NBR to cut minimum turnover tax rate amid trader demands

Facing demands from the business community, the National Revenue Board (NBR) is reducing the minimum turnover tax rate.

The NBR is stepping back from its decision under the new Income Tax Act to impose a 1per cent minimum turnover tax on annual sales regardless of profit or loss.

Under the new decision, the minimum turnover tax will be 0.5per cent if annual sales exceed Tk2 crore.
The agency is currently working on issuing a notification regarding this according to NBR sources on August 25.

Under the new directive, annual sales up to Tk2 crore will remain tax-free, sources informed.

However, if total annual sales fall between Tk2 crore and Tk4 crore, the turnover tax will be 0.5per cent, and if it exceeds Tk4 crore, the turnover tax will be 1per cent.

Turnover tax is a direct or indirect tax payable at a fixed rate on a business’s total annual sales or transactions, which must be paid even if there is no profit.

Income tax lawyer Hasanur Rahman said that provisions for turnover tax exist under Section 163 of the Income Tax Act, 2023.
According to Section 163(6) as amended by the Finance Act, 2026, if the tax determined under sub-section (3) is less than the prescribed turnover tax, turnover tax must be paid at the prescribed rate on the total gross receipts of the business or profession.
This means that where the law applies, total sales or gross receipts-rather than actual profit-will serve as the basis for tax assessment.
He stated that according to the amended provisions, the turnover tax rate has been set at 3per cent for tobacco product manufacturers, 2.5per cent for carbonated and sweetened beverage manufacturers, 1.5per cent for mobile phone operators and NTTN institutions, and 1per cent for other cases.
Business owners expressed concern over this tax rate following the announcement of the current FY27 budget.
They noted that most small and medium enterprises operate on limited capital.
Due to rising raw material costs, high bank interest rates, power and energy expenses, transportation costs, and intense market competition, many businesses operate on very low profit margins or at a loss.
Under such circumstances, levying tax on turnover rather than actual profits creates an additional financial burden for many entrepreneurs.