The Finance Minister, Amir Khosru Mahmud Chowdhury, has withdrawn a proposal to impose VAT on grocery shops following a request from Prime Minister Tarique Rahman aimed at easing the tax burden on general public.
He also announced a reduction in source tax on 60 products. The announcements were made during the closing speech of the budget session in Parliament on Monday.
Khosru said that amid demands from the business community for a reduction in corporate tax rates, a 2.5 per cent tax relief had been announced on the condition that all income is transferred through banking channels.
He added that although an initiative had been taken to introduce flat-rate VAT to reduce harassment of small traders, grocery shops and kitchen markets would remain fully outside its scope in consideration of public relief.
The National Board of Revenue (NBR) has crossed the Tk400,000 crore revenue milestone for the first time, he said, adding that although the target for the next fiscal year is challenging, it is achievable.
Stock market and tax measures
Proposing measures to make the stock market sustainable, the finance minister said a 2.5 per cent additional tax benefit would be given to listed or non-listed companies if all transactions are conducted through banking channels.
He added that listed companies carrying out cashless transactions and offloading 10 per cent or more shares in the stock market would have a tax rate 7.50 per cent lower than non-listed companies.
He also proposed a series of amendments in the Finance Bill aimed at sustainable capital market development, including keeping income from zero-coupon bonds tax-free.
Although not included in the proposed budget, an amendment had previously imposed tax on income from zero-coupon bonds over the past decade and a half, which he proposed to withdraw.
He further proposed a 2.5 per cent tax reduction for companies becoming listed in the stock market after transferring any amount of shares.
He also proposed reducing dividend tax rates for company taxpayers to 20 per cent and for individual taxpayers to 15 per cent, and withdrawing the Tk500,000 investment limit for tax rebate eligibility on mutual fund investments.
Inflation control and fiscal policy
He highlighted government measures to control inflation and restore relief in public life, including strengthening foreign exchange reserves, stabilising the exchange rate of the taka, increasing productivity in agriculture and industry, and reducing source tax on 60 products to help control prices of essential goods.
He expressed hope that inflation would gradually come under control through improved supply systems, increased market competition, and strict action against artificial shortages and manipulation.
Earlier, the finance minister drew the Prime Minister’s attention to a proposal to withdraw a special provision in the budget introduced to resolve complications regarding actual value and mouza value in land registration.
The parliamentary leader spoke about restoring public trust in governance by reducing harassment and not increasing the tax burden, while expanding the tax base. He said a revenue ecosystem should be created where taxpayers feel proud to contribute to development.
As part of making the tax system transparent and modern, he requested raising the tax-free income threshold for individual taxpayers from Tk375,000 to Tk400,000 for the 2026–27 and 2027–28 tax years. He also proposed increasing it to Tk450,000 for 2028–29 and 2029–30, and to Tk500,000 for 2030–31.
The Prime Minister also made several proposals for the education and employment sectors, including reducing tax on private universities from 10 per cent to 5 per cent, strengthening research and development, establishing language labs, and ensuring free education for poor and meritorious students.
He also requested withdrawal of the requirement to submit a Tax Identification Number (TIN) for opening bank accounts, registering deeds, and property mutation.
He further requested withdrawal of duties and VAT on food and medicine imports to support shrimp farming expansion and exports, and concessionary import facilities for local industry raw materials.
He proposed withdrawing the 10 per cent supplementary duty on honey imports used in pharmaceuticals and local industries, and reducing the proposed 10 per cent import duty on PVC and PET resin to 5 per cent. He also proposed reducing VAT on locally produced double cabin pickups and microbuses from 15 per cent to 5 per cent.
The Prime Minister requested an additional allocation of Tk10 billion for the Supreme Court and Tk50 billion for the Ministry of Law for judicial independence and development.
At the final stage of the speech, following a proposal from the opposition leader, she also instructed the finance minister to review and give maximum consideration to withdrawing duties on bicycles.
