Govt plans to enforce bank-based payments for house rents above Tk25,000
The initiative aims to ensure proper tax collection from landlords
Highlights
- Landlords will be required to collect rent through bank accounts to improve tax tracking under NBR.
- The move aims to curb hidden rental income and expand the tax base across sectors.
- Rising rents in Dhaka are putting heavy financial pressure on tenants.
- Meeting ambitious revenue targets remains challenging due to tax evasion and collection shortfalls.
The government plans to enforce bank-based payments for house rents exceeding Tk25,000 from fiscal 2026-27, aiming to improve tax compliance and transparency in the housing sector.
According to officials at the Ministry of Finance, landlords will be required to receive payments through bank accounts. To enforce the measure, the government plans to form a central monitoring unit alongside regional teams under the National Board of Revenue (NBR).
A senior finance ministry official, speaking on condition of anonymity, said the initiative is primarily designed to ensure proper tax collection from landlords.
Keep updated, follow The Business Standard's Google news channel
"Many landlords do not disclose their full rental income, and in some cases, a portion of the rent is taken through banks while the rest is collected in cash, making it difficult to track actual earnings," he explained.
The upcoming national budget is expected to include provisions to verify real income from rental properties, particularly in major urban areas.
Beyond the housing sector, the government is also looking to widen the tax net by identifying individuals who are eligible to pay income tax but currently remain outside the system.
The NBR has already conducted surveys across various administrative levels, from upazilas to metropolitan areas, to identify potential taxpayers across professions.
Officials say efforts will also intensify to curb value-added tax and corporate tax evasion, while expanding digital systems to improve compliance.
"There are individuals and institutions that continue to evade taxes. The plan is to bring them under accountability and eliminate unjustified tax exemptions," the finance ministry official added.
This is not the first time such a measure has been taken. A similar initiative was introduced in the FY2014-15 budget, but it failed to gain traction due to resistance and lack of interest from landlords.
Although the rule technically remained in place, it was never effectively implemented. The current government is now seeking to revive and enforce it more strictly.
Meanwhile, housing costs have surged dramatically over the past two decades. A report by the Consumers Association of Bangladesh (CAB) revealed that rents in Dhaka have increased by nearly 400% over the last 25 years. Compared to essential commodities, rent has risen at almost twice the rate.
According to CAB data, nearly 27% of renters in Dhaka spend nearly 30% of their income on housing, while 57% spend about half their earnings. Another 12% allocate as much as 75% of their income to rent, underscoring the financial strain.
Industry insiders note that most landlords increase rent annually, typically by Tk500 to Tk3,000, regardless of broader economic conditions. This consistent upward trend has intensified affordability concerns, particularly for middle- and lower-income families.
The government's broader revenue strategy reflects ambitious targets. For FY2026-27, total revenue collection has been set at Tk695,000 crore. Of this, Tk604,000 crore is expected to come through the NBR, Tk25,000 crore from non-NBR taxes, and Tk66,000 crore from non-tax revenue sources.
The target was finalised during the second meeting of the Coordination Council on Financial, Monetary and Exchange Rate Affairs for FY2025-26, on 10 April.
In the current FY2025-26, the original revenue target through the NBR was Tk499,000 crore, later revised upward to Tk503,000 crore. However, data from the NBR shows that between July and February – the first eight months of the fiscal year – revenue collection stood at Tk250,624 crore, or just under 50% of the full-year target.
An NBR official acknowledged that meeting the target this year will be challenging, citing both global economic conditions and domestic business trends. The shortfall could range between Tk80,000 crore and Tk100,000 crore.
This raises questions about the feasibility of next year's significantly higher target, which would require nearly 50% growth in revenue collection – a level many analysts consider unrealistic.
Despite these concerns, NBR chairman and other senior officials expressed optimism during the 10 April meeting, assuring policymakers that the targets could be achieved.
To support revenue growth, the government plans to focus on digital transformation, expanding the tax base, improving administrative efficiency, and increasing non-tax revenues.
Officials warned that without a proportional rise in revenue, growing government expenditure – both operational and developmental – would lead to higher reliance on borrowing.
Research by the Centre for Policy Dialogue highlights the scale of the challenge. Although Bangladesh has around 250,000 registered companies, only about 30,000 submit tax returns.
Due to tax evasion and exemptions, the government loses an estimated Tk 56,000 crore to Tk 292,000 crore annually. Some tax evaders are also accused of laundering money abroad, further exacerbating the revenue gap, according to the research.
