Is Withholding Tax at Source an incident of adjustment?
Yes, Withholding Tax at Source an incident of adjustment. Withholding Tax at Source may take place in both increasing and decreasing orders.
As for example, supposing, an institution, namely, ‘A’ delivers a supply amounting to a value of Taka 100,000/- to an institution, namely, ‘B’ Limited (Withholding Tax at Source Institution, according to the provisions of Section 2(11) of the law).
In this case, ‘B’ Limited institution shall withhold at source, a minimum amount of one third of the applicable VAT while paying the value. The ‘B’ Limited institution shall withhold at source, Taka 4347.82, i.e., one third of Taka 13,043.48, the applicable VAT on Taka 100,000/-. As the law provides for withholding at source a minimum amount of one third, therefore, if the ‘B’ Limited institution so desires, it may withhold at source, any amount of money below Taka 4347.82.
However, if Taka 4347.82 is withheld at source by the ‘B’ Limited institution, at the end of the Tax Period, it will add Taka 4347.82 to its applicable tax as Increasing Adjustment and the ‘A’ institution will deduct Taka 4347.82 from its applicable tax as Decreasing Adjustment.