Tax-Free Income Ceiling Unchanged for FY 2026-27

The tax-free income ceiling for individual taxpayers will remain unchanged for the 2026-27 fiscal year, despite rising inflation.

Prime Minister Tarique Rahman finalised the decision during a meeting with the National Board of Revenue (NBR) at the Secretariat on Thursday. Finance Minister Amir Khosru Mahmud Chowdhury and NBR Chairman Md Abdur Rahman Khan also attended.

The newly elected BNP administration has chosen to uphold this policy, initiated by the previous interim government, to foster a sense of state "ownership" among citizens.

In a major shift, the government is introducing a "Package VAT" at the Upazila level. The premier emphasised that all citizens should contribute to the state. "The prime minister believes paying even Tk 5 or Tk 500 a year gives citizens a sense of ownership," an official said. Under this plan, rural small traders will pay a monthly VAT between Tk 500 and Tk 1,000.

Additionally, online VAT registration will become mandatory for business bank transactions.

To ease the cost of living, the prime minister rejected several NBR proposals. The threshold for excise duty on bank balances and loans will instead rise from Tk 300,000 to Tk 500,000. The government also turned down proposals to raise VAT on essential supplies from 1% to 2% and to impose a flat 15% VAT on various goods, citing the ultimate financial burden on consumers.

"The goal is to make people's lives easier," an official noted, adding that the prime minister directed the NBR to prioritize trade and investment over IMF-pressured revenue hikes.

For the first time, battery-run autorickshaws and motorcycles will face an advance income tax (AIT), though at reduced rates. The annual AIT for motorcycles is set at Tk 1,000 (111cc-125cc), Tk 3,000 (126cc-165cc) and Tk 5,000 (above 165cc).

Finally, the NBR proposed a market-value-based "wealth tax" for individuals with assets exceeding Tk 40 million. This tax will range from 0.5% to 2%, capped at the taxpayer’s total payable income tax.