Everything about property taxes and fees

Suppose you are to buy a property in Bashundhara R/A worth BDT 2 crore. But you don’t have that much cash at your disposal. So you went for a home loan to finance your purchase. However, during the closing, you learned about the additional costs (comprising various taxes, VAT, and other fees) totaling 10-11% of the total deed value you need to pay to close the deal. For most people in this situation, this would be a deal breaker. And as reality has it, this is actually the case in this country. Call it an error in our current system (implicating the lack of uniform structure for reliable information), but no one can ignore its impact on one’s time and wealth. 

That is why, in this article, we will be discussing everything you need to know about property taxes and fees in Bangladesh that are associated with property purchases so that you don’t have to go through the same experience.

Stamp Duty

Stamp duty, also known as documentary stamp tax, is imposed by the government when it comes to recording certain types of records, usually real estate or similar assets.

Among the property taxes and fees in Bangladesh, stamp duty is fixed (as of Sept 2022) both for land and apartment purchase.

Stamp duty for purchasing land: 1.5% of the total deed value of the property
Stamp duty for purchasing an apartment/flat: 1.5% of the total deed value of the property

Registration Fee

A registration fee is payable during the registration of a contract for sale or transfer of any immovable property. Depending on the deed type, registration fees might vary.

Registration fee for purchasing land: 1% of total deed value of the property
Registration fee for purchasing an apartment/flat: 1% of total deed value of the property

53H or Gain Tax

According to clause (b), (c) or (e) of sub-section (1) of section 17 of the Registration Act, 1908 (XVI of 1908), any registering officer responsible for registering any document of a person shall not register any document unless the tax is paid at such rate as may be prescribed in relation to the property to which the document relates and on which stamp-duty is chargeable under Stamp Act, 1899 (II of 1899) by the person whose right, title or interest is sought to be transferred, assigned, limited or extinguished thereby, at the time of registration of such document.

Simply put, you have to pay gain tax for your purchase if there is stamp duty involved. That is to say–

Gain Tax for purchasing land: 

• 4% of total deed value of the property if the property is located inside a city corporation.
• 3% of total deed value of the property if the property is located inside the district municipality.
• 2% of total deed value of the property if the property is located inside other municipalities.
• 1% of total deed value of the property if the property is located outside municipality.

Gain Tax for purchasing an apartment/flat: 

• 4% of total deed value of the property if the property is located inside a city corporation.
• 3% of total deed value of the property if the property is located inside the district municipality.
• 2% of total deed value of the property if the property is located inside other municipalities.
• 1% of total deed value of the property if the property is located outside municipality.

Local Government Tax

2-3% of the total value of the property written in the deed depending on the region your property is located. That is to say, if your property falls under city corporation or cantonment board,

Local Government Tax for purchasing land: 2%
Local Government Tax for purchasing apartment/flat: 2%

And for anywhere else–

Local Government Tax for purchasing land: 3%
Local Government Tax for purchasing an apartment/flat: 3%

VAT (Value Added Tax)

If you buy a plot or flat from a real estate company or land developer, you have to pay a certain amount of VAT. That is to say, depending on the plot or flat, VAT rate differs.

VAT for purchasing an apartment/flat: 2% of the deed value for a small apartment under 1600 sft. but above 1600 sft., the VAT will be 4.5% of the deed value.

VAT for re-registration of an apartment/flat: 2%

VAT for purchasing land: No VAT is required unless a real estate company or land developer is involved. In that case, inside Dhaka 3% but 2% otherwise.

53FF or AIT (Advance Income Tax)

AIT is only applicable for apartments or plots purchased through a real estate company or land developer, either for residential or commercial purposes. However, depending on the area in which your property is situated AIT will be different.

AIT when purchasing a plot from a real estate company or land developer:

• 5% of the total deed value for Dhaka, Gazipur, Narayanganj, Munshiganj, Manikganj, Narsingdi, and Chittagong districts.
• 3% for any other areas in Bangladesh

Note: Tax under section 53FF is not applicable in case of re-registration.

AIT when purchasing a flat/apartment from a real estate company or land developer:

1. For Gulshan Model Town, Banani, Baridhara, Motijheel commercial area and Dilkusha commercial area in Dhaka AIT is Tk 1,600 per square meter for residential and Tk 6,500 per square meter for non-residential.
2. For Dhaka’s Dhanmondi Residential Area, Defense Officers Housing Society (DOHS), Mohakhali, Lalmatia Housing Society, Uttara Model Town, Bashundhara Residential Area, Dhaka Cantonment Area, Karwan Bazar Commercial Area, and Chittagong’s Panchlaish Residential Area, Khulshi Residential Area, Agrabad, and Nasirabad Area, AIT is Tk 1,500 per square meter for residential, Tk 5,000 per square meter for non-residential.
3. Tk 1,000 per square meter for residential and Tk 3,500 per square meter for non-residential in Dhaka North City Corporation, Dhaka South City Corporation, and Chittagong City Corporation areas except the areas mentioned in (1) and (2) above.
4. TK 700 per square meter for residential areas in other city corporation areas except for Dhaka North City Corporation, Dhaka South City Corporation, and Chittagong City Corporation, and Tk 2,500 per square meter for non-residential property.
5. Other than the areas mentioned in (1), (2), (3), and (4) above, Tk 300 per square meter is payable as AIT for residential areas, and Tk 1,200 per square meter for non-residential areas.

However, the AIT will be reduced by 20% for residential apartments with areas up to 70 square meters or 754 sft. (including common space) and 40% for residential apartments with areas up to 60 square meters or 646 sft. (including common space).

[Note: this condition is not applicable in the case of building or apartment or any space constructed for any purpose other than residential]

Note: Tax under section 53FF is not applicable in case of re-registration.

Moreover, you might need to pay an extra 0.5% of the total deed value of the property to get through the registration at sub-registrar office.

Total registration fee for purchasing an apartment or flat: (+-)11%
Total registration fee for purchasing a piece of land or a plot: (+-)6 to 9%

Dealing with property taxes and fees in Bangladesh while purchasing a property is not only hectic but also time and money consuming. Moreover, it is not an easy task that you can do by yourself in any given condition. Because there are too many things involved and you have to manage all that at the same time. So if you feel the need to resort to an expert, don’t feel hesitate to contact Bproperty at 09612110011 or directly reach us at any of our marketplaces in Dhaka or Chattogram.

Do you have any queries regarding Bproperty’s legal services? Ask us in the comments section below.