Advisery council okays FY26 budget

Staff Reporter :

The interim government of Bangladesh on Sunday passed the national budget for the 2025-26 financial year which is the country’s 54th fiscal plan and the first of Professor Dr Muhammad Yunus led administration.

The budget revoked the provision of legalizing undisclosed money through the construction of buildings on own land and the purchase of apartments, along with a series of tax reforms and adjustments.

The advisory council approved the Tk 790,000 crore budget for fiscal 2025-26, which was placed on June 2 in a pre-recorded broadcast.
The budget got final clearance at the advisory council with Chief Adviser Professor Muhammad Yunus in the chair.

Earlier on June 2, the government proposed Tk7.90 lakh crore national budget for FY2025-26 which is 0.9 percent lower than the current fiscal year’s outlay of Tk7,97,000 crore.

It is for the first time in Bangladesh’s history the size of the budget was curtailed compared to the previous year.

The proposed budget retains the scope to legalize untaxed assets through investment in real estate and now the provision been scrapped following widespread criticism.

During the final approval, the government increased the allocation by Taka 10,000 crore to Taka 91,297 crore from the proposed amount of Taka 81,297 crore for the social safety net programme keeping the overall size of the budget intact.

“The advisory council approved the national budget for FY26 with some adjustments to the proposed budget placed earlier this month.

Notably, the provision allowing black money legalization through investment in flats and buildings has been scrapped,” said Finance Adviser Dr Salehuddin Ahmed at a press conference at the Finance Ministry conference room in the city.

He said the budget for the coming fiscal eyed a 5.5 percent GDP growth while containing the inflation within 6.50 percent.

“Out of the Taka 7,90,000 crore budget, the government has allocated Taka 560,000 crore for non-development sector while a Tk 2,30,000 crore has been allocated for the Annual Development Programme (ADP),” he added.
The budget for the upcoming fiscal year of 2025-26, narrowing the deficit and prompting a reduction in the planned borrowing from the banking system.

According to budget documents, the total deficit including grants for FY26 is projected at Taka 221,000 crore which accounts for 3.6 percent of GDP.
The budget deficit for the current fiscal year of FY25 was originally estimated to be Taka 2,56,000 crore. In the revised budget, the deficit has been proposed to be Taka 2,26,000 crore, which will be 4.1 percent of the GDP.

Among others, Finance Division Secretary Dr Md Khairuzzaman and National Board of Revenue (NBR) Chairman Abdur Rahman Khan also spoke on the occasion.

Khairuzzaman said the previously announced special benefits for government officials or employees have been increased to a minimum of Taka 1,500 for employed persons and a minimum of Taka 750 for pensioners.

In his speech, Abdur Rahman Khan said the provision regarding investment in buildings or apartments by paying special tax has been abolished.
In the case of publicly traded companies those having at least 10 percent paid-up capital have been transferred through IPO (Initial Public Offering) or Direct Listing, he said, the government has imposed 22.5 percent tax on the companies.

But, if all types of income are made through bank transfer in the considered income year, the tax rate will be 20 percent, he added. In the case of all other publicly traded companies, there will be 27.5 percent tax, he said.
However, he said, if all types of income are made through bank transfer in the considered income year, the tax rate will be 25 percent.

The NBR chief mentioned that the tax rate for private universities, private medical colleges, private dental colleges, private engineering colleges or private colleges engaged in teaching only in information technology has been reduced to 10 percent instead of 15 percent.

He said the existing tax deduction rates for tax collection from property transfer have been reduced to 5 percent, 3 percent and 2 percent respectively instead of 8 percent, 6 percent and 4 percent.

He said advance tax on the import of refined petroleum products has been fixed at 2 percent instead of 7.5 percent and Value Added Tax (VAT) has been exempted at the production stage of cotton produced through the recycling process from jute. VAT exemption has been provided on the rent of premises and establishments of beauty parlors run by women entrepreneurs, he added.

He said VAT exemption has also been provided at the import stage of ball points and advance tax exemption has been provided for the import of heart rings and eye lenses.

In order to introduce a customs system based on invoice value instead of tariff value for the import of all types of petroleum products, Abdur Rahman Khan said the 5 percent import duty fixed for crude petroleum products in FY25 has been reduced to 3 percent and the 10 percent import duty fixed for other cases has been reduced to 6 percent.

In order to make equipment related to solar energy production more accessible, he said the import duty on Solar Inverter has been reduced from 10 percent to 1 percent.

He said 10 more items have been added to the notification regarding the import of medical equipment and materials by hospitals under concessional facilities issued in the budget for the fiscal year 2025-26, as a result, medical services will be more accessible to the people.

The NBR chief also mentioned the import duty on Technically Specified Natural Rubber, one of the raw materials for making tires, has been reduced from 10 percent to 5 percent for the production of quality tires in the country.