United News of Bangladesh

Finance Minister Amir Khosru Mahmud Chowdhury on Thursday unveiled sweeping tax, VAT and duty relief measures in the Tk 9,38,000 crore national budget for fiscal year 2026-27, targeting everything from daily staples and life-saving medicines to electric vehicles and semiconductors, in what the government described as a pro-people, investment-driven overhaul of the country's fiscal architecture. Presenting the budget in the Jatiya Sangsad, the minister said the reliefs were aimed at reducing the burden on ordinary citizens still reeling from years of high inflation, while simultaneously creating an environment conducive to private investment and employment generation. In the most sweeping consumer-facing measure, the government proposed reducing withholding (source) tax on 60 essential commodities, including rice, wheat, potatoes, onions, garlic, ginger, salt, sugar, edible oil, pulses, poultry, fish and dairy, from existing rates of 5%, 2% or 1% down to a flat 0.5%. The minister said unrelenting price hikes of basic goods in recent years had caused severe hardship and that the new government's electoral pledge demanded decisive action. He also proposed full withdrawal of the 5% regulatory duty on all types of spices and on date imports, which are widely consumed across the country. Healthcare For kidney patients, the budget proposes a complete waiver of the existing 15% VAT and 5% advance income tax on dialysis filters, which the government said would reduce the cost of each dialysis session by approximately Tk 800. Similarly, the 7.5% advance tax on blood tubing sets used in haemodialysis has been fully withdrawn. For cardiac and ophthalmic patients, the 10% VAT applied at the supplier level on imported heart rings or stents and intraocular lenses has been removed, a measure expected to reduce the price of each stent by around Tk 20,000 and each intraocular lens by approximately Tk 5,000. All taxes: customs duty, regulatory duty, supplementary duty and advance tax were proposed to be fully waived on 21 categories of special assistive devices for persons with disabilities, including mobility aids. The minister said the measure would improve quality of life and reduce financial burden on families. Import duty on mortuary chambers was proposed to be reduced sharply from 25% to 1%. Electric Vehicles In what the minister framed as a landmark push for environment-friendly transport, the budget proposed dramatically reducing the total tax incidence on imported electric vehicles (EVs). The aggregate tax burden on EVs currently at 93% is proposed to be cut to 64% for vehicles valued up to $25,000 and to 80% for those valued up to $50,000. All duties and taxes on imported EV chargers and charging stations were proposed to be fully withdrawn. For locally manufactured EVs, including four-wheelers, three-wheelers, electric buses and trucks, raw material and component imports would attract only a 3% customs duty, with all other levies waived through FY2030-31. Advance income tax on EV registration was also slashed dramatically, from a flat Tk 2 lakh to a tiered structure based on power capacity: Tk 25,000 for up to 200 KW, Tk 50,000 for up to 300 KW, Tk 75,000 for up to 400 KW, and Tk 1 lakh beyond that. Electric buses and trucks used for transporting students in educational institutions were proposed to be fully exempt from all duties and taxes until June 30, 2030. To incentivise solar power, a zero-tax rate was proposed for the solar electricity sector until 2035, with a 5% tax rebate for consumers paying solar power bills. Pharmaceuticals The budget proposed full withdrawal of import duties on 51 new raw materials used in manufacturing Active Pharmaceutical Ingredients (APIs), with the list expanded significantly to deepen Bangladesh's pharmaceutical self-sufficiency. A further 17 new basic raw materials for the pharmaceutical industry were added to the concessionary duty list at zero percent, to sustain the country's growing export performance in global medicine markets. Nine additional inputs used in manufacturing cancer drugs were included in the existing concessionary scheme under zero customs and VAT, aimed at making anti-cancer medicines more affordable domestically. The government also proposed continued tax support for the pharmaceutical sector as Bangladesh graduates from Least Developed Country (LDC) status, acknowledging competitive pressure in international markets. Technology In a major push to digitise the economy and make computing accessible, the budget proposed complete removal of all customs duty, regulatory duty, supplementary duty and VAT on laptops, desktop computers, servers, computer printers and computer monitors. SSD drives would have all levies waived except a 5% customs duty. Advance income tax on computer monitors, portable automatic data processing machines, flash memory and computer printers was proposed to be reduced from 5% to 2%. The government said these measures were intended to expand IT-sector employment and fulfil its commitment of raising the ICT sector's share of GDP to 10% within the next five years. The Tk 300 per SIM card tax, in force for years, was proposed to be fully scrapped, with the government estimating a Tk 1,200 crore revenue impact but noting that the existing roughly 50% effective tax rate on the telecom sector was far above global norms and was constraining digital inclusion. Mobile network service withholding tax was also cut from 12% to 10%. To attract investment into the high-value semiconductor design, testing and packaging sector, the budget proposed that all imports used in this industry be subjected to no more than 1% customs duty, with regulatory duty, supplementary duty, VAT and advance tax fully waived through June 30, 2031. Small and Medium Enterprises For small and medium enterprises, the budget proposed a complete turnover tax exemption on turnovers up to Tk 50 lakh, with the ceiling raised to Tk 70 lakh for women and persons with disabilities. All content creation income, from freelancing, digital content, and creative work, was proposed to be made fully VAT-exempt. Startup companies would also receive full 15% VAT exemption on their local services, imported services and premises rent until June 30, 2035. Turnover tax was proposed to be set at zero for startups, innovative ventures and technology-based businesses. Agriculture VAT at the trader level on all types of fertilisers used in agriculture was proposed to be fully waived. The 7.5% advance tax on pesticide imports at the import stage was also withdrawn entirely. Customs duty on zinc ash, the primary raw material for zinc sulphate fertiliser production was proposed to be reduced to zero, to enable local self-sufficiency in micronutrient fertiliser manufacturing. For poultry, dairy and fisheries feed manufacturers, three additional raw materials were added to the zero-rate concessionary list. Equipment and machinery for the poultry sector would also enjoy zero import duty on components. Import duty on infant food preparation materials was cut from 15% to 10%, with the government saying the move would make baby food more affordable for ordinary families. The concessionary duty regime for the shipbuilding and dredger industry was extended to June 30, 2030, to keep Bangladesh competitive in global maritime markets. Concessionary duty facilities on lithium-ion battery manufacturing, sodium-ion battery production and battery pack assembly were extended through FY2029-30. EV battery components and mounting brackets were included in the concessionary scheme until June 2028. To support the country's creative industries, the budget proposed removing the 5% regulatory duty on musical instruments including guitars, pianos and violins. Import duty on cinematographic cameras was cut from 15% to 5%, with all levies removed on camera and projector components to enable the production of internationally competitive films and content. Tobacco: Higher Prices The budget raised the minimum retail prices of cigarettes across all four tiers, to Tk 62, Tk 92, Tk 160 and Tk 210 per packet of 10 sticks respectively, with corresponding supplementary duty adjustments. New products including Nicotine Pouches (minimum retail price Tk 500 per 10 grams, 40% supplementary duty) and Heated Tobacco (Tk 210 per 10 sticks, 67% supplementary duty) were brought under a new tax regime. A Track and Trace system was proposed to monitor production and supply and curb illicit trade. Income Tax Relief The tax-free income threshold for individual taxpayers was raised from the existing Tk 3,50,000 to Tk 3,75,000 for FY2026-27 and FY2027-28, with a further step to Tk 4,00,000 in FY2028-29, and Tk 4,50,000 in FY2030-31. For women and senior citizens above 65, the ceiling would be higher still, reaching Tk 5,00,000 by FY2030-31. The minister also announced that a new progressive five-year income tax rate roadmap was being published to allow taxpayers to plan their finances with greater predictability. The minister said the cumulative effect of these reliefs would reduce production costs, lower consumer prices, attract fresh investment, and create new avenues of employment, particularly for young Bangladeshis. "Our tax policy is not merely a tool of revenue collection," Khosru said. "It is also an instrument of food security, energy security and environmental protection and above all, an expression of this government's commitment to a democratic, humane and inclusive economy."

The new government is all set to place its first national budget with a financial outlay of Tk 9.38 lakh crore for the fiscal year 2026-27 in Parliament on Thursday, mapping out a strategy targeted at stabilisation and fiscal reform. Finance Minister Amir Khosru Mahmud Chowdhury will present the proposed budget in the House at 3:00pm. According to high-level treasury sources, the government has set an ambitious overall revenue mobilisation target of Tk 6.95 lakh crore to fund the massive public expenditure. Out of the total revenue target, the National Board of Revenue (NBR) has been given the task of collecting Tk 6.04 lakh crore. Additionally, Tk 25,000 crore is expected to come from non-NBR tax sectors, while non-tax revenue (NTR) sources are projected to yield Tk 66,000 crore. A major portion of the resource allocation will be consumed by debt servicing obligations. The government has earmarked Tk 1.27 lakh crore solely for interest payments on loans. Of the amount, Tk 1.05 lakh crore will go towards servicing domestic debt, while foreign loan interest payments will require Tk 22,500 crore. The draft proposal estimates the overall budget deficit at Tk 2.43 lakh crore. To bridge this significant fiscal deficit, the government plans to borrow Tk 1.09 lakh crore from foreign funding sources. For domestic deficit financing, the administration will heavily rely on the country’s banking system, planning to borrow Tk 1.12 lakh crore from commercial banks. The remaining gap of Tk 15,000 crore is projected to be met through the sales of national savings certificates. Macroeconomic analysts indicate that the primary challenge for the new government will be controlling inflationary pressures and ensuring efficient revenue collection without disrupting industrial growth, as the country navigates a complex economic transition.  

Finance Minister Amir Khosru Mahmud Chowdhury is preparing to unveil the Tk 9.38 lakh crore national budget for Fiscal Year 2026-27 on June 11, while the newly formed government faces some big challenges. Tasked with financing an ambitious economic recovery plan, policymakers are trapped between a fragile macroeconomic landscape inherited from previous administrations and structural vulnerabilities that threaten to push the nation into a debt trap. The upcoming budget faces a near-impossible revenue challenge. A deep dive into the country's financial state reveals that the government's ability to fund its spending is being severely squeezed from five distinct pressure points. The Revenue Shortfall: The primary engine of budget funding—tax collection—has effectively stalled. According to data from the Centre for Policy Dialogue (CPD), the National Board of Revenue (NBR) suffered a staggering shortfall of Tk 1.04 lakh crore during the July-April period of the outgoing fiscal year FY 2025-26. "Meeting the annual revenue target would now require an impossible growth rate of over 128 percent in the final two months," stated Dr. Fahmida Khatun, Executive Director of CPD. Bangladesh's revenue-to-GDP ratio hovers under 8 percent, one of the lowest in Asia, leaving the state heavily reliant on bank borrowing to plug a widening budget deficit. A Crippled Banking Sector and Toxic Loans: The government's traditional safety net—borrowing from local commercial banks—is running thin due to deep banking sector fragility. “Decades of poor governance, political cronyism, and unmitigated loan rescheduling have pushed the non-performing loan (NPL) ratio to a historic 30.6 percent,” said Dr. Zahid Hussain, a prominent Bangladeshi economist and the former Lead Economist at the World Bank’s Dhaka office. With billions of taka trapped in default loans, local banks are facing severe liquidity crunches. Economists warn that the government’s excessive domestic borrowing—which reached 98.5 percent of its full-year target by March 2026—risks completely "crowding out" private sector credit, starving legitimate businesses of capital, he pointed out. Starved Investment and Low FDI: Investor confidence in Bangladesh has cooled significantly due to regulatory unpredictability, energy shortages, and political transitions. Foreign Direct Investment (FDI) remains critically low, while private-sector credit growth dropped by over 6 percent year-on-year, said Dr. Fahmida. Compounding this crisis is the looming shadow of November 2026, when Bangladesh is scheduled to graduate from Least Developed Country (LDC) status. “Graduation means losing vital preferential tariff access for the Ready-Made Garments (RMG) sector, which is already seeing negative export growth trends. Without a rapid injection of local and foreign investment, funding structural growth will be unsustainable,” she opined. Global Shocks and Crushing Energy Prices: External shocks, particularly regional conflicts in the Middle East, have heavily disrupted global energy supply chains. Bangladesh has been forced to buy liquefied natural gas (LNG) from the spot market at nearly two-and-a-half times its usual price, said Dr Khondaker Golam Moazzem, a prominent industrial economist in Bangladesh who also serves as the Research Director at the Centre for Policy Dialogue (CPD). The government has earmarked an enormous US $3.5 billion purely for electricity and LNG subsidies in the upcoming budget. While retail power tariffs were recently hiked by Tk 1.52 per kWh to offset costs, these soaring energy bills are draining precious foreign exchange reserves and eating up fiscal space that should have gone toward infrastructure development, he said. Stagnant Wages and Surging Unemployment: On the human front, the economic slowdown has manifested as a severe employment crisis. Real GDP growth has slowed to roughly 3.9 percent, a sharp drop that has severely limited the creation of formal, well-paying jobs. With inflation stubbornly high at over 9 percent, low-income workers are seeing their purchasing power rapidly erode, said Dr. Zahid Hussain. The national poverty rate rose to 21.4 percent. Consequently, the government is being forced to expand costly social safety net programs, such as the Family Card cash-transfer scheme to 40.1 lakh households, adding further strain to an empty treasury, he said. "Resilience has underpinned Bangladesh's growth story," noted Jean Pesme, World Bank Country Director. "But without decisive, bold structural reforms in revenue mobilization and the financial sector, this resilience cannot last." As June 11 approaches, the Finance Minister faces a clear ultimatum from the country's top economic analysts: the FY2026-27 budget cannot rely on the old formula of printing money or heavy bank borrowing. To keep the economy afloat, the new government must focus on restoring governance to the banks, cutting bureaucratic waste, and radically restructuring how it collects revenue.