Individuals earning less to get some relief, well-off to be taxed more

TBS Illustration

The government may give some relief to people with comparatively low incomes from the mounting inflation by imposing more tax on the wealthier people in the next fiscal's budget.

The existing 25% tax applicable for people with over Tk16.5 lakh annual income may be increased to 30% in the FY25 budget to be announced on Thursday, sources at the National Board of Revenue (NBR) said.   

The tax-free income limit for individuals may be kept unchanged at Tk3.5 lakh. Similarly, the 5% tax rate on the next Tk1 lakh of income is likely to remain intact.

But the individuals falling in the next two slabs may get relief as their limits are being expanded. 

Currently, individuals with Tk7.5 lakh annual income have to pay 10% income tax. The tax rate will remain the same, but the limit may be increased by Tk1 lakh to Tk8.5 lakh. 

At the same time, the 15% tax on the next Tk4 lakh income will be kept intact, but the limit will increase to Tk5 lakh. 

It means that an individual, who currently pays 15% tax on his TK11.5 lakh income, will enjoy the same facility even after earning Tk13.5 lakh in a year.

On the other hand, individuals with Tk18.5 lakh income will enjoy a 20% tax facility in the next fiscal year, which is now applicable for individuals earning Tk16.5 lakh in a year.

At present, the highest income tax rate of 25% is imposed on income over Tk16.5 lakh. Individuals in this high income segment may have to pay 30% tax in the next fiscal.