TDS and VDS Rates in Bangladesh 2026-27: Common Payments Explained
Most companies, NGOs and other organisations in Bangladesh must deduct income tax (TDS) and VAT (VDS) when they pay suppliers. This guide covers the rates for the most common payments in FY 2026-27. To work out the figures for a bill, use our free TDS & VDS calculator.
TDS and VDS: the difference
TDS (tax deducted at source) is income tax the payer deducts from the supplier’s bill under the Income Tax Act 2023 and pays to the government. VDS (VAT deducted at source) is the VAT on the supplier’s invoice, which a VAT withholding entity deducts and deposits to the treasury under the VAT and Supplementary Duty Act 2012. One bill can carry both.
Common TDS rates for 2026-27
| Payment | Section | Individual | Company / firm |
|---|---|---|---|
| Professional services (audit, legal, tax) | 90 | 15% | 7.5% |
| Advisory or consultancy | 90 | 15% | 7.5% |
| Technical services | 90 | 15% | 10% |
| Catering, event management, training, courier | 90 | 2% of gross bill | |
| Transport, vehicle rental, repair and maintenance | 90 | 2% | |
| Security, cleaning, manpower supply | 90 | Higher of 10% of commission or 1% of gross bill | |
| Any other service | 90 | 10% | |
| Supply of goods (general) | 89 | 5% | |
| Industrial raw and packing materials | 89 | 3% | |
| House, office or warehouse rent | 109 | 10% | |
| Media advertising bill | 92 | 5% | |
Common VDS rates for 2026-27
| Service | Code | VDS |
|---|---|---|
| Audit and accounting firms; legal advisers; consultancy firms | S034 · S045 · S032 | 15% |
| Security; cleaning; manpower (human resource) services | S040 · S065 · S072 | 15% |
| Decorators and caterers; event management; courier | S002 · S071 · S028 | 15% |
| Transport contractors; rent-a-car; repair and servicing | S048 · S049 · S031 | 15% |
| Construction firms; motor garages; procurement providers | S004 · S003.1 · S037 | 10% |
| Furniture | S024 | 7.5% |
| IT-enabled services; online advertising; restaurants | S099.1 · S007.2 · S001.2 | 5% |
| Office or space rent (paid by the tenant) | S074 | 15% |
Key rules
- TDS is calculated on the amount before VAT when the invoice shows VAT separately.
- No proof of return submission (PSR), or a cash payment, raises the TDS rate by 50% each (section 142). Both together double it.
- If you bear the tax, TDS is grossed up: base × rate ÷ (100 − rate) (section 141).
- Goods supplied with a Mushak 6.3 invoice generally carry no VDS.
- Office and space rent: the tenant pays 15% VAT through e-challan, on top of the rent.
- Payments to non-residents carry TDS under section 119 and 15% reverse-charge VAT on imported services, paid by you.
Worked examples
Consultancy firm, bill of Tk 1,00,000 plus 15% VAT. TDS at 7.5% is Tk 7,500 and VDS at 15% is Tk 15,000. You pay the firm Tk 92,500 and deposit Tk 22,500 with the government.
Office rent of Tk 50,000 a month. TDS at 10% is Tk 5,000, so the landlord receives Tk 45,000. You also pay VAT of Tk 7,500 (15%) through e-challan.
Laptops for Tk 1,00,000 plus 15% VAT, with a Mushak 6.3 invoice. TDS at 5% is Tk 5,000 and there is no VDS. You pay the supplier Tk 1,10,000.
Security service, bill of Tk 2,00,000 including Tk 30,000 agency commission. TDS is the higher of 10% of the commission (Tk 3,000) and 1% of the bill (Tk 2,000), so Tk 3,000. VDS at 15% is Tk 30,000.
The TDS & VDS calculator suggests the right heads for any expense, such as “audit fee” or “internet bill”, and works out these amounts for you.
After paying
Deposit TDS by challan or a-challan and VDS by treasury challan, give the supplier a TDS certificate and a VDS certificate (Mushak 6.6), and keep the challans with your records. TDS and VDS are also reported in the withholding tax and VAT returns.
This guide is general information based on the Finance Act 2026. Rates can change by SRO; please talk to us about your own payments.
About the publisher. Habib Sarwar Bhuiyan & Co. is a firm of chartered accountants in Gulshan, Dhaka, in practice since 1993 and enlisted with ICAB, FRC and the BSEC Panel of Auditors. For advice on this topic, see our tax & VAT page or contact a partner.