The interim government is going to increase the tax-free income limit to Tk 3,75,000 and make changes in the individual income tax payment structure in the national budget for the forthcoming financial year of 2025-26, said finance ministry officials.
The tax-free income threshold is currently Tk 3,50,000 set in FY聽2023-24.
To compensate for the possible loss in the number of taxpayers due to the rise in tax-free income limit, four slabs with higher rates of tax are likely to be announced in the individual income tax structure for FY26. There are six slabs in the outgoing FY25.
The officials said that the tax-free income limit would be raised with the aim of giving relief to fixed- and low-income groups of people amid high inflation and the devaluation of the local currency against the US dollar over the past three years.
Finance adviser Salehuddin Ahmed will announce the FY26 national budget through television and radio channels at 4:00pm on June 2.
This will be the first budget of the interim government that assumed power on August 8, 2024, following the ouster of authoritarian Awami League regime in a mass uprising.
The interim government is facing major challenges in generating more revenues especially from the direct tax.
Only about 45 lakh out of 1.3 crore tax identification number holders submitted tax returns in the outgoing FY25. A substantial number of TIN returns carried zero tax.
Officials involved in the budget making process said the increase in tax-free income threshold would lead a substantial number of taxpayers out of the tax net.
The expansion of tax base is a key goal of the interim government, the officials said.
Four slabs are likely to be announced in the individual income tax structure for FY26 in place of six slabs for FY25.
In between the slabs, the rate of tax is likely to be changed, said the officials.
For example, 10 per cent tax is likely to be proposed on the annual income up to Tk 6,85,000 in the first slab, compared with 5 per cent tax on the income up to Tk聽4,50,000 set for FY聽25.
The slab of collecting income tax at the rate 20 per cent is likely to be dropped while the annual income earner of over Tk聽20,00,000 is likely to pay 30 per cent tax.
The government is likely to give an overall collection target of Tk聽4.99 lakh crore for the National Board of Revenue for the new financial year.
In the outgoing FY25, the NBR has been given a target of Tk 4.8 lakh crore with the apprehension of a revenue shortfall of close to Tk聽1 lakh crore.
