Finance Adviser Dr Salehuddin Ahmed in his budget speech proposed no change in tax-free income thresholds for the upcoming fiscal year, but suggested changes in caps for the assessment years 2026-2027 and 2027-2028.
“In line with international best practices and considering factors such as the promotion of trade and commerce, enhancement of investor confidence, and policy certainty, prospective tax rates and surcharges for the FY 2025-26 assessment year were determined through the Finance Act, 2024. In continuation of this, the Finance Ordinance, 2025 has set the tax rates and surcharges for the assessment years 2026-2027 and 2027-2028,” he said.
As a result, he said, taxpayers will be able to have a clear understanding in advance of the applicable tax rates for the three assessment years 2025-2026, 2026-2027, and 2027-2028, he added
The Finance Adviser on Monday unveiled the national budget for the 2025–26 fiscal year through the state-owned Bangladesh Television (BTV) and Bangladesh Betar. Private television channels and radio stations are relaying the speech simultaneously by taking the feed from BTV.
“At present, the tax-free income threshold for individual taxpayers is Tk 350,000. To reduce the tax burden on low-income groups, ensure social protection and fairness, and keep pace with inflation, the tax-free income threshold for individual taxpayers has been increased to TK 375,000 for the assessment years 2026-2027 and 2027-2028,” he said in his speech.
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For gazetted ‘July Warriors’, injured in the July Mass Uprising 2024, the tax-free income limit has been set at TK 525,000, he added.
The tax-free income threshold for the women; and senior citizen aged 65 years or above has been increased to Tk 425,000 for the assessment years 2026-2027 and 2027-2028 from the existing Tk 400,000, while that for physically challenged persons and third gender taxpayers has been set at Tk 500,000 from Tk 475,000.
The income tax-free threshold would be increased for parents or legal guardians of each physically challenged child/adopted child by Tk 50,000. If both the parents of a physically challenged child are taxpayers, either of the parents will be entitled to avail the facility.
The tax-free threshold for gazetted war wounded freedom fighters has been enhanced to Tk 525,000 for the assessment years 2026-2027 and 2027-2028 from the existing Tk 500,000.
So, the tax rate will be zero for upto Tk 350,000 income for the assessment year of 2025-26; while the rate will be 5 percent for the next Tk 100,000 income; 10 percent for next Tk 400,000; 15 percent for next Tk 500,000; 20 percent for next Tk 500,000; 25 percent for next Tk 20,00,000; and 30 percent on balance.
For the assessment years of 2026-27 and 2027-28, the tax rate will be zero for upto Tk 375,000 income; while the rate will be 10 percent for the next Tk 300,000 income; 15 percent for next Tk 400,000; 20 percent for next Tk 500,000; 25 percent for next Tk 20,00,000; and 30 percent on balance.
The Finance Adviser said currently the minimum tax payable by individual and Hindu undivided family taxpayers’ ranges from TK 3,000 to TK 5,000 depending on location. For the assessment years 2026-2027 and 2027-2028, if total income exceeds the tax-free limit, a flat minimum tax of Tk 5000 will apply regardless of location, he said.
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To foster a culture of tax compliance, expand the tax net and encourage new taxpayers, the minimum tax for new taxpayers has been set at TK 1,000, he added in budget speech.