Govt directs NBR to outline collection plan before fiscal year ends as revenue growth slows

The government has asked the National Board of Revenue (NBR) to outline plans for increasing revenue collection during the remaining months of the current fiscal year.

According to the government's plan, in order to raise the tax-to-GDP ratio to 8% in the current FY2025-26, revenue collection must increase by around Tk1.25 lakh crore compared to the previous fiscal year.

This means revenue collection needs to grow by about 34% from last fiscal year, although growth in revenue collection during the seven months from July to January has been less than 13%.

Prime Minister's Adviser on Finance and Planning Dr Rashed Al Mahmud Titumir has instructed the NBR to explain what measures it will take to boost revenue collection during the remaining four months of the fiscal year, from March to June, and from which sectors revenue will be increased.

He gave the instruction during a meeting with senior officials at the NBR headquarters in Agargaon, Dhaka, today (11 March), several officials present at the meeting told The Business Standard.

However, speaking on condition of anonymity, a VAT division official who attended the meeting told TBS, "According to the government's target, the opportunity to increase revenue collection significantly in the remaining months of the fiscal year is limited. Some increase in revenue may come through special drives to recover arrears."

Explaining the reasons, the official said, "Due to both domestic and global factors, there is currently little dynamism in the country's economy. Development project implementation is slow. Import and export activities are also sluggish. So how will such a huge amount of revenue come?"

The official also said there is little scope to increase taxes midway through the fiscal year. As a result, regardless of the outcome in the current fiscal year, some measures may be taken in the next budget to ensure better progress in revenue collection in FY2026-27.

In FY2024-25, the tax-to-GDP ratio dropped to 6.6%, which is far below the target set by the International Monetary Fund (IMF) for Bangladesh. Ahead of the national election, the BNP government also pledged to increase the tax-to-GDP ratio or domestic revenue collection.

In line with that commitment, pressure has been mounting on the NBR since the government assumed responsibility to increase revenue collection.

Sources at the NBR said the authority currently has nearly Tk1 lakh crore in outstanding revenue, a large portion of which is undisputed while the rest is tied up in legal cases. NBR officials believe that if a major drive is launched to recover these arrears in the remaining months of the fiscal year, a significant amount of revenue could be collected. Beyond that, opportunities to increase revenue to meet the target remain limited.

Analysis of NBR revenue collection statistics also shows that the pace of revenue growth has slowed over the past three months. The growth rate seen at the beginning of the fiscal year has gradually declined. In such a situation, officials believe maintaining normal revenue growth in the coming months will be a major challenge for the NBR.