Phased raise to enlarge tax-free ceiling to Tk 0.45m

The government is set to come up with a five-year plan to raise the tax-free income ceiling for giving comfort to lower-and middle-income groups of people.

In the upcoming budget, the Finance Minister may outline the plan to raise tax-free income to Tk 0.4 million for the fiscal year 2028-29 and 2029-30 and Tk 0.4,5 million for FY 2030-31, officials have said.

The ceiling is currently Tk 0.35 million.

In the current FY budget, the ceiling has been set at Tk 0.375 million for two fiscal years--2026-27 and 2027-28.

Currently, the tax-free income threshold is Tk 0. 40 million for women and senior citizens aged 65 or above. For third-gender individuals and persons with disabilities, the limit is Tk 0.475 million. Gazetted freedom fighters are allowed a higher threshold of Tk 0.50 million.

Additionally, parents or legal guardians of persons with disabilities are entitled to receive an extra Tk 50,000 tax-free allowance per dependant.

From 2026-27 fiscal year, individuals injured during the July uprising who are officially recognised are entitled to enjoy a tax-free income threshold of Tk 0.525 million.

At present, 12.8 million people in the country hold Taxpayer Identification Number (TIN). Of them, between 4 million and 4.2 million taxpayers submit tax returns annually.

These taxpayers calculate their tax liabilities on the basis of the prevailing tax-free income threshold when filing their returns.

The government last increased the tax-free income threshold in the 2023 budget, raising it from Tk 0.30 million to Tk 0.350 million.

Since then, the threshold has remained unchanged, although inflationary pressure has intensified over the past three years. Inflation has averaged around 10 per cent annually during this period.

In the budget proposals, think-tanks and business chambers have proposed that the tax-free ceiling be raised "to ease the inflationary pressure on fixed-and low-income groups".

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