Private Universities Now Legally Bound to Pay Income Tax After Supreme Court Verdict
Overview
The Appellate Division of the Bangladesh Supreme Court has officially mandated that all private universities must pay a 15% income tax, overturning a previous High Court verdict. This ruling confirms the legal obligation of private universities to comply with the tax, effective immediately.
What the Ruling Says
- The full verdict, now published on the Supreme Court’s official website, declares that no exemptions or reductions apply to private universities.
- The Appellate Division concluded that the previous High Court decision was incorrect, and income tax applies uniformly under the law.
- The ruling affirms that private universities fall under the category of taxable entities per National Board of Revenue (NBR) notifications.
Background and Timeline
- June 28, 2007: NBR issued the first notice imposing 15% income tax on private universities.
- July 1, 2010: A second NBR notification extended this tax to other private higher education institutions like medical, dental, engineering, and IT colleges.
- 46 writ petitions were filed by universities challenging this policy.
- February 2021: The Appellate Division granted leave to appeal against the High Court ruling.
- February 27, 2025: Final judgment delivered by Justice Borhan Uddin, affirming the tax.
- June 2023: Supreme Court barred tax collection temporarily pending appeal outcome.
Statements from Legal Authorities
- Attorney General AM Amin Uddin stated: “The universities must now pay the 15% income tax. This does not affect students since VAT is not involved. The owners will bear this cost.”
- Senior Advocate AF Hasan Arif represented the writ petitioners during the appeal.
Implications for Private Universities
- Private Universities must adjust their financial practices and begin paying the 15% income tax on all generated income.
- Non-compliance could result in penalties from the NBR (National Board of Revenue).
- Though student tuition fees are not directly taxed, operational costs may indirectly impact fee structures in the future.
Conclusion
This ruling ends a long-standing legal battle and sets a clear precedent: private universities in Bangladesh must comply with a 15% income tax policy. While students are not directly taxed, the financial burden now shifts entirely to university authorities.
Updated: 13 June 2025
Note: The ruling has sparked 46 writ petitions filed by various private universities regarding the collection of income tax.