Opportunity to whiten black money dropped from national budget

The measure had come under criticism in the initial draft of the budget for 2025-26

In response to criticism, the interim government has dropped the opportunity to legalise undisclosed income in the budget for the upcoming fiscal year.

The National Board of Revenue (NBR) approved the change in the final budget for the 2025-2026 fiscal year on Sunday.

The budget for the 2025-26 fiscal year was approved at a meeting of the Advisory Council chaired by Chief Advisor Muhammad Yunus at his office on Sunday.

A press release sent by the Finance Ministry said, "The provision regarding investing in buildings or apartments by paying special taxes has been abolished."

Finance Advisor Salehuddin Ahmed presented the budget proposal in a televised address on Jun 2. In this budget after the political changeover, a special opportunity to legalise undisclosed income was also maintained.

A decision was made to withdraw the provision in the face of strong criticism, even at a meeting of the Advisory Council. Moreover, NBR officials said they believed the way the tax increase for investments in the housing sector using undisclosed funds was set up, no one would actually take advantage of that benefit.

The revised budget will be published in the form of a gazette notification with the consent of the president. After the ordinance is issued, the budget will take effect immediately.

Regarding the issue, NBR Chairman Md Abdur Rahman Khan said in a briefing at the Finance Advisor’s Office: “Now the question may arise - what will happen to those who did not show that money before (had undisclosed money)? What they can do is pay the regular tax. The marginal tax rate will be 30 percent plus 10 percent extra. We do not think this is black money. As a result, no one has objected to it.

“In the case of the black money that was whitened by paying tax according to the square footage of the building and apartment, taxpayers could get away with paying much less in tax than the regular tax rate. We increased it fivefold. Despite this, as there was major demand, we have abolished it now.”

Now there is no provision in the law to whiten black money, he said.