Govt plans tax relief for middle class

The government is planning to ease the tax burden on lower- and middle-income taxpayers in the 2026-27 budget by gradually raising the tax-free income limit and introducing multi-year tax declarations to provide greater certainty for individuals.

It is also considering incentives for electric vehicles and other environment-friendly transport as part of efforts to support climate goals and address the ongoing energy crisis.

In addition, authorities are planning to reintroduce wealth tax and introduce advance income tax for the first time on motorbikes and battery-run rickshaws.

Officials said the proposals received in-principle approval from Prime Minister Tarique Rahman at a high-level meeting at the Secretariat yesterday, where the National Board of Revenue presented several tax measures.

Officials said the tax-free income threshold, currently set at Tk 3.75 lakh for the next two fiscal years for individual taxpayers, may be gradually increased over the coming years.

“There is a plan to increase it further over time to Tk 4 lakh,” a finance ministry official said, adding that the proposal is part of a longer-term roadmap extending up to 2030.

Officials also said the government is considering extending the validity of tax declarations for multiple years to ensure more stability for taxpayers.

FOCUS ON FAIRNESS AND REVENUE BALANCE

Officials said the prime minister has instructed policymakers to ensure that any proposed wealth tax does not unfairly affect people who depend only on regular income, while higher-income groups may face stricter scrutiny.

“The focus is to make sure lower-income groups are affected as little as possible,” a senior official involved in the discussions said.

The discussions also included plans to reduce the tax burden on essential goods by placing more items under a lower tax slab.

Officials said some essential products may be brought under a uniform 0.5 percent source tax to simplify the system and ease pressure on consumers.

“There is no move to increase the turnover tax further. The emphasis is on expanding the tax base instead,” an official said regarding turnover tax policy.

Alongside tax relief measures, environmental issues were also a key focus of the discussions.

Officials said the prime minister stressed that fiscal and taxation policies should be designed to support environmental sustainability.

For motorcycles, the prime minister instructed setting the tax rate at Tk 1,000 for 111cc to 125cc bikes, Tk 3,000 for 126cc to 165cc bikes, and Tk 5,000 annually for motorcycles above 165cc, according to meeting sources.

The government is also reviewing taxation and regulatory policies for motorcycles, electric vehicles, and battery-run vehicles as part of a broader transport tax framework.

Officials said discussions on provisions related to undisclosed money and special investment opportunities are still ongoing, and no final decision has been made.

They added that the proposed measures reflect the government’s effort to balance revenue collection with controlling inflation, expanding social protection, and supporting green transition goals ahead of the next fiscal year.

The prime minister also approved a proposal to raise the excise duty exemption threshold on bank deposits to Tk 500,000 from the next fiscal year.

In addition, prices of tobacco products and foreign liquor may increase as part of efforts to discourage consumption and raise revenue.

The advance income tax on luxury vehicles, including private cars with engine capacities above 3,500cc, is set to rise from Tk 200,000 to Tk 1 million.

However, the existing advance income tax of Tk 25,000 for vehicles with engine capacities of up to 1,500cc will remain unchanged.