When a job offer quotes a monthly salary figure in Bangladesh, what arrives in your bank account each month is usually somewhat different — sometimes significantly so. Income tax is deducted at source, provident fund contributions come out before you see the money, and the structure of your gross salary (basic, house rent allowance, medical allowance) determines exactly how much tax is withheld. This guide explains each deduction so you can work out your actual take-home pay from any gross salary.
The Structure of a Salary in Bangladesh
Most formal-sector salaries in Bangladesh are structured with a basic salary plus allowances. The most common breakdown is: basic salary (typically 40–60% of gross), house rent allowance (typically 40–50% of basic), medical allowance (fixed amount, often ৳500–1,500/month), and sometimes travel allowance, festival allowances, and performance bonuses.
How Income Tax Is Deducted
Employers in Bangladesh are required to deduct income tax at source (TDS) on the salary of any employee whose annual income exceeds the tax-free threshold. The employer calculates the employee's estimated annual tax liability at the start of the year and deducts one-twelfth of it each month. If the employee's actual income changes during the year, the deduction is adjusted.
Worked Example: Gross Monthly Salary ৳50,000
Sample Salary Structure and Deductions — ৳50,000 Gross
| Item | Amount (Monthly) | Notes |
|---|---|---|
| Basic salary | ৳25,000 | 50% of gross |
| House rent allowance | ৳12,500 | 50% of basic |
| Medical allowance | ৳1,500 | Standard flat amount |
| Other allowances | ৳11,000 | Travel, festival provision etc. |
| Gross salary | ৳50,000 | |
| Provident fund (employee share) | ৳2,500 | 10% of basic — if applicable |
| Income tax TDS (estimated) | ৳2,000–3,500 | Depends on total annual income and investments |
| Estimated take-home | ৳44,000–45,500 | After PF and tax |
Provident Fund and Gratuity
Many organisations in Bangladesh operate a provident fund (PF) scheme where the employee contributes 10% of their basic salary and the employer matches it. The employee contribution reduces take-home pay immediately; the employer contribution is an additional benefit that accumulates and is paid on retirement or resignation after a qualifying period. Gratuity is a separate end-of-service benefit — typically one month's basic salary per year of service — and does not affect monthly take-home.
Festival Bonuses
Most formal employers in Bangladesh pay two festival bonuses per year — one for Eid-ul-Fitr and one for Eid-ul-Adha. These are typically equal to one month's basic salary each. Festival bonuses are treated as income and are subject to income tax in the year they are received. Because they arrive as a lump sum, they can push employees into a higher tax bracket for calculation purposes.
Tip
When comparing two job offers, do not compare gross salaries — compare the full compensation package including employer PF contribution, gratuity policy, health insurance (if any), and take-home after tax at your expected salary level. A higher gross with no employer PF and taxable allowances can deliver less net benefit than a lower gross with a generous PF scheme.