Tax-free income limit unchanged

Staff Correspondent

14th June, 2019 01:44:40 printer

Finance Minister AHM Mustafa Kamal has proposed keeping tax-free income limit for individuals and corporate tax rates unchanged in his maiden budget.

In parliament on Thursday, the finance minister noted that general tax exemption threshold for income tax has been Tk 250,000 for the last few years. The ceiling has been Tk 300,000 for female taxpayers.

Regarding the tax-free income limit, former Bangladesh Bank governor Atiur Rahman said, “I would have been happier if the threshold for minimum taxable income was raised to taka three lakh as this would have meant a loss of only about taka 70-80 crore but applauded as pro-disadvantaged.”

In developed countries, tax exemption threshold for income is generally less than 25 percent of per capita income while some countries even do not have any threshold limit, the finance minister said.

It is mostly equal to or below per capita income in developing countries while the tax exemption threshold is almost 1.5 times the per capita income in Bangladesh.

Kamal fears that any increase in the tax exemption threshold will push a “significant” number of taxpayers out of the tax net, “which will eventually erode the tax base”.

Moreover, the taxpayers “got habituated” with the unchanged rate of tax, according to Kamal.