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Finance minister to present 53th budget on Wednesday

Inflation hits around 10% but tax free income remain unchanged Tk3,50,000
Hasan Arif
05 Jun 2024 21:21:59 | Update: 05 Jun 2024 21:21:59
Finance minister to present 53th budget on Wednesday
— TBP Photo

There will be no proposal to hike personal income tax in the budget for FY25, but the current inflation rate – which is nearing 10 per cent – will effectively serve as a tax increase for taxpayers.

Inflation has already pushed up the cost of living, putting economic pressure on a large segment of the country’s population.

Finance Minister Abul Hassan Mahmood Ali will announce the proposed budget at the National Parliament on Thursday. Finance ministry sources say the tax-free income limit for individual taxpayers will remain unchanged, just like the current fiscal year.

Mahmood would essentially say, “We want to keep the current financial system stable without putting additional pressure on the taxpayers.”

During his budget speech, Mahmood will mention that the tax-free income limit for regular individual taxpayers in FY24 was Tk 3,50,000 and it will remain unchanged.

For women and taxpayers over the age of 65, the tax-free income limit is Tk 4,00,000, and for physically disabled individuals, it is set at Tk 4,75,000. Additionally, for gazetted war-wounded freedom fighters, the tax-free income limit remains Tk 5,00,000, and for third-gender taxpayers, it remains Tk 4,75,000.

Analysts say the high inflation will increase the total cost of taxpayers as prices of goods and services have gone up due to inflation. This in turn, will increase their taxable income and indirectly increase the tax burden.

Similarly the increase in prices will affect the ability of taxpayers to pay taxes.

Economists say although the tax rate remains unchanged, inflation is eroding the real income of consumers, compelling them to pay taxes more than before. It is a subtle impact that may not directly push tax rates up, but will be felt as a decline in purchasing power for consumers.

Analysts hope that in such an economic situation, the government might consider special incentive or assistance packages for taxpayers. It would not just aid taxpayers, but also have a significant impact on the overall economy.

Furthermore, the government aims to curb inflation through revenue augmentation and economic expansion.

The finance minister has emphasised on providing policy and tax support to build a Smart Bangladesh. He has pledged to keep the proposed framework of taxation unchanged for the fiscal years 2024-25 and 2025-26, which will assist taxpayers in planning their taxes.

By taking these steps, the government anticipates that investment and business expansions will occur, leading to an increase in revenue collection rates.

These are the issues which may get emphasis in the finance minister’s speech for the proposed budget for FY25.

 

Pensioners' welfare

The government has taken effective measures to ensure the hassle-free receipt of pensions for pensioners.

Currently, all retired government officials/employees receive their pensions through the Electronic Fund Transfer (EFT) system at the beginning of each month. Additionally, a pilot mobile app-based verification method has been initiated to verify the livelihood status.

 

G2P methodology

Implementation of the Government-to-People (G2P) method has been announced to streamline and digitise the provision of financial assistance to beneficiaries under the social safety net programs.

In this method, the entitled funds of beneficiaries are directly transferred to their bank or mobile accounts.

These initiatives and steps not only ensure transparency and accountability in the government's financial management, but also help reduce the grievances of government officials, employees and the public.

 

Govt employee leave management

An initiative has been taken to digitise the management of government employees' leave. Currently, pilots are being conducted in three offices.

Leave calculations are being facilitated through paperless LPC (Leave Preparatory Certificate) and eLPC (electronic Leave Preparatory Certificate) issuance methods.

 

TA/DA, and pay-fixation of armed forces personnel

Work is underway to automate the fixation of TA/DA for government and armed forces personnel through the iBAS++ system. This facilitates easy online tour diary entry, bill preparation, and submission processes.

 

Budget distribution, field-level dev work

Previously, after budget preparation at the ministry, division, or department level, it used to take 3-4 months to distribute the budget at field level, which hindered development work.

However, through the utilisation of iBAS++, nearly 90 per cent of the budget is being disbursed by July. With the Finance Division initiative, 3,731 offices are processing their budgets autonomously.

There are plans to digitise budgeting in all government offices in the future.

 

e-GP and iBAS++ integration

To consolidate government procurement activities and bill payment processes into a unified system, integration has been established between e-GP and iBAS++. Currently, this programme is being piloted in the Public Works Department, Roads and Highways Department, and the Department of Public Health Engineering.

 

Treasury Single Account (TSA)

The government's revenue-expenditure and debt management are conducted through the safeguarded Treasury Single Account (TSA) at the Bangladesh Bank. Various initiatives have been taken to streamline cash management and reduce interest expenses.

 

EFDMS module

The Electronic Fiscal Device Management System (EFDMS) development programme has been undertaken by the National Board of Revenue (NBR) for the collection of Value Added Tax (VAT) at the point of sale. Through this system, businesses will be able to submit returns online.

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