The proposed budget for the 2026–27 fiscal year indicates significant shifts in the country’s revenue policy and taxation framework, with the government signalling a strong emphasis on easing the cost of living while simultaneously encouraging industrial expansion. The upcoming budget, to be presented on Thursday, will mark the first fiscal statement of the newly formed government led by the Nationalist Party.
Despite persistent challenges in revenue collection and external pressure linked to International Monetary Fund conditions, policymakers are opting against broad-based tax withdrawal. Instead, the strategy appears to focus on targeted tax relief and expanded exemptions aimed at stimulating key sectors such as domestic manufacturing, export earnings, renewable energy, and technology-driven services.
A notable feature of the proposals is relief for consumers through reduced indirect taxation on essential commodities. Around 60 everyday items—including rice, wheat, potatoes, spices, and other staples—are expected to see withholding tax reduced to 0.5 per cent. In addition, regulatory duties on these goods may be withdrawn entirely to help stabilise market prices.
On the personal income tax front, the tax-free threshold is likely to be raised from Tk 350,000 to Tk 400,000. The existing 5 per cent tax slab is also under consideration for removal, a move that would provide modest relief to lower- and middle-income earners.
Industrial policy remains largely stable, with corporate tax rates expected to remain unchanged in order to avoid increasing production costs. At the same time, emerging income streams such as freelancing and digital content creation are set to be fully exempt from taxation, reflecting a policy shift towards supporting the digital economy.
Renewable energy receives substantial attention in the proposed framework. Solar power generation is expected to enjoy tax exemption until 2035, while imported equipment for renewable energy projects may benefit from duty relief until 2031. Electric vehicles are also prioritised, with reductions in advance tax for registration, incentives for local manufacturing, and exemptions for charging infrastructure and electric buses or trucks.
The health sector is another beneficiary, with proposals to remove VAT and duties on critical imports such as dialysis filters, heart stents, and intraocular lenses. Additionally, several raw materials for pharmaceuticals may be exempted from import duties, particularly those linked to cancer treatment.
Small and women-led enterprises are expected to gain expanded tax relief, while mobile phone manufacturing will benefit from reduced duties on key components and the possible removal of taxes on SIM cards.
Summary of Proposed Tax Changes
| Sector | Proposed Change |
|---|---|
| Essential goods | 0.5% withholding tax on ~60 items; possible duty removal |
| Income tax threshold | Increased to Tk 400,000 |
| Freelance & digital income | Fully tax-exempt |
| Electric vehicles | Reduced registration tax; manufacturing incentives |
| Solar energy | Tax exemption until 2035 |
| Pharmaceutical inputs | Reduced or removed import duties |
| Small entrepreneurs | Tax-free turnover up to Tk 5 million |
| Women entrepreneurs | Tax-free turnover up to Tk 7 million |
Officials from the Ministry of Finance and the National Board of Revenue indicate that the overarching objective is to create a more investment-friendly environment, strengthen domestic industry, and ease pressure on household budgets. However, they acknowledge that balancing these incentives with existing revenue shortfalls will remain a major fiscal challenge in the year ahead.