Today, Mr. Mustafa Kamal, the finance minister of Bangladesh has tabled the budget in parliament which has a size of Tk. 523,190 crore. This budget is the country’s 48^th since its independence.

This year, the government is expecting GDP growth of 8.2 per cent along with sets the goal to achieve 10 per cent GDP growth rate by fiscal year 2023-24, the minister said.

Total revenue collection has been estimated to be Tk. 377,810 crore in the FY2019-20. Out of this amount, Tk 325,600 crore will be collected through the National Board of Revenue (NBR). Tax revenue from non-NBR sources have been estimated at Tk 14,500 crore and non-tax revenue is estimated at Tk. 37,710 crore.

Total Expenditure has been estimated to be Tk. 523,190 crore. The overall budget deficit will be Tk. 145,380 crore. The budget deficit will be financed with Tk. 77,363 crore from domestic sources and Tk. 68,016 crore from external sources (including grants).

Individual Tax

“General tax exemption threshold of income of taxpayers, other than company, for the last few years was Tk. 250,000. The threshold for female taxpayers was Tk. 300,000. In addition, this threshold is higher for other special classes of taxpayers. The criteria for keeping the threshold unchanged for the last few years have remained same this year as well. In developed countries, tax exemption threshold of income is generally less than 25 per cent of per capita income. Some countries even do not have any threshold limit. In developing countries, it is mostly equal to or below per capita income. In Bangladesh, the tax exemption threshold is almost 1.5 times above the per capita income. Moreover, any increase in the tax exemption threshold will push a significant number of taxpayers out of the tax net, which will eventually erode the tax base.” Mr. Kamal said.

Existing minimum tax for a taxpayer, except company taxpayer, residing in Dhaka North City Corporation, Dhaka South City Corporation and Chittagong City Corporation, any other city corporation, and other areas is Tk. 5,000, Tk. 4,000, and Tk. 3,000 respectively remain unchanged.

At present, dividend up to Tk. 25,000 received from the publicly traded company is exempted from tax. With a view to incentivizing the individual investors and strengthening the capital market this budget enhance this limit up to Tk. 50,000.

General Tax Rate

Special Tax Rate

Corporate tax

Finance Minister mentions that, “a good number of corporate sectors are enjoying reduced tax rates and tax exemptions. When these facts are taken into consideration, we find the effective corporate tax rate in Bangladesh is below 5 percent. In addition, the tax rate for banks and financial institutions was reduced by 2.5 percent from last year, which resulted in significant reduction of tax collection from this sector. Considering the facts, I propose to continue with the existing corporate tax rate structure for the next year. Nonetheless, in view of reality, I propose to raise the minimum tax for mobile companies to 2% of their turnover from 0.75%.”

Surcharge

At present, wealth tax law does not exist in Bangladesh. Instead of paying wealth tax, wealthy individual taxpayers in Bangladesh pay surcharge at certain rates based on their income tax.

It is proposed that a minimum surcharge amounting to Tk. 3000, where net wealth of an individual exceeds Tk. 3 crore and a minimum surcharge amounting to Tk. 5000 for individuals who have net wealth exceeding Tk. 10 crore. In addition, 2.5 percent surcharge on the profit of the business of the manufacturers of cigarette, bidi, zarda, gul and other tobacco products will remain unchanged.