Hidden property income to face tax
The government is preparing a new mechanism to bring previously undisclosed income from land, apartment, and commercial property transactions into the formal tax system, according to sources at the National Board of Revenue (NBR).
Expected to feature in the FY2026-27 budget, the proposed framework would require both buyers and sellers to declare the actual value of property transactions in their income tax returns and pay tax at the applicable rates.
NBR officials said the initiative aims to tackle a longstanding issue in Bangladesh’s real estate market, where a significant portion of transactions is underreported, depriving the state of substantial revenue.
While existing laws require sellers to pay taxes based on the sale value of properties, in practice the tax burden is often shifted to buyers.
Large gaps between government-fixed mouza values and actual market prices further encourage underreporting.
“The housing and property sector has become one of the largest channels for holding undisclosed wealth,” said an Income Tax Department official.
He highlighted that during property registration, substantial amounts are often exchanged in cash or through informal arrangements, leaving much of the transaction value outside the official system.
For example, a property in Gulshan or Banani might sell for Tk10 crore, while its registered deed value is only Tk2 crore.
Legal documents reflect the lower amount, but all parties involved, including buyers, sellers, deed writers, and land office staff, are aware of the actual transaction value.
This, the official added, “creates an institutionalised system of false declarations.”
The upcoming budget may offer a conditional pathway for taxpayers to report real transaction values.
The framework could also allow the declaration of previously undisclosed foreign assets, although these would be subject to higher taxes than regular income, with safeguards to prevent abuse.
NBR data shows that over Tk47,000 crore in undisclosed income has been regularised through government schemes over the years.
The highest amount — Tk20,500 crore — was legalised in FY2020-21 under a scheme that imposed only a 10 percent tax.
In FY2021-22, a 7.5 percent tax facility for repatriated overseas assets led to the regularisation of around Tk1,663 crore.
Real estate developers have advocated for a no-questions-asked option for repatriated and undisclosed funds.
During recent pre-budget discussions, they urged the government to restore a previous provision shielding the source of investment in property.
Liaqat Ali Bhuiyan, former senior vice-president of REHAB, said expatriates often fail to declare remitted funds, and allowing these to be invested in housing would strengthen the sector.
Policy analyst Masrur Riaz cautioned that money derived from corruption or illegal activity should never qualify for regularisation.
He suggested that only legally earned but previously undeclared income should be allowed into the system, subject to higher taxes and penalties.
He also urged the government to narrow the gap between mouza rates and market prices through a transparent, regularly updated valuation system.
