Payroll Services in Bangladesh Built on Accurate Records

Payroll services in Bangladesh look simple from the outside: add up salaries and send a bank file. In practice payroll touches the Bangladesh Labour Act 2006 on timing of wage payment and overtime, the Labour Rules 2015 on festival bonuses, the Income Tax Act 2023 on tax deduction at source, and the trust deeds of your provident and gratuity funds. A mistake in any one of these ends up in a dispute, a tax demand or an audit finding.

This page is for companies, branches and liaison offices that want payroll handled accurately every month, whether they have 15 employees or 500. Our approach starts with records: clean employee master data, approved inputs and reconciliations, so every figure on a payslip can be traced back to a source.

What our payroll service covers

• Employee master data: salary structure, bank details, e-TIN, fund membership
• Monthly inputs: attendance, leave without pay, overtime, joiners and leavers
• Gross-to-net calculation including allowances, bonuses and arrears
• Tax deduction at source on salaries and year-end projections
• Provident fund and other fund contributions and loan recoveries
• Payslips, bank advice files and payroll journals for accounting
• Final settlement calculations for resignations and terminations

Salary tax deduction at source under the Income Tax Act 2023

An employer paying salary must estimate each employee's annual taxable salary income, apply the rates and rebates in force under the current Finance Act, and deduct the resulting tax in instalments from monthly salary. The deducted tax must be deposited to the government within the prescribed time, a certificate of tax deducted must be given to each employee, and periodic withholding tax returns must be filed with the tax authority.

Allowances and perquisites such as housing, car, medical and conveyance are treated according to the current law, and the way a package is structured affects the tax due. Investment rebates and other adjustments should be reflected so employees are not over-deducted and then left to claim refunds. When an employee changes jobs mid-year, previous employer income must be considered.

Labour Act rules that shape payroll

The Labour Act fixes when wages must be paid: the wage period may not exceed one month, and wages must be paid within seven working days after the end of the period. Overtime is paid at twice the ordinary rate of basic wage plus dearness allowance. The Labour Rules 2015 provide for festival bonuses for workers who have completed the qualifying service, and sector minimum wages declared by the Minimum Wages Board must be respected.

Deductions from wages are limited to those the Act permits, such as for absence, advances, loans, income tax and fund contributions. Unauthorised deductions are a common source of Labour Court claims.

Provident fund, gratuity and final settlements

Many employers run a contributory provident fund and a gratuity scheme. To give employees the related tax advantages, funds generally need recognition or approval from the tax authority and must be managed by a board of trustees under a trust deed. Payroll must calculate contributions correctly and keep fund records reconciled with the general ledger.

At separation, a final settlement brings together unpaid wages, leave encashment, notice pay, termination benefit or gratuity, fund balances and tax. We prepare a clear settlement sheet so the employee understands it and the employer can show it was calculated under the Act and the contract.

Common payroll errors we fix

• Tax deducted on a flat percentage instead of projected annual liability
• Tax deducted but deposited late or not deposited at all
• No tax deduction certificates issued to employees
• Festival bonus omitted for eligible workers
• Payroll totals that do not reconcile with the general ledger

How the process works

1. Payroll reviewWe review salary structures, past payroll, tax deductions and fund records to identify errors and gaps.
2. Master data set-upEmployee data, salary components, tax status and fund memberships are verified and loaded.
3. Monthly input cut-offYou approve attendance, leave, overtime and changes by an agreed date each month.
4. Processing and approvalWe calculate gross-to-net pay and TDS and send a draft register for your approval.
5. Payment and reportingPayslips, bank files and accounting journals are issued; tax deposits and fund transfers are scheduled.
6. Periodic complianceWe prepare withholding returns, employee tax certificates and year-end salary statements.

Typical timeline: Setting up payroll for a new client typically takes two to four weeks before the first live run, depending on headcount and the quality of past records; after that, each monthly cycle runs to an agreed calendar.

How Tax & VAT Associates helps

• Accurate monthly gross-to-net payroll and payslips
• Salary TDS computation, deposit schedule and employee certificates
• Withholding tax return preparation for salary payments
• Provident fund, gratuity and loan schedules reconciled to the ledger
• Final settlement calculations under the Labour Act and contract
• Confidential payroll handling for management and expatriate staff

Frequently asked questions

Related services

Last reviewed: 6 October 2026. Bangladesh tax and regulatory rules change with each Finance Act, SRO and authority circular. This page is general guidance; confirm current requirements for your case before filing.