The proposed national budget for FY2026-27 sets out an expansive package of fiscal measures aimed at easing cost-of-living pressures, widening the tax base, and stimulating investment, with a multi-year roadmap for income tax, sweeping duty cuts on essentials, and targeted incentives for emerging sectors.
At the centre of the proposals is a long-term personal income tax framework, a departure from the annual adjustments typically seen in past budgets.
The government plans to raise the tax-free income ceiling for general taxpayers to Tk 3.75 lakh for the next two fiscal years, followed by a phased increase to Tk 4 lakh and Tk 4.5 lakh by FY2030-31.
The five-year roadmap is designed to bring predictability to tax planning. Preferential thresholds have also been proposed for vulnerable and special groups, including women, senior citizens, persons with disabilities, and war-wounded freedom fighters, with progressively higher exemption limits over the same period.
While the top marginal tax rate will remain at 30 percent in the near term, a new 35 percent bracket is set to be introduced from FY2028-29 for individuals earning above Tk 3 crore, signalling a shift towards greater progressivity targeting high-income earners.
Corporate tax stability, source tax reform
In a move aimed at reassuring investors, corporate tax rates have been left unchanged for the next five years. Publicly traded companies will continue to enjoy a 22.5 percent rate, while non-listed firms will pay 27.5 percent, subject to compliance conditions.
A significant structural change comes in the treatment of tax deducted at source. The government has proposed scrapping the existing provision that treats such deductions as a minimum tax liability, even in the absence of taxable income.
Instead, source tax will now be considered advance tax, allowing businesses to claim refunds where applicable — a measure expected to ease cash-flow pressures and align the system with international practices.
Duty cuts to ease inflation
The budget introduces sweeping reductions in source tax on essential commodities, lowering rates on around 60 items — including rice, wheat, edible oil, onions, and sugar — to 0.5 percent from as high as 5 percent.
Healthcare costs are also targeted for relief. Duties and taxes on dialysis filters are to be withdrawn entirely, potentially reducing treatment costs significantly.
VAT exemptions at the trading stage for heart stents and intraocular lenses are expected to lower prices for critical medical devices, while new concessions on raw materials aim to support local pharmaceutical production, particularly in cancer drugs and active pharmaceutical ingredients.
In a bid to promote green energy, the zero-tax facility for the solar sector is proposed to be extended until 2035, alongside a tax rebate for consumers. Import duties on electric vehicles priced up to $25,000 are set to be reduced sharply, and charging infrastructure will be fully exempted from taxes.
Push for digital economy and startups
The fiscal measures place strong emphasis on formalising and expanding the digital economy. Tax exemptions on freelancing income are proposed to be extended beyond the IT sector, while startups are set to receive VAT waivers on a range of operational services until 2035.
Content creators are also brought under the incentive framework, with both VAT and income tax exemptions proposed for the sector. In addition, turnover tax for tech startups is to be reduced to zero, and small entrepreneurs will benefit from higher tax-exempt income thresholds.
To encourage regional industrialisation, accelerated depreciation benefits have been proposed for manufacturing and tourism facilities outside Dhaka and Chattogram.
Telecom relief and connectivity
The budget proposes scrapping the Tk 300 tax on new SIM cards, a move expected to make mobile access more affordable, particularly for low-income users. Source tax on mobile services is also set to be reduced.
Trade and logistics reforms
A new Free Trade Zone framework is on the table, allowing duty-free import of goods for processing and re-export, alongside provisions for domestic supply upon payment of applicable duties. The government also plans to establish regulatory frameworks for air cargo operator stations and private port operators, aiming to strengthen logistics capacity and support export growth.
Broadening the tax net
Alongside relief measures, the budget outlines steps to enhance compliance and expand the tax base. These include mandatory tax identification numbers (TIN) for certain financial and asset transactions, a small advance tax on retail supply chains, and integration of databases across agencies to improve monitoring.
A new Withholder Identification Number system is also proposed to strengthen source tax administration.
Recognition for compliant taxpayers
In an effort to promote a culture of compliance, the government plans to formalise a “Best Taxpayer Award Policy 2026,” recognising top taxpayers across sectors with a range of privileges.
Overall, the proposed fiscal measures reflect a balancing act — offering relief to consumers and emerging sectors while tightening compliance and ensuring steady revenue mobilisation in a challenging economic environment.