Tax ceiling up, corporate rates rise

Tax-free income threshold for all individual taxpayers is going up and corporate rates are being raised in the new budgetary measures ready for the chief adviser's perusal today (Monday).

Essential commodities are, however, spared from tax hikes as inflation bites all sections of people, officials said Sunday.

The revenue authority is set to place the fiscal measures before the head of interim government, Chief Adviser Prof Muhammad Yunus, today with an upward revision of tax-free ceiling for all categories of individual taxpayers.

In the new budget's fiscal measure, a proposal is being incorporated for bringing the textile industry under regular rate of corporate tax from July 1, 2025 as the cut-down tax benefit is destined to expire on June 30 with the expiry of the current financial year.

A team of income tax, customs and value-added tax (VAT) policy wing would place the proposals for CA seal of approval for drafting an ordinance of authentication for the 2025-26 fiscal budget.

A senior official of the National Board of Revenue (NBR) says in the absence of parliament in the interim period ushered in with the August-5th, 2024 uprising, the budget proposals would be placed directly for adoption in an ordinance.

"There would be no scope to discuss the pros and cons of the fiscal changes as a political government does in the national parliament before giving final approval for a bill," he says.

Tax-free threshold for individual taxpayers is currently Tk 350,000. It may go up by Tk 25,000 in the next FY, officials said. Also, corporate tax for textile millers would rise to 20 to 22.5 per cent for those listed with the capital market while 27.5 per cent for non-listed ones.

Currently, textile millers are paying corporate tax at 15 per cent, which would expire on June 30.

A number of turnover taxes on taxpayers may also see a hike--in some cases, doubled-- while nearly 10 products are set to see an escalation of their VAT rate to 15 per cent.

Officials say there would be no hike in taxes on essential commodities while local air-conditioner and refrigerator manufacturers may bear some additional tax burden.

On the taxation for textile millers, Bangladesh Textile Mills Association's (BTMA's) Muhammad Ziaur Rahman says as apparel exporters are enjoying 10-percent and 12- percent corporate-tax rates respectively for general and green factories, "textile millers also deserve the equal treatment for running same-nature businesses".

There are differences of opinion on the taxmen over increasing tax ceiling for individual taxpayers as many of the existing taxpayers would get dropped out from the threshold.

More than half of the individual taxpayers submit their tax return showing zero income.

Currently, the tax-free income limit is Tk350,000 for general individual taxpayers, Tk400,000 for women and senior citizens above 65 years, Tk475,000 for physically challenged persons, and Tk500,000 for war-wounded freedom fighters.

Officials say all of the ceilings, including senior citizens and women, would go up in the upcoming fiscal year.

Private think-tank Centre for Policy Dialogue (CPD) and the apex chamber, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), in their budget proposals also suggested for the government to raise the tax threshold for individual taxpayers by considering inflationary pressure and erosion of real income.

The FBCCI administrator, Md Hafizur Rahman, says the tax-free ceiling for general taxpayers was proposed Tk 450,000 while for women and senior citizens Tk 500,000.

He points out that many people are escaping tax net despite having taxable income, and shows a way of taxing all who obtain taxpayer-identification number.

"The NBR can introduce a minimum tax for those obtaining TIN from the upcoming fiscal year," he says.

Currently, he notes, it is said that only 25 per cent of the TIN-holders submit income tax returns.

Mr Hafiz, however, urges the government to honour taxpayers who came onto tax net, who often alleged harassment.

doulotakter11@gmail.com