FY26 budget proposes share trade tax cut, wider tax gap, but higher source tax on bond interest

Finance Adviser Salehuddin Ahmed today (2 June) proposed several tax and regulatory measures in the FY2025-26 budget aimed at reviving Bangladesh's capital market, which has suffered from low investor confidence and past irregularities.

Key proposals include widening the corporate tax gap between listed and non-listed companies to 7.5% (from the current 5%), reducing advance income tax (AIT) on securities trading from 0.05% to 0.03%, and lowering the corporate tax rate for merchant banks by 10 percentage points to 27.5%. However, the AIT or withholding tax rate on interest income from debt instruments increased to 10% from 5%.

However, market insiders and experts criticised the new budget for overlooking affected investors, noting the absence of incentives to help general investors recover their losses.

In his televised budget speech, Salehuddin said that to restore momentum in the capital market—damaged by past irregularities and manipulation—the interim government is undertaking reforms to reduce state ownership in multinational companies, encourage large local firms to list, and enforce legal actions against market wrongdoers.