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Scope for legalizing undisclosed money is finally blocked while safety net widened as the new national budget for FY2025-26 is approved with changes in fiscal measures, including tax cuts.
The government ramped up the allocation for social safety-net programmes by over Tk 100 billion, raising the total to Tk 912.97 billion.
Another key decision involves deferring the third phase of incentive cuts for exporters. Initially scheduled for July 2025, the cut will now take effect from January 2026.
The announcements were made Sunday at a press conference organised by the Ministry of Finance following the final seal of approval given to the Tk 7.9-trillion budget by the council of advisers of the interim government.
The budget, endorsed by the Advisory Council at its meeting on the day with Chief Adviser Professor Muhammad Yunus in the chair, will be authenticated with a presidential ordinance for execution as there is no parliament in the interregnum created through the 'July mass uprising'.
"We've dared to abolish the provision for whitening black or undisclosed money-something no one did before," said Finance Adviser Dr Salehuddin Ahmed during the briefing in the Finance Division conference room in Bangladesh Secretariat.
The finance adviser said the government refrained from launching any megaprojects and excluded many non-essential ones to keep the development budget realistic.
"We've also focused on the value of money. We are borrowing Tk 5.0 and want to utilise it efficiently, rather than spending our own Tk 2.0 or Tk 3.0 casually."
Framed in the wake of economic volatility amidst political tumults at home and abroad, the budget cautiously estimates GDP growth at 5.5 per cent while taming inflation to 6.5 per cent for the fiscal year starting July 1.
He said the third-phase incentive cuts for exporters, scheduled for July 2025, will now take effect from January 2026. The postponement is to allow the private sector time to adjust, explains Mr Ahmed, who holds the nation's purse strings in the interim period.
"So far, two reductions in incentives have been made, and the third was scheduled for July. We pushed it to January to support private investment."
Although the budget, initially proposed on June 02, retained the option for legalizing black money through real-estate investments, this provision was later dropped on public backlash.
According to NBR sources, around Tk 470 billion in undisclosed funds had been declared under such schemes in the past for mainstreaming the unaccounted-for money.
However, despite offering this chance to repatriate laundered money in FY2022-23, no one availed of the clemency.
At the press conference, National Board of Revenue (NBR) Chairman Md. Abdur Rahman Khan confirmed the rollback: "We initially allowed the whitening of black money with additional taxes. However, following demands from various stakeholders, the provision has been removed."
Several changes have been made in tax policy related to VAT, customs duties and income tax.
Publicly traded companies that raised paid-up capital via IPOs or direct listings will be taxed at 22.5 per cent-or 20 per cent if all income is through bank transactions.
Other publicly traded companies will face a 27.5-percent rate-reduced to 25 per cent if income is bank-transacted.
Private universities, medical, dental, engineering, and IT-only colleges will enjoy a cut-down tax rate of 10 per cent from 15 per cent.
Property-transfer tax deductions have been lowered to 5.0 per cent, 3.0 per cent and 2.0 per cent from 8.0 per cent, 6.0 per cent and 4.0 per cent respectively. In value-added tax (VAT), advance tax on refined petroleum imports has been reduced to 2.0 per cent from 7.5 per cent.
VAT exemption is granted at the production stage for cotton made from environment-friendly by recycling 'garment jhut (scraps)'.
Also, VAT exemption now applies to rent on spaces used by women-run beauty parlours.
Ballpoint pens and imports of heart rings and eye lenses are now VAT-free following the revisions in fiscal measures.
Under customs duties, the government plans to implement invoice-based customs valuation for petroleum imports, reducing crude-oil duties from 5.0 per cent to 3.0 per cent, and other petroleum duties from 10 per cent to 6.0 per cent.
Solar inverter-import duties have been slashed from 10 per cent to 1.0 per cent to support solar energy on the cusp of transition to clean energy.
Duty on Technically Specified Natural Rubber, used in tyre production, got halved from 10 per cent to 5.0 per cent.
Ten additional medical equipment items have been added to the duty-free list to improve healthcare access. A special allowance has been set at a minimum of Tk 1,500 for government employees and Tk 750 for pensioners.
Pensioners receiving Tk 17,388 or more will get a 10-percent hike, while those receiving less will get a raise by 15 per cent.
Dr Ahmed said nearly 400 public suggestions had been received since the announcement of the budget on June 02, reflecting "growing civic engagement in economic policymaking".