Black money window reopens

The proposed national budget for fiscal year 2026-27 includes a provision allowing the legalisation of black money, or undisclosed income, without any questions being asked.

Although Chief Whip of Parliament Nurul Islam Moni had initially stated that no such opportunity would be included, the controversial provision has ultimately been retained in the Finance Bill announced by the government.

The Chief Whip had said the proposed budget was intended to protect the poor and would not contain any such provision.

The first budget of the BNP-led government has thus reintroduced the opportunity to legalise black money.

However, unlike previous arrangements, no special tax concession has been offered this time. Undisclosed funds may be legalised only by paying tax at the applicable regular rate.

Finance Minister Amir Khosru Mahmud Chowdhury presented the proposal while placing the budget before Parliament on Thursday.

Under the new provision, undisclosed money invested in the housing sector may be declared in tax returns and legalised, provided the taxpayer pays tax at the prescribed rate. No special discount or reduced rate will apply.

Under the provision, once money is voluntarily whitened, neither the National Board of Revenue (NBR) nor any other authority will be permitted to question the source of the funds.

However, taxpayers already subject to audits or legal proceedings under the Income Tax Act will be required to pay an additional 20 per cent penalty tax.

Those with cases pending before the courts or who have already been convicted will not be eligible for the facility.

According to the proposed law, if the actual value of land, a flat or a building is understated in the deed at the time of purchase, the difference may later be declared in a tax return and legalised.

The buyer will be required to pay tax at the individual rate of 30 per cent on the difference between the actual value and the declared deed value. For the seller, a 15 per cent capital gains tax will apply to the same amount.

As an additional condition, if the tax authorities uncover the information independently, the taxpayer concerned will also be liable for an extra 20 per cent penalty tax.

An example provided in the proposal states that if a person purchases a flat worth Tk2 crore but declares only Tk50 lakh in the deed, they will have to pay Tk45 lakh in tax at a rate of 30 per cent to legalise the undisclosed Tk1.5 crore. An additional penalty may also be imposed in such cases.

For the seller, the same undisclosed amount would be subject to a 15 per cent tax rate, which in this example would amount to approximately Tk22.5 lakh.