Payroll Compliance Updates- Bangladesh
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A. Update

The Honorable Finance Adviser, Dr Salehuddin Ahmed, presented the Budget for the Financial Year 2025-26 on 2 June 2025. The proposals have now been tabled before Parliament for approval and will be gazetted once approved.

The key budget proposals impacting payroll are as follows:

1. Change in Income Tax Slab and Rates

To reduce the tax burden on low-income groups, ensure social protection and fairness, and keep pace with inflation, the tax-free income threshold for individual taxpayers has been increased, and accordingly, the income tax slab and rates for the next two assessment years, 2026-2027 and 2027-2028, have been proposed as follows:

For the assessment year 2025-2026 For the assessment year 2026-2027 and 2027-2028
Income Slabs Rate Income Slabs Rate
On first 350,000 (male) Nil On first 375,000 (male) Nil
Next of 100,000 5% Next of 300,000 10%
Next of 400,000 10% Next of 400,000 15%
Next of 500,000 15% Next of 500,000 20%
Next of 500,000 20% Next of 2,000,000 25%
Next of 2,000,000 25% On Balance 30%
On Balance 30%    

Accordingly tax-free income slabs for below categories are also increased as follows -

  • Female, Senior citizens above 65 up to Tk 425,000 would be "nil" and the above table would be applied for the subsequent income
  • Third gender, physically challenged persons up to Tk 500,000, would be "nil" and the above table would be applied for the subsequent income
  • For War-wounded gazetted freedom fighters and gazetted "July Warriors 2024”, up to BDT 525,000 would be "nil" and the above table would be applied for the subsequent income
  • The income tax-free threshold would be increased for parents or legal guardians of each physically challenged child/adopted child by BDT 50,000. If both the parents of a physically challenged child are taxpayers, either of the parents will be entitled to avail the facility

Note: Tax slabs for individuals are proposed to remain unchanged for the assessment year 2025-2026.

2. Introduction of Flat Minimum Tax:

Currently, individual and Hindu Undivided Family (HUF) taxpayers are subject to a minimum tax ranging from TK 3,000 to Tk 5,000, depending on their location. It has been now proposed, for the assessment years 2026–2027 and 2027–2028, a flat minimum tax of TK 5,000 will apply to all such taxpayers whose total income exceeds the tax-free threshold, regardless of their location.

3. Increase in Maximum allowable deduction: currently,1/3 of “income from employment” or TK 450,000 whichever is lower has been excluded from total taxable income. It is now proposed that the maximum allowable deduction for salaried individuals in calculating taxable income has been increased from TK 450,000 to TK 500,000.

4. Change in frequency of Withholding Tax return: It has been proposed to replace the monthly withholding tax return by a quarterly return as per the timeline below

Applicable months Last Date of Submission
July, August, and September 25 October
October, November, and December 25 January
January, February, and March 25 April
April, May, and June 25 July
B. Announcement Date June 02, 2025
C. Effective Date: Assessment Year 2026-27 and 2027-28
 
Source:
https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/b1d603c0_0d69_4aaa_ab22_162ee52d0502/English.pdf
A. Update

The Finance Bill passed by the Parliament received assent of the Hon'ble President Mohammed Shahabuddin on June 30, 2024. Tax Slab for the assessment year of 2025-2026 (financial year 2024-25) has been updated below as per the latest Finance Act:

Effective for the assessment year of 2025-2026 (Income year of 2024-2025)
Income Slab (in Taka) Rate
On first 350,000 (male) / 400,000 (female) Nil
Next 100,000 5%
Next 400,000 10%
Next 500,000 15%
Next 500,000 20%
Next 2,000,000 25%
On Balance 30%
B. Statutory Compliance Release Date: June 30, 2024
C. Effective Date: July 01, 2024
 
Source:
Tax - Finance_Act
A. Update

The Minister of Finance, Mr. Abul Hassan Mahmood Ali, presented the National Budget for the year 2024-2025 last Thursday. A series of key measures have been proposed in the budget and will be gazetted in due course. Below are the relevant proposals having payroll impact:

1.Tax rates for Individual taxpayers:

The proposed changes in tax slabs will be effective from the assessment year 2024-25.

Amount of Taxable Income Rate
Existing Proposed
First Tk. 350,000 or as applicable First Tk. 350,000 or as applicable Nil
Next Tk. 100,000 Next Tk. 100,000 5%
Next Tk. 300,000 Next Tk. 400,000 10%
Next Tk. 400,000 Next Tk. 500,000 15%
Next Tk. 500,000 Next Tk. 500,000 20%
On the balance On the balance 25%

2. Deadline of Withholding tax return:

Deadline for withholding tax return has been proposed to increase to 25th of the following month instead of 15th of the following month.

3. Extension of Tax Day:

Proposed extension of Tax Day maximum for one month (upto December).

B. Statutory Compliance Release Date: June 06, 2024
C. Effective Date: AY 2024-25 (income year starting July 01, 2023)
 
Source:
https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/e3f239dc_f581_47c7_a32f_c18b075e0697/2024-25_Budget_Speech_English.pdf
A. Update

The Minister of Finance, Mr. AHM Mustafa Kamal has presented the National Budget (‘the budget’) for the year 2023-2024 on June 01, 2023. A series of key measures have been proposed in the budget and will be gazetted in due course. Below is an overview of the relevant proposals having payroll impact:

1. The tax-free income threshold limit and tax rate have been revised for individuals as follows:

a) Individual Taxpayer- Tax-free Income Threshold:
Tax exempted income Current 2022-23 Proposed 2023-2024
General taxpayer Tk. 3 lakhs Tk. 3 lakhs and 50 thousand
Women and Senior citizen above 65 years age Tk. 3 lakhs and 50 thousand Tk. 4 lakhs
Physically Challenged persons Tk. 4 lakhs and 50 thousand Tk. 4 lakhs and 75 thousand
War-wounded gazette freedom fighter Tk. 4 lakhs and 75 thousand Tk. 5 lakhs
Third gender taxpayers Tk. 3 lakhs and 50 thousand Tk. 4 lakhs and 75 thousand
The income tax-free threshold would be increased for parents or legal guardians of physically challenged child or dependent by Tk. 50 thousand for each child/ dependent.
b) Individual taxpayer- Tax rate:
Current Tax slabs 2022-23 Current Tax rate 2022-23 Proposed tax slab 2023-24 Proposed Tax rate 2023-24
First Tk. 300,000 or as applicable Nil First Tk. 350,000 or as applicable Nil
Next Tk. 100,000 5% Next Tk. 100,000 5%
Next Tk. 300,000 10% Next Tk. 300,000 10%
Next Tk. 400,000 15% Next Tk. 400,000 15%
Next Tk. 500,000 20% Next Tk. 500,000 20%
On the balance 25% On the balance 25%

2. It is proposed in the budget to remove the following items for which tax rebate cannot be claimed while computing individual income tax:

  1. Valuation of Perquisite Allowance
  2. House Rent Allowance (received in cash)
  3. Rent Free Accommodation
  4. Conveyance Allowance (received in cash)
  5. Conveyance received for private use
  6. Free of Concessional passage (commonly known as LFA or LTA)
  7. Entertainment Allowance
  8. Medical Allowance

3. There is a new exemption proposed in the budget, where from the total taxable income, 1/3 rd of “income from salary” or BDT 450,000 whichever is lower, will be exempted.

4. The limits for the investment rebates have been proposed to amend as follows:

Investments Proposed Limit 2022-23 Current limit 2023-24
Purchasing of BSP 500000 Tk No limit
Deposit of pension scheme (DPS) 120000 Tk 60000 Tk
Mutual fund 500000 Tk No limit

Also, the calculation for investment tax rebate on eligible tax investment has been proposed to revise as follows:

Tax rebate on investment will be lower of followings:

• 3% of taxable income, or

• 15% of actual Investment, or

• 1 million

5. Notional Income (non-cash benefits) for free accommodation and transport facility has been proposed to revise as follows:

a) Accommodation: Actual rental amount has been proposed to consider for tax computation. Currently tax computation for accommodation facilities is based on 25% of taxable income or actual rental amount whichever is lower.

b) Car facility: For cars with 2500CC, BDT 10,000 per month and for cars with above 2500CC, BDT 25,000 is proposed to consider in tax computation. Currently tax computation for car facilities is based on 5% of taxable income or BDT 60,000 whichever is higher.

B. Statutory Compliance Release Date: June 01, 2023
C. Effective Date: July 01, 2023
 
Source:
https://nbr.gov.bd/uploads/news-scroller/%E0%A7%A8%E0%A7%A6%E0%A7%A8%E0%A7%A9-%E0%A7%A8%E0%A7%A6%E0%A7%A8%E0%A7%AA_%E0%A6%85%E0%A6%B0%E0%A7%8D%E0%A6%A5%E0%A6%AC%E0%A6%9B%E0%A6%B0%E0%A7%87%E0%A6%B0_%E0%A6%AC%E0%A6%BE%E0%A6%9C%E0%A7%87%E0%A6%9F%E0%A7%87_%E0%A6%86%E0%A7%9F%E0%A6%95%E0%A6%B0_%E0%A6%AC%E0%A6%BF%E0%A6%B7%E0%A7%9F%E0%A6%95_%E0%A6%89%E0%A6%B2%E0%A7%8D%E0%A6%B2%E0%A7%87%E0%A6%96%E0%A6%AF%E0%A7%8B%E0%A6%97%E0%A7%8D%E0%A6%AF_%E0%A6%AA%E0%A6%B0%E0%A6%BF%E0%A6%AC%E0%A6%B0%E0%A7%8D%E0%A6%A4%E0%A6%A8%E0%A6%B8%E0%A6%AE%E0%A7%82%E0%A6%B92.pdf
https://nbr.gov.bd/uploads/budget/Budget_Speech_2023-24_English_Final_Press_(1).pdf
A. Update

On June 9, 2022, Mr. AHM Mustafa Kamal, the Finance Minister of Bangladesh presented the national budget for fiscal year (FY) 2022-2023 and proposed the below mentioned changes. The same is gazetted on June 29, 2022 and published on July 1, 2022.

Change in Rates of investment tax rebate:

As per the amendment, rate of investment and the tax rebate are subject to change for the current year. The details are as follows.

Change category Old New
Investment limit on the taxable income of individual. 25% 20%
Tax rebate on investment 10% 15%*

*Earlier 10% tax rebate was given on annual income above 1.5 million and was 15% for annual income below 1.5 million. Now the rate is 15% flat on the eligible amount.

Also, if an assessee fails to submit the return of income shall be entitled to 7.5% credit from the amount of tax payable on his total income.

B. Statutory Compliance Release Date: June 29, 2022
C. Effective Date: July 01, 2022
 
Source:
https://nbr.gov.bd/uploads/acts/Finance_act_2022.pdf
A. Update

The Bangladesh Finance Minister has proposed a change through the finance bill in the deduction from payment to a beneficiary of worker’s participation fund - At the time of payment to the beneficiary of the workers’ participation fund 5% (five percent) of tax deduction shall be applicable and the person who is responsible for such payment shall deduct that certain amount on the whole payment. However, such tax deduction shall not be applicable in following circumstances:

  • a. The beneficiary does not have taxable income; and
  • b. Amount of fund does not exceed taka 25,000.00 (Taka Twenty-Five Thousand) only.

These changes are subject to parliament approvals with or without modification to become an Act.

B. Statutory Compliance Release Date: June 03, 2021
C. Effective Date: July 01, 2021 (Passed)
 
Source:
https://nbr.gov.bd/budget/budget/eng
A. Update

In the Budget session, the Bangladesh government has announced changes in the Income-Tax Act through the Finance Bill for 2020-2021. Following is the overview for the same.

i. Tax-free Income Ceiling for Resident Individuals rises to TK 3 lakh:
Category Tax Free Ceiling (TK)
Current Proposed
General 2,50,000 3,00,000
Women & elderly aged above 65 years 3,00,000 3,50,000
Physically disabled people 4,00,000 4,50,000
Gazetted Freedom Fighters/ Injured Veterans 4,25,000 4,75,000
Parents or Guardians of specially-abled children - by 50,000 Taka
Income Slabs and Tax Rates
Total Income Tax Rate
On the first TK 3,00,000 Nil
On next TK 1,00,000 5%
On next TK 3,00,000 10%
On next TK 4,00,000 15%
On next TK 5,00,000 20%
On the balance of total income 25%
ii. Surcharge on Net Wealth - Individual Tax Payer:
Surcharge on Net Wealth -  Individual Tax Payer
Wealth Rate of Surcharge * on income tax Minimum Surcharge/Tk.
<BDT. 10 crore->=BDT. 15 crore 20% 5000
<BDT. 15 crore->=BDT. 20 crore 25% 5000
<BDT. 20 crore 30% 5000
<=BDT. 50 crore 0.1% of Net Wealth or 30% of Income Tax, whichever is higher 0
Up to BDT. 3 crore 0 0
<BDT. 3 crore->= BDT. 5 crore or Owns 1 + Car or Investment in land greater than 8000 sq. ft. in any City Corporation area 10% 3000
<BDT. 5 crore->=BDT. 10 crore 15% 3000
iii. Advance Tax for the owners of Private Motor Car
Advanced Tax for a Car or a Jeep
Not exceeding 1500 CC
25,000 Taka		 Exceeding 1500 CC but not exceeding 2000 CC
50,000 Taka		 Exceeding 2000 CC but not exceeding 2500 CC
75,000 Taka		 A Micro Bus
30,000 Taka
Exceeding 2500 CC but not exceeding 3000 CC
1,25,000 Taka		 Exceeding 3000 CC but not exceeding 3500 CC
1,50,000 Taka		 Exceeding 3500 CC
2,00,000 Taka		  
iv. Minimum Tax- Individual tax payer
Resident of Dhaka North City Corporation
Resident of Dhaka South City Corporation
Resident of Chittagong City Corporation		 5,000 Taka
Resident of Other City Corporation Area 4,000 Taka
Resident of Non-City Corporation Area 3,000 Taka
v. Tax rate – Others

Income of Non-residents (Except NRB) - 30%

The Finance Bill has been passed by the Bangladesh Parliament and shall be effective from 1st July 2020 and the retrospective effect of Tax rates shall be taken care by the employee at the time of filing their individual returns

B. Statutory Compliance Release Date: June 11, 2020
C. Effective Date: July 01, 2020
 
Source:
https://campaigns.ramco.com/hubfs/Finance-BILL-2020-2021_Final_Tracing.pdf

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