Record revenue shortfall raises fiscal concerns

The National Board of Revenue (NBR) is facing an unprecedented revenue shortfall of nearly Tk98,000 crore in the first nine months of the current fiscal year, despite overall collections registering growth of more than 11 per cent.

Official figures show that the tax authority collected Tk2,87,862 crore between July and 26 March, against a revised target of Tk3,85,852 crore — leaving a deficit of about Tk97,990 crore, the highest ever recorded for this period.

The gap widened sharply in March, when revenue fell short of the monthly target by about Tk26,000 crore. Growth during the month also slowed significantly to 2.67 per cent compared with the same period last year.

Economists attribute the slowdown to a combination of external and domestic factors, including the ongoing Middle East conflict and subdued economic activity at home. While overall revenue still posted a year-on-year growth of 11.15 per cent, analysts say the shortfall has been exacerbated by overly ambitious targets.

Sector-wise data indicates a decline in import tax collections in March, while value-added tax (VAT) and income tax recorded only modest increases of 4.86 per cent and 2.77 per cent respectively.

With three months remaining in the fiscal year, analysts warn that the overall revenue deficit could exceed Tk1.25 lakh crore.

The issue came into focus during pre-budget consultations on 21 April, where business leaders urged the NBR to reduce import duties to ease pressure on domestic industries.

Three industry bodies — the Accumulator Battery Manufacturers and Exporters Association of Bangladesh (ABMEAB), the Bangladesh Electrical Association (BEA), and the Bangladesh Manufacturers Association of Transformers and Switchgears (BMATS) — jointly called for significant cuts in import duties, supplementary duties and VAT on raw materials and components used in the electrical and electronics sectors.

They proposed reducing duties on inputs for products such as electric fans, LED bulbs, circuit breakers, transformers and batteries from the existing 10–25 per cent range to between 1 per cent and 5 per cent.
The battery sector also sought enhanced investment incentives for lithium-ion and sodium-ion technologies, along with tax relief for used battery recycling—areas considered crucial for long-term competitiveness.

Overall, the proposals are aimed at strengthening “Made in Bangladesh” manufacturing, protecting small and medium-sized enterprises from import competition, and keeping consumer prices affordable.
Responding to the demands, the NBR chairman acknowledged the concerns but cautioned against excessive reliance on tax exemptions. He stressed the need to move away from a culture of blanket tax breaks, noting that while targeted duty adjustments may be considered, widespread exemptions could create leakages in the tax system.

His remarks come amid mounting pressure on revenue authorities as the fiscal gap continues to widen.