The government employees will have to pay no income tax on earnings except their basic salary and bonus, according to a Statutory Regulatory Order (SRO) issued by the National Board of Revenue (NBR) on Wednesday.
However, government employees had been enjoying these benefits already but the formation of new Income Tax Act-2023 triggered confusion over the matter that has been cleared by the NBR notification. The notification will come into effect retroactively from July 1.
The newly formed Income Tax Bill 2023 was passed in parliament on 18 June, which replaces the Income Tax Ordinance 1984.
Earlier, the government approved a special incentive with 5 per cent of the basic salary for its employees and pensioners. Under this incentive, employees will receive a minimum of Tk 1,000, while pensioners Tk 500 on July 1 every year. The Finance Ministry issued another notification in this regard, which will also come into effect on the same date (July 1).
Meanwhile, according to the new law, for individual taxpayers excluding the government employees, two-thirds of the gross salary or Tk 4.5 lakh, whichever is lower, will be considered an allowable deduction from their salary.
They earlier enjoyed a tax-free house rent allowance of up to 50 per cent of their basic salary or Tk 25,000 per month, whichever is lower. Income from medical allowance of up to Tk 1.2 lakh per annum or 10 per cent of their basic salary, whichever is lower, was exempted from tax, as per the Income-tax Ordinance 1984. Besides, they did not pay income tax on conveyance allowance of up to Tk 30,000 per annum.
