United News of Bangladesh

The government has proposed raising the tax-free income ceiling for individual taxpayers to Tk 3.75 lakh in the national budget for fiscal year 2026-27, up from the existing threshold of Tk 3.5 lakh. Finance Minister Amir Khosru Mahmud Chowdhury made the proposal while unveiling the budget in Parliament on Thursday, affirming that the revised limit will remain in effect for the next two consecutive fiscal years, extending through FY2027-28. The adjustment builds upon the previous decision by the former interim government's finance adviser Dr Salehuddin Ahmed, who had initially increased the ceiling. The newly elected government has decided to maintain and advance this trajectory, a move analysts believe will provide much-needed breathing room for low-income and middle-class families hit hard by inflation. Special Categorised Exemptions Expanded: Following past conventions, the proposed budget offers higher tax-free thresholds for several specific categories of taxpayers. The threshold for women and senior citizens (65+) has been fixed at Tk 4.25 lakh, third gender and physically challenged taxpayers at Tk 5 lakh, gazetted freedom fighters and injured July uprising warriors Tk 5.25 lakh, and parents/legal guardians of persons with disabilities an additional Tk 50,000 exemption per child or dependent over their applicable personal threshold. Currently, Bangladesh has approximately 1.28 crore Taxpayer Identification Number (TIN) holders, out of whom only 40 lakh to 42 lakh individuals file income tax returns annually. New Tax Slabs: 5% Rate Abolished In a significant structural overhaul, the government has eliminated the lowest 5 percent tax bracket entirely, a move that may increase the tax burden on mid-to-high-income earners. Under the new layout, once the initial Tk 3.75 lakh tax-free buffer is crossed, the remaining income will be taxed under the following reconfigured slabs: Next Tk 3 Lakh: 10 percent Next Tk 4 Lakh: 15 percent Next Tk 5 Lakh: 20 percent Next Tk 20 Lakh: 25 percent Remaining Income: 30 percent Starting from the upcoming fiscal year, taxpayers will be allowed to submit their income tax returns throughout the entire year, moving away from rigid deadlines. However, the system introduces a tiered reward-and-penalty mechanism based on timing: Submission Period | Fiscal Benefit / Penalty: First Quarter (July-September)- Rebate: 5 percent of payable tax or Tk 25,000 (whichever is less). Second Quarter (October-December)-Standard: Regular tax applies; no incentives or penalties. Third Quarter (January-March) Penalty: Additional 2 percent of payable tax or Tk 3,000 (whichever is higher). Fourth Quarter (April-June) Penalty: Additional 5 percent of payable tax or Tk 5,000 (whichever is higher). | Erosion of Real Income and Persistent Inflation: The tax-exempt ceiling was last raised from Tk 3 lakh to Tk 3.5 lakh in the 2023 budget. Over the subsequent three years, the threshold remained stagnant despite persistent economic headwinds. Bangladesh has experienced a gruelling average inflation rate of around 10 percent annually over this period. According to the latest data from the Bangladesh Bureau of Statistics (BBS), inflation in May hit 9.42 percent, marking a 16-month high. Economists point out that this prolonged inflationary pressure has severely diminished the real purchasing power of citizens, leaving those sitting just above the tax-free line struggling to balance escalating living costs with their statutory tax obligations.

Bangladesh's Finance Minister AHM Mustafa Kamal in his budget speech on Thursday (June 1, 2023) proposed to increase the tax-free income limit to Tk 3.5 lakh from the existing Tk 3 lakh for individual taxpayers for the fiscal year 2023-24.He also proposed the threshold for women and senior citizens above 65 years of age to Tk 4 lakh from Tk 3.5 lakh. Read more: Finance Minister unveils Tk 761,785 crore national budgetBesides, proposals have been placed for the physically challenged persons and third-gender taxpayers to extend their tax-free income limit to Tk 4.75 lakh from Tk 4.5 lakh and Tk 3.5 lakh respectively.The tax-free income ceiling for the war-wounded, gazetted freedom fighters will be Tk 5 lakh, up from Tk 4.75 lakh. The proposed tax rates and tax slabs for all categories of individual taxpayers except companies and local authorities are: no tax on first Tk 3.5 lakh, 5 percent tax on next Tk 1 lakh; 10 percent on next Tk 3 lakh; 15 percent on next Tk 4 lakh; 20 percent on next Tk 5 lakh and 25 percent income tax on the balance of total income. Read more: Budget sets 7.5 percent annual economic growth, inflation at 6 percent

Centre for Policy Dialogue (CPD) on Saturday recommended raising the tax-free income threshold level from Tk 250,000 to Tk 350,000 and not keeping the provision of black money whitening facility in the national budget for 2020-‘21 fiscal year.