Tax free income ceiling remains at Tk 3.5 lakh

The government has retained the tax-free income limit at Taka 3.5 lakh for individual taxpayers for the fiscal year (FY25).

"I propose to keep the tax-free income thresholds of natural individual taxpayers and firms unchanged for the financial year (FY) 2024-25," said Finance Minister AH Mahmood Ali while placing the budget for the next fiscal year (FY25) at Jatiya Sangsad (JS) Bhaban on Thursday.

At the same time, it is proposed to increase the existing maximum tax rate from 25 percent to 30 percent for natural individual taxpayers and firms with tax slab adjustments.

According to today's budget proposal, for women and senior citizens aged 65 years or above, the limit is Taka four lakh, physically challenged persons and members of the third gender Tk 4.75 lakh and the freedom fighters Tk five lakh.

However, the threshold would be increased for parents or legal guardians of physically challenged/adopted child by Taka 50,000 for each child.

Mahmood Ali said the maximum tax free income threshold for individual taxpayers was Tk 1.65 lakh in FY 2009-10, which has been increased to Tk 3.50 lakh in FY2023-24 in a phased manner.

He said the tax-free income threshold is higher for women, senior citizens, physically challenged persons, members of the third gender and war wounded freedom fighters. "This has brought back some comfort in the life of ordinary taxpayers due to reduction in tax burden and encouraged tax payers to pay taxes regularly," he added.

Ali also proposed to retain the proposed tax rate for 2024-25 for the assessment year 2025-26 to facilitate the expansion of trade, improve investor confidence in the country's tax system and encourage local and foreign investment, thereby introducing a prospective tax system in Bangladesh. "I believe that through a prospective tax system, taxpayers can do proper tax planning and help increase tax compliance," the finance minister said.