BNP retains untaxed wealth loop hole in latest budget proposals

The facility allows buyers and sellers to regularise undeclared funds in land and apartment transactions without questioning source

The BNP government has brought back the provision to legalise undisclosed income in its proposed budget.

A clause barring anyone from questioning the source of such funds has also been included, mirroring what previous political governments had done.

The cabinet approved the Finance Bill for 2026-27 containing the provision on Thursday, and Finance Minister Amir Khosru Mahmud Chowdhury presented the budget in parliament at 3pm.

The budget is due to be passed on Jun 30 and take effect Jul 1.

If the provision remains unchanged, the window will be open from July through the following June for anyone buying or selling land, buildings, or apartments.

Notably, the provision was not mentioned at all in the finance minister's budget speech in parliament, meaning it was slipped into the bill without any floor discussion.

The then interim government of Muhammad Yunus had included a similar provision in its proposed 2025-26 budget but dropped it later in the face of public criticism.

Before that, the Awami League government -- ousted in the 2024 July Uprising -- had maintained the same scheme, also with a no-questions clause on the source of funds.

The BNP government, which came to power in February's election, has now revived it by amending the first schedule of the Income Tax Act 2023 in the Finance Bill.

The provision says that notwithstanding anything in this law or any other law in force in Bangladesh, no question shall be raised and no proceedings taken regarding the source of any investment, purchase, or receipt "voluntarily" disclosed, nor about the tax paid against it.

For buyers, if the actual purchase price of land, a building, or an apartment exceeds the registered deed value, the taxpayer will pay income tax on the undisclosed excess amount at the regular rate applicable to individual taxpayers -- that is, the standard slab rates with the usual tax-free threshold.

A similar provision covers sellers.

If the actual sale price exceeds the deed value, the seller will pay income tax on the undisclosed excess at the rate applicable to capital gains -- 15 percent on the difference between the original purchase price and the sale price.

Conditions, however, apply. If an audit or proceedings under the income tax law have already been initiated against the person before their voluntary disclosure, they can still use the scheme but must pay an additional 20 percent on top of the tax that would otherwise be due.

To legalise undisclosed funds, the taxpayer must declare the relevant amount under "tax deducted or collected at source" in the lifestyle expenditure section of their tax return.

This will serve as the signal to tax officials, after which no further legal obligation or questions about the source will follow.

The facility is not available, however, to anyone against whom a court case is already under way or who has been convicted of an offence before making the voluntary declaration.