The National Board of Revenue officially scrapped the option for taxpayers to legalise undisclosed income by paying a 15 per cent tax without undergoing any scrutiny.
This change was formalised through a Statutory Regulatory Order issued on Monday.
Previously, individuals and businesses could legitimise hidden wealth by paying a 15 per cent tax for various investments such as the share market, cash, bank deposits, and financial schemes. However, with this latest move, that option has been revoked.
The decision to scrap this facility was made by the interim government on August 29 during a weekly meeting of the council of advisers at the state guesthouse Jamuna. The move is a part of broader financial sector reforms aimed at ensuring fairness and transparency in the system.
The controversial provision allowing the legalisation of undisclosed wealth was initially introduced by former finance minister Abul Hassan Mahmood Ali in the budget for the fiscal year 2024-2025, which he announced on June 6 in the Jatiya Sangsad.
The provision allowed taxpayers, including companies and firms, to legitimise their undeclared assets by paying a 15 per cent tax and buy immovable properties, like land and flats, without having to face any questions about the sources of their income, regardless of existing laws in the country.
This opportunity was made available till June 30, 2025.
The provision faced widespread criticism. Many argued that allowing people to legalise undisclosed money at a 15 per cent tax rate was unfair to honest taxpayers, who have to pay up to 25 per cent income tax.
Moreover, those with a certain level of wealth must also pay an additional 35 per cent surcharge on top of their income tax.
Experts, think tanks, and economists were particularly vocal in their opposition, warning that the provision would further encourage financial sector irregularities by making it easier for individuals to whiten black money at a lower tax rate.
They argued that such a step would undermine the integrity of the financial system and create more loopholes for financial misconduct.