FY26 Budget: Surcharge to be levied on actual tax to promote transparency
The move aims to encourage taxpayers to disclose their actual wealth with more transparency in their tax returns

Highlights:
- Government plans surcharge based on actual tax, not assessed amount
- Current system penalizes taxpayers with inflated tax and surcharge
- New policy aims to promote wealth transparency and tax fairness
- Importers overpay due to surcharge on advance income tax
- Experts urge broader tax deduction and refund system reform
- Surcharge rates range from 10% to 35% by wealth
In a bid to promote tax fairness, the government is set to revise the surcharge provisions, with plans to impose it on actual tax liabilities rather than inflated assessments.
The move aims to encourage taxpayers to disclose their actual wealth with more transparency in their tax returns.
Currently, individuals with assets exceeding Tk4 crore are subject to a surcharge – essentially a tax on tax, ranging from 10% to 35%, depending on different tiers set as per their net wealth. The measure is primarily aimed at high-income taxpayers.
Individual importers are now subject to Advance Income Tax (AIT) at the import stage. If, by the end of the year, the amount deducted as AIT exceeds the taxpayer's actual payable tax, the surcharge is still imposed on the AIT or higher tax amount.
As a result, taxpayers end up paying more than their actual tax liability, and on top of that, they have to pay a surcharge on the excess amount.
For instance, suppose an importer has Tk100 deducted as AIT at the import stage, and at the end of the year, their actual tax liability turns out to be only Tk50. If the individual owns assets worth over Tk4 crore (in any form), they are required to pay a surcharge – up to 35% – on their tax. Under the current system, the surcharge is calculated on the deducted amount, meaning it would be 35% of Tk100, or Tk35.
Under the proposed system, the surcharge would only apply to the actual Tk50 liability, totaling Tk17.5 – effectively halving the burden.
The issue has long been a point of complaint among traders and importers as it effectively increases their tax burden.
Many have said this discourages them from declaring their actual assets.
Speaking to The Business Standard on condition of anonymity, a senior official at the National Board of Revenue (NBR) said, "At present, even if the total deducted tax, including advance tax, exceeds the actual payable tax, surcharge is still levied on the deducted tax.
"Considering tax fairness and in response to demands from taxpayers, the surcharge may soon be imposed only on the actual tax."
He added that the policy shift is expected to reduce the tendency to conceal wealth and instead encourage accurate declarations of income and assets.
The change may be formally announced by the finance adviser on 2 June when the fiscal ordinance is issued.
Taxpayers and experts have welcomed the planned change though many also called for a broader overhaul of the tax deduction and refund system.
Snehasish Barua, a tax expert and managing partner of Snehasish Mahmud and Company, told TBS, "Bangladesh's tax system often treats tax deducted or collected at source as a minimum tax, leading to effective tax rates exceeding statutory ones. Applying a surcharge on this already inflated tax burden adds further inequity.
"While amending surcharge provisions is a step, true relief requires a broader rationalisation of the rates of the tax deduction and collection at source to prevent excessive upfront payments."
Mohammed Shahidul Islam, chairman of HNS Group and former vice president of BARVIDA, said: "The current system of collecting surcharge on inflated tax is irrational. Importers pay more than their actual tax upfront, yet no refund is made, and the surcharge is also levied on that excess. I doubt any other country has such a flawed structure."
"As a result, people are discouraged from disclosing their actual wealth," he said, adding that applying surcharge only on actual tax would incentivise transparency.
Currently, individuals with assets up to Tk4 crore are not subject to any surcharge. However, if a person has a net wealth between Tk10 crore and below Tk20 crore, owns two vehicles, or holds residential property measuring 8,000 square feet or more in their own name, they are required to pay a 10% surcharge on their payable tax.
The surcharge rate increases with higher asset brackets – 20% for those with assets between Tk10 crore and Tk20 crore, 30% for assets between Tk20 crore and Tk50 crore, and 35% for those with net wealth exceeding Tk50 crore.
For example, if someone pays Tk1 crore in taxes – including advance and other taxes – and has assets worth Tk50 crore, they would need to pay an additional Tk35 lakh as surcharge.
There is no official data available on how many people in the country currently fall under the surcharge system.
However, according to the Global Wealth Databook 2021, the number of Bangladeshis with wealth ranging from $1 million to $5 million (roughly Tk10 crore to Tk50 crore) rose to 28,931 – although not all of these individuals are necessarily liable to pay surcharge on additional taxes.