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I need to know what...

Tax means the income tax payable under this Ordinance and includes any additional tax, excess profit tax, penalty, interest, fee or other charges leviable or payable under this Ordinance

...means in terms of reference and congent excerpt since I am going to use it in income tax court?

What does it mean as in the the left or right diagram(set/venn diagram) of the attached image- left diagram or the right one?

  1. Left diagram: "tax" and "income tax" are same entity.
  2. Right diagram: "tax" and "income tax" are different entity where "tax" contains "income tax" along with others.

** I want to prove in court that the right side diagram is the true meaning of section 2(62)- is it possible?**

N.B. I am referring to section 2(62) of this tax law http://bdlaws.minlaw.gov.bd/act-672.html

diagram

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  • Where are the diagrams from and how do they relate to the cited Ordinance?
    – Rick
    Aug 11 at 8:40
  • @Rock Ape these two diagrams are drawn based on the meaning of the quoted wordings in the question, i.e. section 2(62) of Income Tax Ordinance 1984.
    – SIslam
    Aug 11 at 13:02
  • You need to consult a licensed professional acquainted with the tax law you are referring to here. It is perilous in the extreme to expose yourself to legal penalties based on random internet posters' unschooled opinions.
    – tchrist
    Aug 11 at 13:40
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You’ll need to check with a tax professional regarding statutory interpretations of the quote, so this answer is not intended to help with your court case. This answer just deals with the quote as a piece of conversational English.

The plain English sense is that although “tax” admits to a wider interpretation ordinarily (your #2), the word is constrained in the given context to just income tax, together with other things that one might not consider to be taxes (close to your #1).

Unconstrained, “tax” includes consumption taxes, wealth taxes, income taxes and so on. It can be argued that penalties and interest etc are not taxes in the normal sense of the word.

However, within a specific context, it can be more convenient to define the term more narrowly while adding a bunch of related concepts that are included by metonymy.

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  • edited the question.
    – SIslam
    Aug 11 at 13:07
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What does it mean as in the the left or right diagram(set/venn diagram) of the attached image- left diagram or the right one?

The diagram in the left is a more accurate, although incomplete, representation. That being said, the difference between both diagrams is immaterial because some of the statutory definitions involved are circular, redundant, and imprecise.

The statutory definition of "income" "includes (a) any income [...] from whatever source derived". As such, salary constitutes income, yet it does not seem explicitly associated to any of the listed items ("additional tax, excess profit tax, [...]").

The reason for saying that the difference is not material is that taxation of salary might be conceptualized as belonging to "additional tax" or "fee or other charges leviable or payable under this Ordinance". From that standpoint, it is irrelevant whether "tax" and "income tax" are taken as synonyms or "income tax" is to taken as a subset of "tax".

Maybe if you elaborate on the argument(s) you intend to advance in court and/or why you think the difference is material it will be possible to address any remaining confusion.

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  • Edited the question.
    – SIslam
    Aug 11 at 13:55
  • @SIslam "Edited the question", "I want to prove in court". That intent was obvious from the start, but it remains unclear why you think the issue is relevant at all or why the right-side diagram would be correct despite that the answer explains that the left-side diagram is more appropriate. The right-side diagram suggests that items such as interest and excess profit are not income, when in reality and by statute they are examples of income. Aug 11 at 14:15
  • '@Viggers in fact let me tell you the background. There is surcharge imposable on only "income tax" at different rate based on amount of net wealth- the more net wealth you have the more high rate of surcharge is applicable to you. I need to substatiate that - If anyone pays tax u/s 19BBBBB or 19AAAAA which is not " income tax" so no point to apply surcharge thereon. There is no explicit definition of income tax in the above statue. So if I can prove that tax paid u/19bbbbb or 19aaaaa is not income tax then no surcharge to pay.
    – SIslam
    Aug 11 at 16:16
  • @SIslam I gather from your comment that net wealth determines the tax rate (or surcharge rate). But that is a separate issue from whether "tax paid u/19bbbbb or 19aaaaa"(whatever that means) is income tax. The premise that someone "pays tax u/s 19BBBBB or 19AAAAA" implies that that sum of money no longer constitutes part of that person's wealth. At that point it is irrelevant whether or not that payment was for income tax. At most, that sum would matter for quantifying the net wealth for fiscal periods prior to making that payment, but it is unclear whether that is the case in your matter. Aug 11 at 16:30
  • '@Viggers let me portray an example of surcharge- formula for surcharge:(1) net wealth>3 crores<10 crores= surcharge is 10% of paid income tax (2)10 crores< net wealth<20 crores= surcharge is 20% of paid income tax and so on.... So if i can prove that tax paid u/s 19aaaaa or 19 bbbbb is not "income tax" then surcharge would be lessened.
    – SIslam
    Aug 11 at 22:09
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This is paragraph (62) of section 2 (Definitions, part of Chapter I) of the tax ordinance , linked in the question. It seems to define "tax" as equivalent to ":income tax", and to say that it includes various specific assessments and charges, as well as the tax directly on income. These various charges seem to be specified in Chapter IV (sections 16 through 19E). Section 2(62) simply means tht the word "tax" can be used to refer to the total of these various charges, in this law, for simplicity.

This seems to correspond better to your left-hand diagram.

This definition alone does not indicate what a person does or does not have to pay.

I must agree that it would be wise to consult a professional knowledgeable about this law, before undertaking a legal action in which sizable sums might be at stake. Such a professional might be a lawyer, or a tax accountant, or have some other title.

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The ordinance is defining the term "tax" for the narrow purpose of the ordinance itself, which is more narrow the the general definition of the word tax in most respects (since it doesn't include non-ordinance imposes taxes), but broader than the word tax is other respects (since it includes interests and penalties and fees and the like). The terms "additional tax", and "excess profit tax" are defined terms in the ordinance and basically amount to penalties owed in addition to the ordinary "income tax" which is the primary kind of tax owed under the ordinance.

This definition means that as used in the ordinance, the term "tax" means all tax related amounts of money owed as a consequence of this particular ordinance, but no tax related amounts owed as a consequence of any other law.

There are other taxes in Bangladesh, for example, value added taxes and property taxes and fuel taxes and customs duties, that are excluded from the definition of tax as used in this ordinance.

This is done for drafting convenience, so that what is included and excluded in the concept defined as "tax" in the ordinance doesn't have to be reiterated every time the concept is used.

The diagram on the right is closer to the mark than the diagram on the left, since the definition includes "income tax" as well as other amounts within the definition of "tax". But it is still flawed because it doesn't include all of the other things that could plausibly be called taxes that are outside the circle and that are not included in this definition, such as taxes imposed by different laws. In equation form:

Tax = any income tax payable under this Ordinance + any additional tax under this Ordinance + any excess profit tax under this Ordinance + any penalty under this Ordinance + any interest under this Ordinance + any fee under this Ordinance + any other charges under this Ordinance.

Thus, "tax" and "income tax" are different things, where "tax" contains "income tax" along with others.

Another subtly of the definition is that only includes taxes and charges described in the ordinance that are "leviable or payable", which excludes tax obligations which are accrued but not yet payable.

For example, suppose that your 2020 income taxes were due on May 15, 2021, and you are in disputed with tax officials. As used in the ordinance, the term "taxes" includes your taxes from the 2020 tax year and all prior tax years for which the statute of limitations on collection of those taxes has not expired. But it does not include taxes that will be due in the future for the year 2021 on income that you have already earned in 2021, since those taxes aren't payable yet.

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  • 'ohwilleke section 2(62) contains two pivotal word "means" and "including". If right diagram is more proper than the left one, then how these two words will be addressed properly?
    – SIslam
    Aug 12 at 3:54
  • Means is = and including is +
    – ohwilleke
    Aug 12 at 15:37
  • '@ohwilleke but your equation treats all as '+'- if i get you properly. There are some extra background in comment section of Iñaki Viggers's answer.
    – SIslam
    Aug 12 at 15:44
  • Income tax is within the definition of tax. Tax or income tax is not a defined term. The term "income tax" standing alone, does not include additional tax, excess profits tax, interest, or other parts of the definition.
    – ohwilleke
    Aug 12 at 15:54

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