Reduced tax burden for the rich on cards

Finance Minister AHM Mustafa Kamal is likely to propose a reduction of the tax burden on the country’s rich class in the upcoming national budget for FY2023-24, according to sources.

Currently, rich people have to pay a surcharge or wealth tax if they have more than Tk 3 crore worth of assets or multiple cars or houses of more than 8,000 square feet.

The government now plans to increase the surcharge-free ceiling to Tk 4 crore. But the rich will still pay the tax at the previous rate, which means they will pay less income tax, said Finance Ministry officials involved in the budget formulation.

Meanwhile, the maximum income tax for individuals will remain at 25 per cent. The National Board of Revenue (NBR) increased the surcharge-free ceiling for the rich to Tk 3 crore from Tk 2.5 crore three years ago.

The surcharge provision was introduced in FY2011-12 as an alternative to property tax, which is yet to be introduced in Bangladesh. The aim was to collect more taxes from the affluent section of society, reduce inequality in the distribution of wealth and reduce economic disparity widening over the years.

In FY12, Tk 65 crore was collected from wealthy people, according to NBR data. The tax wing also collected Tk 600 crore in FY2020-21, which was slightly higher than Tk 592 crore collected in FY2019-20. Around 15,000 individuals paid a surcharge in FY21, up by 7 per cent year-on-year, showed NBR data.