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What is tax deducted at source?
Companies, NGOs, government offices, banks and other withholding entities must keep back part of a supplier's bill and deposit it to the government on the supplier's behalf:
- VDS (VAT deducted at source) — under the VAT and Supplementary Duty Act 2012 and the VDS rules. For listed services the entity deducts VAT at the specified rate; for goods supplied at a reduced VAT rate, the full VAT on the invoice is deducted.
- TDS / AIT (income tax deducted at source) — under the Income Tax Act 2023. The rate depends on the nature of the payment: supply of goods, contracts, services, rent, transport and so on.
How the numbers work
For a ৳1,00,000 consultancy bill plus 15% VAT: total bill ৳1,15,000. VDS at 15% = ৳15,000, TDS at 10% of the value excluding VAT = ৳10,000. Net payment to the consultant: ৳1,15,000 − ৳15,000 − ৳10,000 = ৳90,000. The entity deposits ৳25,000 to the government.
After you deduct
- Deposit VDS and TDS through the treasury / A-challan within the legal deadline.
- Give the supplier a Mushak-6.6 (VDS certificate) and a TDS certificate.
- Show VDS in your monthly VAT return (Mushak-9.1) and TDS in the withholding tax return.
Rates change every budget
The defaults here follow the FY 2025-26 TDS and VDS rules. Rates for specific goods differ (for example essential food items, cement and iron products), so every rate in the calculator is editable — check the latest SRO or ask your tax adviser.