The Business Initiative Leading Development (BUILD) has welcomed the proposed Tk9.38 lakh crore budget for the 2026-27 fiscal year (FY27) as a business-friendly and reform-oriented plan, though it cautioned that success hinges on effective implementation amidst fiscal and global challenges.
The budget, unveiled by Finance Minister Amir Khosru Mahmud Chowdhury, was described by BUILD as a “creative and innovative departure” from traditional fiscal thinking, specifically for its measures to reduce bureaucracy, lower taxes, and automate government services.
While the advocacy platform praised the intent to stimulate investment and job creation through deregulation, it warned of significant risks, including a high budget deficit, banking sector weaknesses, and sluggish revenue mobilisation.
BUILD noted that the government’s macroeconomic targets – including a GDP growth target of 6.5 per cent and an inflation reduction to 7.5 per cent – appear challenging given the current fragile environment and ongoing geopolitical shocks.
Ambitious revenue and NBR reforms
The Tk6.95 lakh crore revenue target was deemed ambitious and unlikely to be met without substantial improvements in the institutional efficiency of the National Board of Revenue (NBR).
BUILD argued that simply expanding the number of Tax Identification Number (TIN) holders would not suffice unless transparency in Tax Deducted at Source (TDS) collection improves and the proposed refund mechanism is fully implemented.
Additionally, the organisation expressed concern that a proposed 0.2 per cent advance income tax at the retail stage could prove regressive and inflationary.
Spending and social protection
The budget allocates Tk3.16 lakh crore for development, including a Tk3 lakh crore Annual Development Programme (ADP), which signals a strong growth orientation. However, BUILD argued that the plan does not adequately address the weak project implementation capacity within line ministries.
Regarding social protection, the organisation acknowledged the Tk1.45 lakh crore allocation – a 25 per cent increase – but questioned the inclusion of Tk39,000 crore in pension payments (27 per cent of the total) within the social safety net programme.
Fiscal discipline and banking
A budget deficit of Tk2.43 lakh crore, equivalent to 3.6 per cent of GDP, is projected.
BUILD welcomed the decision to lower bank borrowing to Tk1.12 lakh crore to support private-sector credit growth, but warned that uncertainty surrounding foreign financing could force an increased reliance on domestic borrowing.
It also stressed that recently announced stimulus packages for CMSMEs would require effective management.
Taxation and sectoral reforms
BUILD lauded several tax measures, including reducing TDS on export cash incentives to 5 per cent and lowering withholding tax on freight forwarding services to 1 per cent.
Significant procedural reforms were also praised, such as extending the VAT return filing deadline to 105 days and reducing mandatory deposits for VAT appeals from 10 per cent to 1 per cent.
However, the organisation noted that bringing all imported services under the standard 15 per cent VAT regime could create a cascading effect on costs. It also called for clearer guidelines on NBR valuation powers and bonded warehouse facilities for sectors like agro-processing and pharmaceuticals.
Digital and green economy
The budget introduces VAT exemptions for content creators and freelancers to support the digital economy, though BUILD emphasised that intellectual property rights enforcement remains crucial.
To promote green growth, the budget significantly cuts import taxes on electric bikes (to 64 per cent) and electric cars (to 80 per cent), while exempting EV chargers and battery raw materials from duties.
BUILD concluded that while these incentives are positive, a transition to a green economy will require dedicated financing mechanisms and comprehensive policy support.
