Budget FY27: Tax relief on essential goods, agricultural products

Bangladesh’s government will propose tax relief measures in the FY27 budget to alleviate inflation and reduce the cost of living. The plan includes lowering withholding tax on 60 essential commodities—such as rice, wheat, potatoes, livestock, poultry, fish, onions, garlic, ginger, salt, sugar, edible oil, and seeds—from rates of 5%, 2%, and 1% down to 0.5%. The government aims to ease financial burdens on households amid rising prices, aligning with its electoral commitments. Additional tax exemptions and reductions are proposed across sectors. The 5% advance tax on imported kidney dialysis filters will be fully exempted, while the tax rate for 15 products used by persons with disabilities will drop from 2% to 1%. To formalize the gold and jewelry trade, the tax rate on gold and jewelry supply will decrease from 5% to 0.5%, boosting government revenue collection. The budget also promotes environmentally friendly transport by exempting withholding tax on imports of electric buses, electric trucks, and charging stations. In the ICT sector, tax rates on computer printers, portable data processing machines, flash memory, and monitors will fall from 5% to 2%. For local mobile phone manufacturers, the tax on 22 raw materials will be cut from 5% and 2% to 1%. Industrial and financial sectors will see tax relief as well. The withholding tax on electricity purchases will drop from 4% to 3%, while fuel oil supply tax will decrease from 1.5% to 1%. The tax on recycled products and raw materials will be reduced from 3% to 1%. Additionally, the 20% withholding tax on revenue sharing and license fees for the Bangladesh Telecommunication Regulatory Commission (BTRC) will be withdrawn, and the tax rate in the mobile network service sector will fall from 12% to 10%. To support businesses and foreign investment, the general advance tax rate on imported raw materials will decrease from 5% to 4%. The tax on payments to non-resident taxpayers for machinery rental will drop from 15% to 7.5%, and reinsurance premium payments to non-resident taxpayers will see a reduction from 10% to 5%. The government will also cut the withholding tax on foreign loan interest payments from 20% to 10% to reduce capital costs for industrial investment. The budget proposal will treat withholding tax as advance tax rather than minimum tax, eliminating liquidity pressures for businesses. Previously, taxpayers with low taxable income were required to treat withheld tax as a minimum obligation, which the government will now repeal.