Taxpayers are going to get some good news in the coming budget for the 2018-19 fiscal year.
The tax free income ceiling for the individual taxpayers will be extended while there will be tax cuts for the corporate sector.
Finance Minister AMA Muhith will pronounce the new rates in the coming budget that will be placed in parliament on June 7.
According to National Board of Revenue (NBR) sources, the rate of income tax free ceiling for individual taxpayers will be Tk3 lakh in the next budget, as opposed to the current Tk2.5 lakh.
The ceiling for women and people above the age of 65-year will be Tk3.25 lakh from existing Tk3 lakh.
However, the tax ceilings for the taxpayers with disabilities and injured freedom fighters will remain the same – Tk4 lakh and Tk4.25 lakh respectively.
Currently, the Tk2.5 lakh tax free ceiling for individual taxpayers is calculated at a 10% rate up to an income of Tk4 lakh, 15% for the next Tk5 lakh, 20% for the next Tk6 lakh, 25% for the next Tk3 lakh and 30% tax on additional income.
Finance Minister AMA Muhith, in a pre-budget meeting with the Economic Reporters’ Forum (ERF), has hinted at increasing the ceiling.
At the same meeting, the finance minister also informed that the corporate tax rate will be reduced.
The reduction of the corporate tax rate has been a long standing demand from businesses.
The tax rate for publicly traded companies is 25%, for non-publicly traded companies it is 35%, for publicly traded banks, insurance and financial institutions (other than merchant banks), newly established banks, and insurance and financial institutions approved by government in 2013 it is 40%, and for non-publicly traded banks, insurance and financial institutions it is 42.5%. For merchant banks, the tax rate is 37.5%.
The tax rate for cigarettes, bidi , zarda, chewing tobacco and other tobacco product manufacturing companies is 45%, for publicly traded mobile phone companies it is 40%, and for non-publicly traded mobile phone companies it is 45%. The tax rate on income from dividend is 20%.
The finance minister in his budget speech last year said a limited number of sectors, including non-listed banks, non-listed mobile phone operators and cigarette manufacturing companies, were paying taxes at rates more than 40%.”We plan to gradually bring the rate down to 40% for these sectors in future,” he said.
Finance Ministry sources said that due to the hike in prices of fuel oil and agricultural products, as well as crop damage due to flash floods in the country, the inflation rate was higher than usual.
“Considering these matters, the government has decided to increase the income free ceiling for individual taxpayers,” a senior official of the Finance Ministry said.
Responding to a question on lower revenue collection due to the increasing the tax free ceiling, a senior official of NBR said that the revenue collection might be affected due to this process. “But we will fill the gaps by expanding our tax net,” he added.
NBR chairman Md Mosharraf Hossain Bhuiyan in a recent meeting also said that the revenue collecting authority of the government wanted to expand the numbers of the taxpayers, as the taxpayers’ ratio in Bangladesh is the lowest in the region.
Currently, the number of eTIN holders in the country is 3,460,000, and the tax-GDP ratio is just over 10%. The corresponding figure is more than 15% in neighbouring countries.
