Staff Reporter :
Despite calls from businesses and research groups for tax relief amidst rising inflation, the National Board of Revenue (NBR) is unlikely to propose an increase in the tax-free income limit for individuals in the upcoming national budget for fiscal years 2024–25.
NBR sources confirmed that there will be no official proposal for a higher threshold, and the final decision rests with the government after parliamentary discussions.
The current fiscal year saw an increase in the tax-free income limit to Tk 350,000 for individual taxpayers. Additionally, the limit for women and senior citizens above 65 years of age rose to Tk 4 lakh, while physically challenged persons and third-gender taxpayers saw theirs climb to Tk 4.75 lakh. War-wounded gazette freedom fighters now enjoy a tax-free limit of Tk 5 lakh.
The existing tax structure for individuals (excluding companies and local authorities) remains unchanged, with no tax on the first Tk 3.5 lakh, a 5% tax on the next Tk 1 lakh, a 10% tax on the next Tk 3 lakh, a 15% tax on the next Tk 4 lakh, a 20% tax on the next Tk 5 lakh, and a 25% tax on the remaining income.
However, NBR officials hinted at a possible proposal to raise the tax rate for the highest income bracket (currently 25%) to 30% in an effort to collect more revenue from high earners.
The stakeholders made a demand to increase the tax-free income limit as inflation increased due to price hikes for commodities and a decrease in people’s income.
The inflation rate has remained over 9 percent in the country in the last few months. This indicates that people’s expenditures have increased. The spending has increased for individuals whose income is slightly over Tk 300,000.
But these individuals will have to pay as much tax as the previous year, which would add more pressure, the research organisations said.
Every year, some new taxpayers are added to the tax net if the tax-free income limit remains static, while others get exempted if the tax-free income limit is increased.
The number of Tax Identification Number (TIN) holders is over one crore in the country.
Although it is mandatory for all TIN holders to submit tax returns every year, only around 35 lakh comply with the rules.
The Centre for Policy Dialogue’s (CPD) researcher Taufiqul Islam told The New Nation, “Every taka is important for the individuals whose income is slightly more than the tax-tree income limit. It is imperative to alleviate some pressure on them in this time of high inflation.”
