The finance minister has proposed to increase the number of tax slabs from six to seven to collect more taxes from the rich
Published : 06 Jun 2024, 05:23 PM
Even as inflation and economic headwinds batter the bottom lines of families, Finance Minister Abul Hassan Mahmood Ali has announced that Bangladesh does not plan to raise the threshold for tax-free income in the new budget.
However, the middle class will feel a slight loosening of the belt due to lower tax rates. And, to collect more taxes from those who earn more, he has also suggested increasing the number of tax slabs from six to seven.
The finance minister has maintained the maximum level of tax-free income at Tk 350,000, as it was last year, in the budget for the 2024-25 fiscal year he presented on Thursday.
This means that people will pay no tax on income up to Tk 350,000.
The finance minister proposed to keep the tax-free income thresholds for women, senior citizens, the physically disabled, members of the third gender and those freedom fighters listed as injured in war as they were last year.
This means the tax-free income level for women and taxpayers aged 65 years and above remains Tk 400,000, the level for disabled persons is Tk 475,000, for gazetted war-wounded freedom fighters is Tk 500,000 and for taxpayers of the third gender, it is Tk 475,000.
In addition, the finance minister has proposed that the tax-free income limit for parents or legal guardians of children with a disability should be increased by Tk 50,000 per child.
He also maintained the minimum tax rate for regular individual taxpayers, firms, and Hindu undivided families at 5 percent.
The budget proposes to increase the maximum tax rate from 25 percent to 30 percent by making some changes to the number of slabs.
According to the budget proposal, income up to Tk 350,000 will not be taxed. The next Tk 100,000 of income will be taxed at a rate of 5 percent.
Previously, a 10 percent income tax was imposed on income between Tk 450,000 and Tk 750,000. Now, it will apply up to Tk 850,000.
Previously, income from Tk 750,000 to Tk 1,150,000 was taxed at 15 percent. Now, the 15 percent income tax will apply from Tk 850,000 to Tk 1,350,000.
Previously, income from Tk 1,150,000 to Tk 1,650,000 was taxed at 20 percent. This tax level will now apply to income from Tk 1,350,000 to Tk 1,850,000.
In FY 2023-24, any income above Tk 1,850,000 was taxed at 25 percent. The budget for FY 2024-25 proposes that a 25 percent tax be applied on income from Tk 1,850,000 to Tk 3,850,000, while any income above that level will be taxed at 30 percent.
Current tax slabs |
Tax rate 2023-24 |
Proposed tax slabs |
Proposed tax rate |
Up to Tk 350,000 |
0 |
Up to Tk 350,000 |
0 |
The next Tk 100,000 |
5 |
The next Tk 100,000 |
5 |
The next Tk 300,000 |
10 |
The next Tk 400,000 |
10 |
The next Tk 400,000 |
15 |
The next Tk 500,000 |
15 |
The next Tk 500,000 |
20 |
The next Tk 500,000 |
20 |
Any amount above |
25 |
The next Tk 2 million |
25 |
|
|
Any amount above |
30 |
FINANCE MINISTER NOT TAKING ON THE WEALTHY
Finance Minister Mahmood Ali has also proposed to keep the surcharge-free limit on wealth at Tk 40 million, as in the previous budget.
In his speech, he said, “Surcharge is collected from wealthy individual taxpayers at certain percentage of the income tax based on their net wealth. This provision of surcharge has been in force for quite a long time. Surcharge of individual taxpayers ensures balanced distribution of income and wealth along with economic development of society.”
“In case of surcharge imposition, on the basis of individual taxpayers disclosed net wealth value to simplify enforcement of surcharge levy and reduce the burden of the middle class taxpayers. Currently, the rate of surcharge payable up to the net asset value of Tk 4 crore [Tk 40 million] is nil. If the net asset value exceeds Tk 4 crore, the surcharge is 10 percent and if the net asset value exceeds the maximum limit of Tk 50 crore [Tk 500 million], the surcharge amount is 35 percent. I propose to keep the existing structure of surcharge unchanged.”