All eyes on Yunus-led interim govt as national budget set to be unveiled today

As the clock ticks towards budget time, all eyes are on the interim government led by Nobel Laureate Muhammad Yunus, which is poised to unveil the national budget for the fiscal year 2025–26 today (2 May).

Dr Salehuddin Ahmed, adviser for Finance in the interim government, will unveil the proposed national budget for the 2025–26 fiscal year at 3 pm today (Monday).

The pre-recorded budget speech will be broadcast from 3:00pm via Bangladesh Television (BTV) and Bangladesh Betar.

In a move to ensure wider dissemination, private television channels and radio stations have been requested to relay the speech simultaneously by taking the feed from BTV.

While the nation struggles with persistent inflation and mounting pressure on household incomes, insiders suggest that the upcoming budget will offer little in the way of sweeping reforms. Core tax policies are expected to remain largely intact, signalling a cautious approach by the caretaker administration.

Despite mounting calls from economists and businesses alike for bold interventions to curb inflation and stimulate growth, sources close to the budget process indicate that the interim government will favour continuity over change.

The focus, it seems, will be on maintaining macroeconomic stability rather than introducing ambitious fiscal measures.

This marks the first national budget to be placed under Professor Yunus' stewardship, and expectations are high, especially given his global reputation as a pioneer in poverty alleviation and social business. Yet, with limited political mandate and time, the government is expected to prioritise administrative efficiency over structural reform.

The tax-free income threshold for individual taxpayers is likely to remain at Tk350,000 per year.

There will be no increase in this limit, despite calls from economists and policy experts who argue that rising inflation necessitates a higher threshold to relieve financial pressure on low- and middle-income earners.

Business taxes are likely to see upward adjustments. Non-listed companies in the stock market may face a 2.5% increase in the corporate tax rate, taking it to 27.5%. Companies with an annual turnover above Tk 30 million currently pay a minimum tax of 0.6% of total sales, regardless of profit or loss. This rate may be raised to 1%, as per the sources confirmed.

Merchant banks might benefit from a reduced corporate tax rate—down from 37.5% to 27.5%. For listed companies, the existing 20% tax rate will remain unchanged.

Some targeted tax concessions may be introduced. These include:

Minimum tax relief: To encourage new taxpayers, the minimum tax—currently between Tk 3,000 and Tk 5,000 depending on location—may be reduced to as low as Tk 1,000.

Land transactions: Taxes on land purchases may be lowered, with rates potentially reduced to 6%, 4%, and 3%, down from 8%, 6%, and 4% respectively based on location.

Income tax return requirements: The number of services requiring proof of return submission may be reduced from 45, with some sectors like savings certificates no longer requiring returns, though credit card applications will still need them.

Family donations: Tax exemptions for monetary gifts may now extend to include siblings, along with spouses, parents, and children.

Private sector employees may receive higher tax-exempt allowances. Currently, up to Tk 450,000 can be exempted due to various benefits; this may be increased to Tk 500,000.

Employers might be allowed to declare up to Tk 20 lakh in perks and financial benefits (perquisites) to employees without facing additional compliance burdens, doubling the current ceiling of Tk 10 lakh. Incomes from the National Pension Authority and its universal pension schemes are expected to be tax-exempt.

The government may maintain the current policy allowing black money to be legalized through real estate investments, albeit at higher tax rates based on location. Buyers could be required to declare the source of funds.

There may also be an announcement regarding taxing and penalizing laundered money and assets, particularly those involving individuals who renounced their Bangladeshi citizenship but continue to earn income from the country.

Excise duty thresholds are expected to be revised. The current exemption for bank accounts holding less than Tk 100,000 may be increased to Tk 300,000. New layers for duty imposition are under consideration.

Consumers may see higher prices on items like refrigerators, air conditioners, and mobile phones due to increases in VAT. Conversely, prices may drop for buses, microbuses, sugar, imported butter, soft drinks, specialty paper, and cricket bats due to adjustments in import duties.

However, products such as steel rods, face washes, lipsticks, and chocolates may become more expensive as a result of duty hikes.