Budget FY26: No change in tax-free income, black money legalisation to continue
The interim government is set to present the national budget for the fiscal year 2025–26 on Monday, amid ongoing concerns over high inflation, slowing growth, and declining real incomes.
Despite expectations of policy adjustments to address economic pressures, sources close to the finance ministry suggest that major structural reforms are unlikely in this budget.
Core tax policies will largely remain unchanged, with the focus shifting toward targeted relief measures and revenue optimisation strategies.
No change in tax-free income threshold
One of the most anticipated decisions – raising the tax-free income threshold – will not be implemented, according to insiders.
The current limit of Tk 350,000 per year for individual taxpayers will stay, despite calls from economists and civil society groups for an upward revision to ease the burden on low- and middle-income earners affected by rising living costs.
“This was a missed opportunity,” said Dr Atonu Rabbani, economist and professor at Dhaka University.
“With inflation still hovering near double digits, maintaining the same threshold means more households will fall into taxable brackets without any actual increase in purchasing power.”
Corporate taxes: Rise for some, relief for others
The budget is expected to bring mixed news for businesses:
Non-listed companies may see their corporate tax rate rise by 2.5 percentage points to 27.5%.
Companies with annual turnover above Tk 3 crore could face a hike in minimum tax, potentially increasing from 0.6% to 1% of total sales, regardless of profitability.
In contrast, merchant banks are likely to receive a major tax cut – from 37.5% to 27.5% – in what analysts see as an effort to strengthen the financial sector.
Listed companies, which currently pay 20% corporate tax, will see no change in their rate.
Targeted tax reliefs and incentives
To encourage compliance and support specific sectors, the budget is expected to introduce several targeted tax concessions:
Minimum tax relief: The minimum tax for new taxpayers, currently between Tk 3,000 and Tk 5,000 depending on location, may be reduced to as low as Tk 1,000, easing entry into the formal tax system.
Land transactions: Taxes on land purchases are likely to be lowered from 8% to 6% in urban areas, from 6% to 4% in semi-urban areas and from 4% to 3% in rural areas.
Income tax return requirements: The number of services requiring proof of income tax return submission is expected to be reduced from 45 categories.
- Sectors such as savings certificates may no longer require return filing, although credit card applications will continue to do so.
Family donations: Tax exemptions for monetary gifts may now include siblings, expanding beyond the current scope covering spouses, parents, and children.
Private sector employees: Tax-exempt allowances for private sector employees are expected to rise – from Tk 4,50,000 to Tk 5,00,000 – to reflect inflationary pressures on household budgets.
Employee perks: Employers may be allowed to declare up to Tk 20 lakh in employee perks and benefits, doubling the current ceiling of Tk 10 lakh, without triggering additional compliance requirements.
Pension incomes: Incomes from the National Pension Authority (NPA) and its universal pension schemes are expected to be made fully tax-exempt, encouraging broader participation in retirement savings programmes.
Black money legalisation policy continues
The controversial policy allowing individuals to legalise undeclared assets through real estate investments will reportedly continue, albeit under stricter conditions. Buyers may be required to disclose the source of funds, adding a layer of transparency to the process.
In a separate move aimed at tackling illicit wealth, the government is also expected to announce new measures to tax and penalise laundered money and assets, particularly those linked to former Bangladeshi citizens who maintain economic interests in the country after renouncing citizenship.
Excise duty adjustments
Excise duty thresholds are under review:
The current exemption for bank accounts holding less than Tk 1,00,000 may be raised to Tk 3,00,000. New layers of excise duties may be introduced for higher balances, signalling a broader attempt to expand the tax base.
Impact on consumers
Consumer prices are expected to shift significantly based on changes in VAT and import duties:
Price hikes expected on refrigerators, air conditioners, and mobile phones. These items may see increased VAT rates, contributing to higher retail prices.
Price drops possible for: Buses and microbuses, sugar, imported butter, soft drinks, specialty paper, cricket bats. Reductions in import duties on these goods could lead to price cuts or stabilization.
More Expensive Essentials: Duty hikes on steel rods, face washes, lipsticks and chocolates may result in cost increases for consumers.
This year’s budget appears to prioritise stability over stimulus, aiming to balance revenue generation with selective relief for key sectors and vulnerable groups.
While there are no sweeping reforms, the package includes sector-specific incentives, modest relief for salaried workers, and tightened rules around illicit wealth – a sign that the interim administration is focusing on maintaining economic order during a period of transition.
According to an official handout, the pre-recorded budget speech by Finance Adviser Salehuddin Ahmed will be aired at 3:00pm – an hour earlier than the previously scheduled time – on Bangladesh Television (BTV) and Bangladesh Betar.
To ensure broader coverage, all private television channels and radio stations have been requested to broadcast the speech simultaneously by taking the feed from BTV.
Source: UNB, BSS