Staff Reporter :
A proposal to increase the tax-free income threshold for individual taxpayers to Tk5 lakh has been put forward, considering the rising inflation and growing cost of living.
This recommendation was discussed during a pre-budget meeting held at the National Board of Revenue (NBR) headquarters in Agargaon, Dhaka, on Tuesday. The session was chaired by NBR Chairman Abdur Rahman Khan.
The recommendation was made by DCCI President Taskeen Ahmed during a pre-budget discussion at the National Board of Revenue (NBR) headquarters in Agargaon, Dhaka, on Tuesday.
Taskeen highlighted that the current tax-free income limit stands at Tk3.5 lakh, with a maximum tax rate of 30 per cent.
He suggested raising the threshold to Tk5 lakh while reducing the highest tax rate to 25 per cent.
Additionally, DCCI proposed that the next tax slab should impose a 5 per cent tax on the following Tk3 lakh of income, an adjustment from the current system, where a 5 per cent tax applies to income exceeding Tk1 lakh.
In response, NBR Chairman Khan argued that developed nations impose individual income tax rates of 50-55 per cent and suggested that further reductions could be counterproductive.
He emphasised that higher tax rates in those countries help reduce inequality by funding better public services.
He also acknowledged the need for the government to ensure quality services to justify any future tax adjustments.
During the discussion, DCCI presented 42 budget proposals, focusing on tax system reforms, expanding the tax base, simplifying VAT and income tax structures, and supporting local industries.
One of the key suggestions was introducing a single-digit VAT rate, as businesses currently struggle with a multi-tiered structure.
DCCI proposed a uniform 10 per cent VAT rate and a 1 per cent rate for the informal sector to reduce complexities and improve tax compliance.
NBR Chairman Khan expressed openness to revising VAT policies, acknowledging that businesses had previously resisted a single-rate system.
He suggested that if businesses now support this move, discussions could be initiated through the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), with the potential development of supporting software to facilitate compliance.
Highlighting tax compliance issues, Taskeen cited NBR data showing that while over 11.3 million people hold Tax Identification Numbers (TINs), only 3.7 million filed tax returns between 1 July 2024 and 6 February 2025, with just 1.33 million submitting online returns.
He urged NBR to set structured targets for expanding the tax base and improving automation to simplify tax filing.
NBR Chairman Khan acknowledged the low rate of tax return submissions despite significant growth in TIN registrations.
He reiterated the government’s focus on facilitating corporate tax filing online and suggested that reducing corporate tax rates could encourage more businesses to formalise their operations.
Several industry representatives also presented sector-specific proposals during the discussion.
The Bangladesh Paint Manufacturers Association called for the removal of the 10 per cent supplementary duty on paints and related products, arguing that they are essential goods.
The Bangladesh Cold Storage Association proposed reducing the 1 per cent advance income tax on potato purchases and eliminating VAT and advance income tax on cold storage equipment.
Meanwhile, the Bangladesh Agro Processors Association (BAPA) sought an exemption from source tax on agricultural product supplies and recommended a uniform 5 per cent tariff on industrial material imports.
The discussion underscored the need for balanced tax reforms that accommodate business concerns while ensuring sustainable revenue collection for the government.
