Govt widens tax-free income threshold to Tk 3.5 lakh

Finance Minister AHM Mustafa Kamal today proposed increasing the tax-free income threshold to Tk 3.5 lakh from the existing Tk 3 lakh for individual taxpayers for 2023-24 fiscal year.

In fiscal 2020-21, the government increased the tax-free income Tk 3 lakh.

During his budget speech the finance minister said "The loss of real income due to inflation on the other, and considering the matter of comfort of the genuine and valued taxpayers with regard to payment of taxes, I propose to increase the tax-free income threshold applicable for the individual taxpayers, other than companies and local authorities. This reduction of tax burden will hopefully give them some relief and encourage them to pay taxes regularly".

Besides, the tax-free threshold of female taxpayers and taxpayers above 65 years of age has also been increased to Tk 4 lakh from Tk 3.5 lakh.

Proposals have been placed for the physically challenged persons and third gender taxpayers to extend their tax-free income limit to Tk 4.75 lakh, which were Tk 4.5 lakh and Tk 3.5 lakh respectively.

The tax-free income limit for war-wounded gazette freedom fighter will be Tk 5 lakh, up from Tk 4.75 lakh.

The proposed tax rates and tax slabs for all categories of individual taxpayers except companies and local authorities are: no tax on first Tk 3.5 lakh, 5% tax on next Tk 1 lakh; 10% on next Tk 3 lakh; 15% on next Tk 4 lakh; 20% on next Tk 5 lakh and 25% income tax on the balance of total income.

AHM Mustafa Kamal said the existing minimum tax for a taxpayer, except company taxpayer, residing in Dhaka North City Corporation, Dhaka Southcity corporation and Chittagong City Corporation is Tk. 5,000, any other citycorporation is Tk. 4,000 and other area is Tk. 3,000.

"I propose to maintainthis structure of minimum tax unchanged for the next year as well", he added.