Parliament is set to pass today the Finance Bill 2026 with significant amendments, including the withdrawal of a controversial provision that would have allowed legalizing undisclosed income by paying 20-percent penal tax.
Another contentious proposal requiring taxpayers to obtain Taxpayer Identification Number (TIN) before opening bank account is also likely to be dropped following widespread criticism from businesses and stakeholders, officials say.
According to them, the income-tax provisions are expected to undergo the highest number of revisions among the three wings of the revenue board -- income tax, VAT and customs.
Among the most debated proposals was the provision allowing taxpayers to whiten what is commonly known as 'black money' without needing to disclose its source.
Although the proposal imposed a higher tax rate along with a 20-percent penalty, civil-society organisations and tax experts argued that it would effectively legitimise ill-gotten wealth.
A senior tax official says the provision was primarily intended to address transactions involving land and housing property, where many honest taxpayers are unable to explain differences between government-assessed mouza value and prevailing market prices.
"However, policymakers preferred to drop the controversial provision, as a similar facility was also withdrawn last year," says the official.
Officials concerned, however, note with concern that efforts to broaden the country's tax base continue to face strong resistance. They regret that initiatives aimed at bringing more businesses under the VAT system have repeatedly drawn opposition.
The Finance Bill has proposed bringing 16 categories of small businesses under the package VAT system, not to increase revenue but to expand the VAT net by registering currently unregistered businesses. However, officials say this proposal is also likely to be withdrawn from the Finance Act for the next fiscal year.
Meanwhile, a longstanding demand from private universities for a lower corporate tax rate is expected to be addressed. Parliament is likely to reduce the corporate tax on private universities to 5.0 per cent.
The proposed capital-gains tax on gold jewellery is also expected to be reduced to 5.0 per cent from the proposed 15 per cent.
Businesses are also set to receive compliance relief. From the upcoming fiscal year, VAT-registered businesses will be allowed to deposit the value-added tax and submit VAT returns on a quarterly basis instead of every month.
In another relief measure, VAT on online advertising services is expected to be reduced to 5.0 per cent from the existing 15 per cent.
The Finance Bill also outlines a gradual increase in the tax-free income threshold over the coming years. The current threshold of Tk 0.35 million is proposed to be raised to Tk 0.40 million for FY2026-27 and FY 2028-29.
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