Muhammad Tareq ; Dhaka – While the tax rates for the ultra-wealthy remain untouched, the upcoming national budget is set to deliver a significant blow to the poor and middle class by doubling the tax burden on savings certificates (Sanchayapatra). Finance Minister Amir Khasru Mahmud Chowdhury will present these proposed changes in the National Parliament today.
The proposed national budget for the fiscal year 2026-27 introduces structural changes to tax slabs, investment rebates, luxury vehicle taxes, and tax return rules. Here is a comprehensive breakdown of how the new budget will affect your wallet.
1. Savings Certificates: Tax Burden Doubled
Under the new rules, source tax deducted from savings certificates will no longer be treated as the final tax liability. Instead, it will be considered an advance tax, and the interest income will be taxed again based on the taxpayer’s applicable income tax slab.
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For Small Investors (Up to BDT 5 Lakh): Investors holding up to BDT 5 lakh in savings certificates will effectively see their tax rate double to at least 10%, up from the previous 5%. If a taxpayer’s taxable income exceeds BDT 3.75 lakh, they must pay 10% tax on this income, which can rise to 15% for higher brackets.
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Tax Rebates Slashed: The maximum tax rebate on allowed investments (such as Sanchayapatra, DPS, and life insurance) is being reduced. The allowed investment rebate rate is dropping to 10% with a maximum cap of BDT 7.5 lakh (down from BDT 10 lakh). Taxpayers will now receive BDT 5,000 less in tax exemptions for every BDT 1 lakh invested.
2. Early Tax Return Incentives and Late Penalties
The government is replacing flexible tax return deadlines with strict timelines, offering rewards for early filers and fines for delays:
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July 1 – September 30: Filers will receive a 5% incentive on their payable tax (capped at BDT 25,000).
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October 1 – December 31: Normal filing period; no incentives, no penalties.
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January 1 – March 31: A 2% penalty will be charged (capped at BDT 3,000).
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April 1 – June 30: A 5% penalty will be enforced (capped at BDT 5,000).
3. Luxury Cars Costlier, Relief for Electric Vehicles
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Luxury Vehicles: Advance income tax (AIT) for high-capacity luxury vehicles is set to double. Vehicles above 4,500 cc will face an AIT of BDT 5 lakh, while 3,500 cc to 4,500 cc vehicles will see taxes rise from BDT 2 lakh to BDT 4 lakh. Microbuses and double-cabin pickups will now require a BDT 40,000 tax, up from BDT 30,000. Cars below 2,500 cc see no change.
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EV Tax Relief: To encourage green energy, the complex kilowatt-to-cc tax conversion has been simplified. Electric vehicles under 200 kW will now only pay BDT 25,000 in advance tax, down significantly from previous rates (where a 175 kW EV cost BDT 2 lakh).
4. Mandatory Tax Returns (PSR) for Bank Accounts
The requirement to show Proof of Submission of Return (PSR) has been heavily expanded. Moving forward, a PSR is mandatory to open any bank account. It is also required for registering or renewing the fitness of motorcycles with an engine capacity of 150 cc or above. Student accounts and zero-fee (no-frills) accounts are exempt from this rule.
5. Other Key Budget Adjustments
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Whitening Undisclosed Money: The budget maintains the opportunity to whiten undisclosed income or “black money”. If a taxpayer declares property values below the actual market rate, they can legalise it by paying the regular individual income tax rate. However, if legal action has already been initiated against them under the Income Tax Act before making the declaration, an additional 20% penalty tax will apply.
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Brick Kilns: Advance tax on brick kilns is increasing across all volume tiers, raising operation costs by BDT 20,000 to BDT 80,000 depending on the size.
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Export Incentives: In a major relief for export-oriented sectors like ready-made garments (RMG), leather, and ICT, the source tax on export incentives is being halved from 10% to 5%.