Value Added Tax Act 1991 (Law-1991) in Bangladesh

The VAT Act 1991, often called Law-1991 or the old VAT law, replaced the earlier sales tax and excise system and made VAT the main indirect tax in Bangladesh. It was supported by the VAT Rules 1991 and a long series of SROs, general orders and NBR clarifications. Most businesses now work only under the 2012 Act, but the old law has not disappeared from practice.

This page is for businesses, finance managers and lawyers dealing with the tail end of the 1991 regime: pending demand notices, appeals before the Appellate Tribunal or High Court Division, audits of pre-July 2019 periods, carried-forward balances, and buyers doing due diligence on a target's historical VAT position. It is a reference and practical guide, not a guide to current filing.

What the VAT Act 1991 covered

The 1991 Act set a 15% standard rate, but in practice the system was layered with exceptions that made it quite different from a pure VAT. Key features included:

• Registration with a BIN and the earlier VAT registration forms, with turnover tax for small businesses
• Truncated or reduced rates and tariff values for many goods and services, rather than VAT on actual value
• Package or fixed VAT for certain small traders and sectors
• Price declarations on Mushak-1 before supply of manufactured goods
• The Mushak-11 invoice, purchase and sales books (Mushak-16 and Mushak-17), the current account register (Mushak-18) and the monthly return on Mushak-19
• VAT deduction at source by specified entities, introduced and expanded through later amendments and SROs
• Supplementary duty on specified goods and services under the same Act

The move to the VAT and SD Act 2012

The VAT and Supplementary Duty Act 2012 was passed in 2012 to modernise the system: broader base, input credit on actual value, online registration and returns, and fewer tariff values. Implementation was postponed several times after business concerns, and the Act was amended before it finally came into force on 1 July 2019, together with the VAT Rules 2016.

The 2012 Act repealed the 1991 Act but contains saving and transitional provisions. In broad terms, obligations and proceedings that arose under the old law continue to be dealt with under it, and transitional rules governed matters such as re-registration of existing BIN holders, treatment of closing stock and input credit balances, and contracts spanning the changeover. The exact effect depends on the specific provision and the facts, so each old matter should be read against the text of the saving clause.

Where Law-1991 still matters today

• Demand notices and adjudications for tax periods before 1 July 2019 that are still under dispute
• Appeals pending before the Commissioner (Appeals), the Customs, Excise and VAT Appellate Tribunal, or writs and references before the High Court Division
• Recovery proceedings and bank account attachment relating to old dues
• Audits, VAT intelligence cases and investigations covering older periods
• Old input credit or refund claims and carried-forward balances
• Financial and tax due diligence in mergers and acquisitions, where historical VAT exposure affects valuation
• Interpreting old SROs and contracts that refer to 1991 Act concepts such as tariff value or truncated base

Handling an old VAT case: practical points

Old cases are usually won or lost on records. Mushak-11 invoices, Mushak-16, 17 and 18 registers, Mushak-19 returns, treasury challans and the price declarations in force at the time must be located and organised. Many businesses changed accounting software or staff after 2019, so the first task is often reconstruction.

The second point is applying the law as it stood for the relevant period. SROs under the 1991 Act were amended frequently, and the rate, tariff value or exemption that applied in a given month can differ from the year before or after. Arguments built on today's 2012 Act rules may not be relevant to a 2017 dispute.

Finally, look at procedure. Time limits for appeal, pre-deposit requirements and the forum all depend on the stage the case has reached and the applicable provisions. Missing a deadline can be harder to fix than the underlying tax point.

Old law vs new law at a glance

• Invoice: Mushak-11 under 1991; Mushak 6.3 under 2012
• Monthly return: Mushak-19 under 1991; Mushak 9.1 under 2012, filed online by the 15th
• Price declaration: Mushak-1 under 1991; Mushak 4.3 input-output coefficient under 2012
• Valuation: widespread tariff values and truncated bases under 1991; actual transaction value with reduced rates in schedules under 2012
• Administration: largely manual under 1991; online registration and returns under 2012

How the process works

1. Case intakeWe review the notice, order or audit letter and identify the tax period, amount and current stage.
2. Law for the periodWe establish which provisions of the 1991 Act, Rules and SROs applied in the relevant months, plus any saving clause in the 2012 Act.
3. Record reconstructionWe collect and organise Mushak-11, 16, 17, 18 and 19 records, challans and price declarations.
4. Position paperWe prepare a written analysis of the exposure, the strength of each issue and the options available.
5. Response or appealWe draft the reply, hearing submission or appeal papers, coordinating with your advocate where litigation is needed.

Typical timeline: Preparing a response on an old VAT matter usually takes a few weeks depending on how quickly records can be located; the duration of appeals and court proceedings depends on the forum and its listing schedule.

How Tax & VAT Associates helps

• Review of old demand notices, adjudication orders and audit findings under the 1991 Act
• Reconstruction of historical Mushak registers and returns from available records
• Research on the SROs, tariff values and rates applicable to a specific period
• Preparation of replies, hearing submissions and appeal documents
• Historical VAT exposure review for buyers, investors and lenders

Frequently asked questions

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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.