VAT is the most audit-prone tax in Bangladesh, largely because it is document-driven. The tax position is defended with challans and registers, not with explanations.
Who Must Register
Under the VAT and Supplementary Duty Act 2012, businesses whose annual turnover exceeds the prescribed registration threshold must obtain a Business Identification Number (BIN). Businesses below the VAT threshold but above the turnover tax threshold enrol for turnover tax instead. Certain categories - importers, exporters and specified supply types - must register regardless of turnover.
An entity operating from multiple locations may need central registration or unit-wise registration depending on how it accounts for supplies.
Getting the BIN
Registration is filed online through the NBR VAT system with the trade licence, TIN, incorporation documents, bank details, premises information and a description of the goods or services supplied. The BIN certificate must be displayed at the place of business.
The Mushak Records You Must Maintain
- Mushak 4.3 - input-output coefficient declaration for manufacturers, filed before production
- Mushak 6.1 - purchase register
- Mushak 6.2 - sales register
- Mushak 6.3 - VAT challan issued on every taxable supply
- Mushak 6.6 - certificate issued by the withholding entity for VAT deducted at source
- Mushak 6.10 - record of purchases above the prescribed cash threshold
Input VAT credit depends on holding a valid Mushak 6.3 within the permitted period. Missing challans mean lost credit, regardless of whether the purchase was genuine.
Monthly Return: Mushak 9.1
Every registered entity files Mushak 9.1 by the 15th of the following month, reporting output VAT, input VAT credit, VDS deducted and withheld, supplementary duty and net payable. Payment is deposited by treasury challan under the correct economic code before filing.
Nil returns are mandatory in months with no activity.
VAT Deduction at Source (VDS)
For specified services, the recipient withholds VAT from the supplier's payment, deposits it and issues a Mushak 6.6 certificate. Withholding entities include government offices, semi-government and autonomous bodies, NGOs, banks and financial institutions, insurance companies, limited companies and educational institutions.
Two failure modes are common: not deducting at all, and deducting but never issuing the 6.6 - which leaves the supplier unable to claim credit and the withholder exposed on assessment.
Penalties
Late filing attracts a fixed penalty per return plus interest on unpaid VAT. Failure to register, issuing challans without registration, or non-maintenance of records draws separate penalties per offence, and persistent default can result in BIN suspension and freezing of bank accounts.
Practical Controls That Prevent Problems
- Reconcile the sales register to the accounting revenue account every month, not at year end
- Track input challans by date so credits are not lost to time limits
- Maintain a VDS register listing every deduction made and every certificate issued
- Ensure the input-output coefficient reflects actual production; a stale Mushak 4.3 is a standard audit finding
How AeroNext Helps
AeroNext handles VAT registration, monthly Mushak 9.1 preparation and filing, VDS compliance, record maintenance, VAT audit representation and dispute resolution with the NBR - integrated with bookkeeping, so the return reconciles to the ledger by construction.
