certificate issuance:
- For registered withholding entities: within 3 working days of filing the VAT return
- For non-registered withholding entities: within 3 working days of depositing the VDS to the Treasury
Certificate copies:
- Main copy → VAT Circle Office (with original TR Challan)
- 2nd copy → Supplier
- 3rd copy → Retained by withholding entity for 5 years
Action Checklist for FY 2025–26 TDS/VDS Compliance
Based on the updated TDS VDS rates Bangladesh FY 2025–26, every organisation should immediately:
- [ ] Update all vendor payment templates with revised TDS rates (especially rent, advisory, internet, securities)
- [ ] Distinguish between individual and non-individual service providers for Section 90 payments
- [ ] Apply the new 15% VDS rate to indenting organisations (up from 5%)
- [ ] Apply the new 15% VDS rate to transport contractors (non-petroleum, up from 10%)
- [ ] Confirm PSR status for all regular vendors and contractors
- [ ] Ensure all payments above threshold are via bank transfer (or apply 50% surcharge)
- [ ] Brief accounts payable teams on the new community centre VDS category (previously not listed)
Conclusion
The TDS VDS rates Bangladesh FY 2025–26 changes are not minor adjustments. Rent rates have doubled. Advisory rates now depend on entity type. Indenting VDS has tripled. Internet service TDS has halved. For finance controllers and accounts payable teams, applying the wrong rate is not just a compliance failure — it creates a liability that the withholding entity must bear, not the payee.
Disclaimer: Rate information is based on the Finance Ordinance 2025, SRO 157 and SRO 269-Law/Income Tax/2025, and VDS Rules 2025 SRO 182. Always verify against the latest NBR orders before applying rates. Compiled with reference to the work of Sonjib Chandra Pal, ACA.
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