An Assignment on

Chittagong Stock Exchange (CSE)

I
N
2
2
1

Prepared For

Umme Hanna Airin Ara

Assistant Professor
Department of Finance
Faculty of Business Administration Prodip Kumar Das
ID# BBA 03009905

Md. Imrul Hassan

ID# BBA 02606691

Md. Ekram Akter

ID# BBA 02606663

Stamford University Bangladesh

27-04-2010
Submitted to

Tazrina Flora
Lecturer
Department of Finance
Faculty of Business Administration
Stamford University Bangladesh

Submitted by

Group No: 07
BBA 30c Batch
Faculty of Business Administration

Serial
No. Name of the Students ID no

01 Prodip Kumar Das BBA 03009905

02 S.M. Tarequl Hoque Chishty BBA 03009718

03 Kamruzzaman Kishan BBA 03009758

04 Suman Kanti Paul BBA 03009708

05 Debabrata Mitra BBA 03009753

Letter of Transmittal

Date: March 09, 2009

Tazrina Flora
Lecturer
Department of Finance
Faculty of Business Administration

Subject: Submission of Assignment

Dear Madam,
Here I am submitting my Assignment on “Public Finance” prescribed by you in
your course Public Finance. For this purpose, we have gone through Internet,
different books, and class lecture sheets for the relevant information of the
assigned topic.

Please call me (our contact number is written down after group list) for any
further information at your convenient time and place.

Yours truly,

Prodip Kumar Das

On behalf of group no. 07
30c Batch
Faculty of Business Administration
Stamford University Bangladesh
Acknowledgement

We, at first, owe our sincere gratitude to Tazrina Flora, our course teacher of
Public Finance who assigned us to prepare such an Assignment which is the
most crucial part of our study of this subject because it deals with tax. Her
helpful suggestions, instructions, encouragement and support make clear to the
perspective of preparing this Assignment.

We are grateful to all of our friends and classmates who give us necessary
information and suggestion for formulating and analyzing this complex task.

Table of Contents

Serials Particulars Page No

Overview Background, Mission, Objectives 01

Functions Functions of stock exchange bodies 03
Stock Exchange Dealers / members 03
Stock Exchange Trading 04
Types of Transaction 04
Most Frequent Orders 07

Listing Requirments 07
Forms and Types of Forms of Securities 08
Securities Types of Securities 09
Other types of Instruments 09
Types of Primary Market Placements 09

Trading Rule Organizations and institutions involved 11

Capital Changed Organization 12
Shareholders Meeting 13

Executive Summary

This report is an assigned job as a partial requirement of course requirement by

honor Course teacher Tazrina Flora, Lecturer, Department of Public Finance,
Faculty of Business Administration, Stamford University Bangladesh. The
ultimate task of this assignment is to get different types of tax related
Knowledge.
 INTRODUCTION

The corporate income tax is one of the most controversial types of taxes.
Although the law treats corporations as if they have an independent ability to
pay a tax, many economists note that only real people—such as the
shareholders who own corporations—can bear a tax burden. In addition, the
corporate income tax leads to double taxation of corporate income. Income is
taxed once when it is earned by the corporation, and a second time when it is
paid out to shareholders in the form of dividends. Thus, corporate income faces
a higher tax burden than income earned by individuals or by other types of
businesses.

Some economists have proposed abolishing the corporate income tax and
instead taxing the owners of corporations (shareholders) through the personal
income tax. Other students of the tax system see the corporate income tax as
the price corporations pay in return for special privileges from society. The most
important of these privileges is limited liability for shareholders. This means
that creditors cannot claim the personal assets of shareholders, because the
liability of shareholders for the corporation’s debts is limited to the amount they
have invested in the corporation.

1.1 Scope and Objectives of this Study

As a business graduate in future, we should have to gather experience beside
our institutional education. We should not only concern our lesson in
classroom but also endeavor to know the practical implementation sector of
these studies also that will help us to understand and judge well the various
issues today and tomorrow. Every activity should have its own goal. Without
establishing and achieving goal we can not expect a prosperous result.

So, identifying objectives is very much important. Our purpose of preparing

the report is:
• To prepare the Return file of a corporation
• To calculate net tax payable
• To broaden our knowledge in corporate assessment

1.3 Limitations of this Study

Hardly any report overcomes all the limitations getting complete accuracy. Ours
is also not exceptional. Although we face some limitations, we were trying our
best to overcome these complexities and provide information as far as possible.

• We have not got any academic facilities from the Faculty of Business
Administration and Management to prepare the report.
• We have prepared the report when our final examination of 4th semester is
knocking at the door, thus we get very short time to make a survey and
report on it.
• As the tax return file is quite confidential, we cannot collect the company’s
actual tax return file.
• We prepare the Profit and Loss account from an unauthorized source, so
we cannot assure about its reality.

DISCUSSION: AN OVERVIEW OF THE PROBLEM

2.1 Tax and Bangladesh

Since ancient times the taxes has been the real strength of the kings and
emperors. At present, too, taxation is the mainstay of public expenditure.
Moreover, in a developing economy with almost insatiable demand for limited
fund, ever expanding development activities of Government have placed the
emphasis on taxation as the main source of fund.
The sources of Govt. revenue in Bangladesh are: tax receipts, loan, printing
notes, loan, income from public industrial service enterprises, fees and other
receipts. Among these, the principal source is tax which account for about 80%
of the revenue receipts and the remaining 20% comes fro rest other sources.
But what is important to note is that our tax system yields low revenue
compared to develop and developing countries to support her development
activities.
Thus it is utmost important to push up revenue-GDP ratio and tax- GDP ratio
through higher effective investment and enlarging tax net and closing loopholes
in tax collection.

2.2 What is Tax?

Taxation system raises money to finance the government. All governments

require payments of money—taxes—from people. Governments use tax
revenues to pay soldiers and police, to build dams and roads, to operate schools
and hospitals, to provide food to the poor and medical care to the elderly, and
for hundreds of other purposes. Without taxes to fund its activities, government
could not exist.

Throughout history, people have debated the amount and kinds of taxes that a
government should impose, as well as how it should distribute the burden of
those taxes across society. Unpopular taxes have caused public protests, riots,
and even revolutions. In political campaigns, candidates’ views on taxation may
partly determine their popularity with voters.

Taxation is the most important source of revenues for modern governments,

typically accounting for 90 percent or more of their income. The remainder of
government revenue comes from borrowing and from charging fees for
services. Countries differ considerably in the amount of taxes they collect. In
the United States, about 30 percent of the gross domestic product (GDP), a
measure of economic output, went for tax payments in 2000. The 30 percent
figure is relatively low from a historical standpoint. As a result of a new round of
tax cuts in 2003, the tax percentage share of GDP was expected to be lower
than at any time since 1959 when many major government programs, such as
Medicare and Medicaid, did not exist. In Canada about 35 percent of the
country’s gross domestic product goes for taxes. In France the figure is 45
percent, and in Sweden it is 51 percent.

In addition to using taxation to raise money, governments may raise or lower

taxes to achieve social and economic objectives, or to achieve political
popularity with certain groups. Taxation can redistribute a society’s wealth by
imposing a heavier tax burden on one group in order to fund services for
another. Also, some economists consider taxation an important tool for
maintaining the stability of a country’s economy.

Criteria of Taxation in Bangladesh

Tax Rate (Assessment Year- 2008-09):

For individuals other than female taxpayers, senior taxpayers of 70 years and
above and retarded taxpayers, tax payable for the

First 1, 65,000/- Nil

Next 2, 75,000/-
10%
Next 3, 25,000/-
15%
Next 3, 75,000/-
20%
Rest Amount
25%

For female taxpayers, senior taxpayers of age 70 years and above and retarded
taxpayers, tax payable for the
First 1, 80,000/- Nil
Next 2, 75,000/-
10%
Next 3, 25,000/-
15%
Next 3, 75,000/-
20%
Rest Amount
25%

• Minimum tax for any individual assessee is Tk. 2,000

• Non-resident individual 25%
(Other than non-resident Bangladeshi)
For Companies

• Publicly Traded Company 27.5%

• Non-publicly Traded Company 37.5%

• Bank, Insurance & Financial Company 45%

• Mobile Phone Operator Company 45%

• If any publicly traded company declares more than 20% dividend,

10% rebate on total tax is allowed.
Tax Authorities

The income tax authorities can be classified into two groups.

1. Administrative Authorities
2. Judicial Authorities

The administrative authorities look after the administration and the

Judicial branch looks after Judicial matters.

Administrative Authorities:

• National Board of Revenue,

• Director General of Inspection (Tax),
• Commissioner of Taxes (Appeals),
• Commissioner of Taxes (LTU)
• Director General (Training),
• Director General Central Intelligence Cell (CIC),
• Commissioner of Taxes,
• Additional Commissioner of Taxes (Appeal/Inspecting),
• Joint Commissioner of Taxes (Appeal/Inspecting)
• Deputy Commissioner of Taxes,
• Assistant Commissioner of Taxes,
• Extra Assistant Commissioner of Taxes,
• Inspectors of Taxes.

Judicial Authorities:

• Appellate Tribunal
• Appellate Additional Commissioner of Taxes
• Appellate Joint Commissioner of Taxes.
• Commissioner of Taxes- Appeal
Requirements of a Good Tax Structure

It is rare to find a tax that meets all the criteria of a good tax. Taxes
have two purposes – that of raising revenue and that of creating or
implementing social policy.

The first four properties of a good tax or tax system relate to the
revenue-generating purpose. The fifth is related to social policy.

• Taxes Should Have an Adequate and Stable Tax Base.

• Taxes Should Be Fair.
• Taxes Should Be Efficient.
• Taxes Should Be Transparent.
• Where possible, taxes should be used to advance social policy.

Public Revenue- General Consideration

It is a normal practice with a government to divide its receipts into
“revenue” and “capital” categories. Broadly speaking, revenue
receipts include “routine” “earned” ones. For this purpose they do not
include borrowing and recovery of loans from other parties, but they
do include tax receipts, donation, grants, fees, and fines etc.
Capital receipts, on the other hand, cover those items which are
basically of non-repetitive and non-routine variety and change
government‘s financial liabilities/assets.

Revenue Receipts

These receipts are divided into tax revenue and non-tax revenue.
Tax-revenue itself is divided into three sections:

• Taxes on income and expenditure

• Taxes on property and capital transactions
• Taxes on commodities and services

Non-tax revenue is divided into three sections:

• Currency, coinage and mint

• Interest receipts, dividends and profits
• Other non-tax revenue

Capital Receipts

Capital receipts of the govt. take many forms. On the basis of origin,
public borrowing may be

• External- From within the country

• Internal- Outside the country

In terms of maturity, there may be non terminable-

• Long term
• Medium term
• Short term loans
•
Some capital receipts may be in the form of grants and donation,
deposits, and appropriation to various funds and So on.
Base of Tax

The base of a tax is the legal description of the object with reference
to which the tax is payable. The base of an income tax is the income of
the assessee defined and estimated in terms of certain rules laid down
for this purpose. The base of each tax has to be defined legally and it
is to be quantified for the purpose of determining the tax liability of an
individual tax payer.

Principles of Taxation

Prescribed by Adam Smith. Four canons

• Canon of Equality
• Canon of Certainty
• Canon of Convenience
• Canon of Economy
• Canon of Productivity
• Canon of Buoyancy
• Canon of Flexibility
• Canon of Simplicity
• Canon Diversity

Objectives of Taxation

Government needs revenue for defense, administration and

development activities.
The main source of this revenue is tax. The objectives of Taxation
Includes-

• Collection of Revenue
• Redistribution of Income
• Economic Control
• Protection of Industry
• Economic Development
• Full Employment
• Raising National Income in Desired Level
Tax Burden – Some Theories

The first set of Theories

• The Expediency Theory
• The Socio Political Theory
The second set of Theories
• The Benefits- Received Theory
• Cost of Service Approach
The third set of Theories
• Ability to Pay Theory
• Objective Indices of Ability
• Subjective Indices of Ability

2.10 Procedure of Assessment

CONCLUSION

Governments spend the revenues raised by taxation on an enormous variety of

items, from atomic weapons to drug-abuse treatment programs.

Federal government spending comprises several major categories. One of the

largest government expenditures is national defense. The most important
nonmilitary program is Social Security, whose main function is to provide
income to individuals during their retirement years. Another major program for
the benefit of the elderly is Medicare, a health insurance program. Social
welfare programs—which include unemployment insurance and payments of
cash and food to the poor—also account for a large slice of the federal budget

When the government borrows money from the public, it must pay interest like
any other borrower. One popular way the federal government borrows money is
by selling U.S. treasury bonds. By purchasing the bonds, individuals lend money
to the government. At the end of a bond’s term, the government returns the
investment plus interest.

State and local governments spend the largest share of their tax revenues on
public school systems. Other important expenditures include welfare programs,
police and fire protection, maintenance of roads and highways, and public
hospitals.

4.1 Bibliography

1. Mahmud Dr. Monjur Morshed, Purohit Dr Kanchan Kumar, Dr.

Bhattacharjee Dr. Milan Kumar; Income tax, Padma Prokashani, 4th Edition.
2. Baree M. A.; Law and Practice of Bangladesh Income Tax. Daisy
Publisher, 2nd Edition.