The National Board of Revenue (NBR) is preparing a new Tax Exemption Policy with the aim of making it harder for any individual to avail it.

The decision to allow tax exemptions is being taken away from the NBR. It will now rest solely with Parliament to grant exemptions, said NBR chairman Md Abdur Rahman Khan.

“This is now at the final stage, it is stated that the government and the NBR will not give any tax exemption, only Parliament will give that. We are making it more harsh,” he said while speaking at the pre-budget meeting with the Retired Tax Officers’ Welfare Association at the Revenue Building.

He also made it clear that no individual, except in the interest of the republic, will be considered for tax exemption.

According to available data from the NBR, Individual taxpayers received over Tk40,000 crore in tax exemptions, more than double the amount provided to companies.

The International Monetary Fund (IMF) also provides guidance on streamlining tax expenditure in Bangladesh, a requirement included in the $4.7 billion loan package. The multilateral lender also stipulates an annual increase of 0.5% in the tax-to-GDP ratio up to FY26.

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The government recognises that the provision for tax exemptions has been misused. When tax exemptions are granted for social welfare purposes under this provision, some black money holders also exploit these benefits to pay taxes at reduced rates in certain cases.

People are taking advantage of the benefit by declaring their income from fishery and paying taxes at a lower rate, but the true source of such income is always in question.

Tax exemptions are also provided to promote local industries, encourage investment in backward areas and high-tech industries, and attract businesses to economic zones.

However, there are complaints that some industries have been exploiting tax exemptions for years by using their influence or by unethical means.

According to the NBR some 102 types of sectors currently receive partial or full tax exemptions. Forty of these exemptions apply to individual taxpayers, while the remainder apply to companies, industries, or investments.

The NBR claims that widespread tax exemptions are costing the revenue board a significant amount of revenue and that no study has been done to assess the impact of these exemptions.

Abdur Rahman Khan several times referred to a study which showed that NBR conceded the same amount in tax exemption that it collected as revenue.

The NBR chairman said that the revenue collecting authority is thinking actively to rationalise the tax-related issues.

“They will pay taxes on their income or profit, if they hav33e refund we have to pay that, there is nothing to put restriction on their logical refund claim,” he said.

He also said that this time the government wanted to establish discipline in the revenue sector.

“We have used the policy very aggressively in the past, it seemed that commissioners, first secretary and second secretary from the NBR will do everything to collect the revenue,” he said.

Abdur Rahman Khan said that the zero return submission is almost two-thirds of the total income tax return.

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“I have asked the field level officials why they are not serving notices to these taxpayers,” he said.

He put emphasis on the enhancement of operational efficiency and functional competence among the tax officials.

“We are not applying these, we are getting out from these two for collecting revenue, we are totally dependent on the policy,” he criticised.