FY26 budget: Black money whitening in real estate to stay – but with 5x taxes
Relevant agency can question source of undeclared wealth

Highlights:
- Black money holders may face questions, penalty
- Fivefold tax rates to be for affluent areas
- Other areas to see threefold tax rates
- Goal is to discourage use of black money in real estate
The government is considering a significant increase in taxes on undeclared wealth, known as black money, invested in the housing sector, with rates potentially rising by up to five times the current levels.
The change in tax rates will be made in the upcoming national budget, scheduled to be proposed by the finance adviser on 2 June, to discourage the use of black money in real estate and bring tax rates closer to market values, according to officials at the National Board of Revenue (NBR).
Any individual investing undeclared funds in the sector will face scrutiny regarding the source of their wealth by any relevant agency, a departure from previous, more lenient provisions.
Furthermore, if undeclared assets are detected by any tax department, the penalty for such discoveries may exceed the standard rate applicable to regular tax.
In areas like the capital, where the actual transaction value of land and properties significantly exceeds the deed value, the tax on undeclared wealth could increase up to fivefold. In areas with a smaller disparity between deed and market values, a threefold increase is being considered.
A senior NBR official, who preferred to remain anonymous, told TBS that several opportunities for investing undeclared wealth had been revoked by the current government since it took office. "Even if such opportunities may remain, they will come with such restrictions that owners of undeclared money will lose interest."
Additionally, he said, the upcoming budget may introduce a provision to calculate taxes based on "per square foot" instead of "per square meter."
Opposition from real estate developers
Real estate developers, however, opposed the government's proposed initiative, warning that it could cripple the already struggling sector.
MA Awal, vice president of the Real Estate and Housing Association of Bangladesh (REHAB), told TBS, "If taxes are increased across the board and conditions are made stringent, the housing sector will completely collapse. No one will want to buy apartments with such high taxes."
He further cautioned, "If there is no opportunity to invest undeclared funds in the housing sector and the stock market, this money will be laundered abroad, as happened in the past."
Tax rates
Currently, in affluent areas of Dhaka, including Gulshan, Banani, Baridhara and Motijheel commercial areas, for apartments over 200 square meters, a fixed tax of Tk6,000 per square meter is levied regardless of the property's value. For apartments under 200 square meters, the tax is Tk4,000 per square meter when investing undeclared funds.
In other areas such as Mirpur, Mohammadpur, Dhanmondi, Mohakhali, Lalmatia Housing Society, Uttara Model Town, Bashundhara Residential Area, Siddheswari, Karwan Bazar, Banasree, Bijoynagar, Wari, Segunbagicha, Nikunja, and Chattogram's Panchlaish, Khulshi Agrabad and Nasirabad areas, the current tax on undeclared funds is Tk3,000 per square meter for apartments under 200 square meters and Tk3,500 for those over 200 square meters.
The officials said that the existing taxes in these specified areas could increase fivefold.
For other areas beyond those specified, the current tax per square meter ranges from Tk500 to Tk1,500, where a threefold increase is anticipated.
To illustrate, consider someone investing black money to purchase a 200-square-meter apartment in Dhaka's Gulshan area. Under the current system, the tax would be Tk8 lakh. If the proposed fivefold increase is implemented, the tax liability would jump to Tk40 lakh.
Explaining the rationale, the NBR official said, "We have calculated that under the current system, the effective tax rate for investing undeclared money in areas like Gulshan, based on deed value, is only 8%. If the market value is considered, the actual tax rate for the individual in question is even lower, whereas a regular taxpayer pays up to 30%."
Effective tax rate remains low
After the budget last year, the Centre for Policy Dialogue (CPD) estimated that the average effective tax rate for investing black money in the housing sector, based on area-specific taxes, was merely 2.38%.
Towfiqul Islam Khan, a senior research fellow at CPD, told TBS, "Even if the tax increases fivefold compared to the current rate, the effective tax rate, considering market value, will still be close to 10%, which is very low. Consequently, those who whiten money by investing in the housing sector will still enjoy more benefits than regular taxpayers."
He added, "While increasing the tax is a good move, this facility (to whiten money) should not exist at all."
During the fiscal year 2022-23, the government offered a widespread opportunity to legalise black money across various sectors, including apartments, with indemnity. As a result, over Tk20,000 crore in black money was whitened that year, with sector insiders suggesting that the majority was invested in the housing sector.
However, the exact amount invested or brought into the housing sector in the latest fiscal year 2023-24 is not available from either the NBR or the REHAB.