How to Calculate VAT in Bangladesh: Add and Remove 15%

What VAT is, and the rate

VAT (value added tax, called mushak or musok in Bangla) is a tax on the price of goods and services that the buyer pays and the seller passes on to the government. Under the Value Added Tax and Supplementary Duty Act, 2012 the standard rate is 15%. Some goods and services have reduced rates such as 10%, 7.5% or 5%; which rate applies to an item comes from NBR’s lists or the VAT invoice.

There are two everyday questions: adding VAT to a price that excludes it, and removing the VAT from a price that already includes it. They use different formulas. The VAT Calculator does both in one click; here is how to do them by hand.

Adding VAT to a price

VAT = price excluding VAT × rate ÷ 100

Price including VAT = price excluding VAT + VAT = price excluding VAT × (1 + rate ÷ 100)

• ৳1,000 at 15%: 1,000 × 15 ÷ 100 = ৳150 VAT, so ৳1,150 including VAT. In one step: 1,000 × 1.15.
• With paisa: ৳2,499.50 × 0.15 = 374.925, rounded to ৳374.93 VAT, so ৳2,874.43 including VAT.
• ৳1,000 at 7.5%: ৳75 VAT, ৳1,075 including VAT.

How paisa are rounded: round the VAT to the nearest paisa first (halves go up), then add it to the price. That way the price before VAT plus the VAT always equals the VAT-inclusive price exactly, and the receipt never ends up a paisa out.

Taking VAT out of a VAT-inclusive price

When a price already includes VAT (a receipt that says “incl. VAT”, for example), the VAT inside it is:

VAT = price including VAT × rate ÷ (100 + rate)

Price excluding VAT = price including VAT ÷ (1 + rate ÷ 100)

• ৳1,150 at 15%: 1,150 × 15 ÷ 115 = ৳150 VAT, so the price before VAT is ৳1,000.
• ৳1,000 at 15%: 1,000 × 15 ÷ 115 = 130.434…, rounded to ৳130.43 VAT, so ৳869.57 before VAT.

Shortcuts worth remembering

• 15%: 15 ÷ 115 = 3 ÷ 23, so VAT = price including VAT × 3 ÷ 23.
• 10%: VAT = price including VAT ÷ 11 (৳500 in ৳5,500).
• 7.5%: VAT = price including VAT × 3 ÷ 43 (৳300 in ৳4,300).
• 5%: VAT = price including VAT ÷ 21 (৳100 in ৳2,100).

Checking a receipt

1. The receipt total is ৳3,450, marked “including 15% VAT”.
2. VAT = 3,450 × 3 ÷ 23 = ৳450.
3. Price before VAT = 3,450 − 450 = ৳3,000.
4. Check: 3,000 × 1.15 = ৳3,450. It matches, so the sum is right.

That last step is the useful one: if multiplying the price before VAT by (1 + rate ÷ 100) gives back the total, you have removed the VAT correctly.

The common mistake: taking 15% of the total

To remove VAT, many people take 15% of the VAT-inclusive price. That overstates the VAT, because the 15% was charged on the price before VAT, which is smaller than the total. 15% of ৳1,150 is ৳172.50, but only ৳150 of it is VAT; taking away ৳172.50 leaves ৳977.50, not the real ৳1,000.

The reason is simple: the VAT-inclusive price is 115% of the price before VAT. Think of the total as 115 parts: 100 are the price and 15 are VAT, so the VAT is 15/115 of the total, not 15/100. The wrong answer is always 15% higher than the real VAT. So remember: to remove VAT, divide by 115, not 100 (by 100 + rate for other rates).

VAT with discounts and profit

VAT after a discount

A ৳2,500 shirt with 20% off costs ৳2,000, and 15% VAT on that makes ৳2,300. Both steps are multiplications, so adding VAT first and then taking the discount gives the same ৳2,300. What does not work is treating “20% off and 15% VAT” as a net 5% off: 2,500 × 0.95 = ৳2,375 is wrong. To see the discount on its own, use the Discount Calculator.

A seller’s profit

When you sell at a VAT-inclusive price, the VAT inside belongs to the government, not to you. An item bought for ৳800 excluding VAT and sold for ৳1,150 including VAT brings in ৳1,000, a profit of ৳200 (25% on cost), not ৳350. Do this sum in the Profit and Loss Calculator with prices before VAT. Registered businesses also deal with things like input tax credit; ask your accountant about those.

What this simple sum leaves out

The formulas above add or remove VAT at one rate. Some products involve more: supplementary duty (SD), advance tax, VAT deducted at source, a fixed VAT per unit, or VAT on a tariff or truncated value instead of the price. Whether a printed price (MRP) already includes VAT also depends on the product and NBR rules. Businesses should follow NBR rules and their accountant.

To check an everyday receipt, enter your amount and rate in the VAT Calculator: it shows the VAT, both prices and the formula with your numbers, to the paisa.

Sources

Standard rate of 15%: NBR VAT FAQ. Reduced rates of 1.5%, 2%, 2.4%, 4.5%, 5%, 7.5% and 10% for specific goods and services: PwC Worldwide Tax Summaries, Bangladesh (last reviewed 31 July 2026). Both checked on 28 October 2026. Rates can change with each budget; NBR’s current rules always prevail.