The government has proposed significant reductions in the tax at source and Value Added Tax (VAT) on gold and gold ornaments in the national budget for the fiscal year 2026-27.
Finance Minister Amir Khosru Mahmud Chowdhury unveiled the proposals while presenting the FY26-27 budget in the National Parliament on Thursday.
Highlighting the challenges faced by the gold market, the minister said the high source tax had driven most gold and ornament trading into the informal sector, resulting in substantial revenue losses for the government.
“To formalise the gold business and enhance government revenue collection, the tax at source on gold and gold ornaments has been reduced from 5 percent to 0.5 percent,” he noted.
Under a section titled ‘Formulation of Specific VAT Provisions for the Jewellery Sector’, the finance minister proposed setting a fixed VAT of Tk 2,500 per bhori for jewellery services, replacing the current 5 percent VAT structure.
The move responds to long-standing demands from gold traders for a lower tax at source and a simplified VAT system, which they have argued will streamline business operations and curb informal trading.
Analysts suggest that these changes could lead to a drop in gold prices while simultaneously increasing formal sector participation and government revenue collection.
