FY 2021-22 Budget

The government may not raise the tax-free income ceiling for individual taxpayers in the upcoming national budget for the fiscal year 2021-2022.

The tax rates range from minimum 5 per cent to the highest 25 per cent for individual taxpayers may also be remained unchanged.

Officials of the finance ministry said that the tax-free income threshold might remain unchanged at Tk 3 lakh for individual taxpayers in the budget as the government considered the limit consistent with the per capita income and economic growth.

The limit was raised to Tk 3 lakh in the national budget for the current fiscal year 2021 after five years from Tk 2.5 lakh, they said.

On the other hand, the corporate income tax rates for both publicly listed and non-listed companies may be slashed by 2.5 percentage points to facilitate businesses and boost investment amid the slowdown in economic activities and investment due to the coronavirus outbreak, they said.

The new tax rate would stand at 30 per cent for non-listed companies and 22.5 per cent for listed companies after proposed reduction from current 32.5 per cent and 25 per cent respectively, if the proposal is approved by parliament.

The rates of corporate income tax for banks, mobile operators, tobacco companies and other sectors may remain unchanged, they added.

Currently, corporate income tax rate is 37.5 per cent for banks, insurance and other financial institutions that are listed on the capital market, 40 per cent for non-listed banks, 37.5 per cent for merchant banks, 45 per cent for tobacco companies, 45 per cent for non-listed mobile phone operators and 40 per cent for listed mobile phone operators, 15 per cent  for cooperative entities and 12 per cent for export-oriented readymade garment factories.

The National Board of Revenue has already obtained approval of the proposals from the government high-ups.

Finance minister AHM Mustafa Kamal on June 3 will place the budget proposals in parliament.

Businesses have been demanding a reduction in corporate tax rates to facilitate ease of doing business and attract more local and foreign direct investment terming the rates are much higher in Bangladesh comparing with those of the competing countries like India and Vietnam.

According to the NBR, the existing tax-free income limit is Tk 3.50 lakh for women and senior citizen taxpayers, Tk 4.50 lakh for physically challenged people, Tk 4.75 lakh for gazetted war-wounded freedom fighters.

The government in the last budget reduced the lowest income tax rate to 5 per cent and the highest income tax rate to 25 per cent from previous 10 per cent and 30 per cent respectively.

Individual taxpayers need to pay 5 per cent income tax on the next Tk 1 lakh income after enjoying tax exemption on income of the first Tk 3 lakh while the highest income tax rate is 25 per cent on annual income above Tk 16 lakh.

The other tax rates include 10 per cent, 15 per cent and 20 per cent based on the annual income.

According to the NBR, there are more than 61 lakh electronic taxpayers’ identification number holders in the country.

Only 24 lakh taxpayers filed their income tax returns in the current fiscal year.