On behalf of the FBCCI, I congratulate the Honorable Financial Advisor for announcing the proposed national budget for the fiscal year 2025-2026, expressing my determination to build an equitable and sustainable economic system. Following the mass uprising of the students and the public in July-August, the interim government has made great efforts to formulate a rational and implementable budget by prioritizing inflation control and food security in the new context.
The government has announced a budget of Tk 7,90,000 crore for the next fiscal year, which is Tk 7,000 crore less than the previous fiscal year. The budget has set a GDP growth of 5.25 percent and an inflation target of 6.5 percent. On behalf of the FBCCI, I applaud the government for moving away from the high-end budget and formulating an implementable budget and taking efforts to set targets carefully.
The proposed budget has set a total revenue collection target of Tk 564,000 crore – which is 9.0% of GDP. The National Board of Revenue’s target is Tk 499,000 crore and Tk 65,000 crore will come from other sectors. It is important to ensure clear guidelines and plans for continuous improvement in efficiency, transparency, accountability and oversight standards in budget implementation. In addition, FBCCI calls for further strengthening of public and private sector partnerships for budget implementation.
We wish the government successful implementation of the goal set by it to improve the quality of life of the people of this country and break out of the vicious cycle of inequality by building a zero poverty, zero unemployment and zero carbon society. We thank the government for giving special emphasis on education, health, good governance, citizen benefits, social security, employment, sustainable development, etc. in this year’s budget. FBCCI calls for the government to continue its efforts to reduce unnecessary and unproductive expenditure.
At the same time, special attention has been paid to the implementation of short and long-term activities in the budget to increase competitiveness in the commercial sector under the Smooth Transition Strategy (STS) with the aim of graduating from the Least Developed Country list in 2026, which is very positive. We believe that gradually reducing the tariff rate is a logical step to graduate from the Least Developed Country.
The deficit in the proposed budget is Tk 2,26,000 crore, which is 3.6 percent of GDP. To meet the deficit, the government will have to take Tk 1,25,000 crore from domestic sources. Including Tk 1,000 crore for domestic interest payments and Tk 22,000 crore for foreign interest payments, the government will have to pay a total of Tk 1,22,000 crore in interest. Excessive government borrowing from the banking system hinders the flow of credit to the private sector. As a result, it may have an adverse impact on investment and employment. To meet the budget deficit, attention can be paid to financing from foreign sources at the lowest possible interest rates and with caution, instead of the local banking system.
The budget has increased the coverage of the social safety net. We believe that this initiative will play a positive role in social security and social economy. However, it must be ensured that this benefit reaches the actual beneficiaries properly.
We welcome the initiative to create 15,000 new entrepreneurs for the development of small and medium industries, provide skill and technical training to 25,000 entrepreneurs, and distribute Tk 1,000 crore loans to women entrepreneurs and 10,000 entrepreneurs in the CMSME sector at the marginal level.
Tk 125 crore has been allocated to further improve the business environment for women entrepreneurs. In addition, Tk 100 crore has been allocated in the next fiscal year to deeply involve the youth in the economic development of the country, which is a positive initiative. However, monitoring activities must be taken for its proper implementation.
Considering inflation, the tax-free income limit for the next fiscal year 2026-2027 and 2027-2028 has been increased from Tk 3,50,000 to Tk 3,75,000. Although the FBCCI had proposed to increase the limit to Tk 4.5 lakhs, we propose to reconsider the FBCCI’s proposal on increasing the tax-free limit. We believe that the new taxpayers will be encouraged to pay tax by setting the minimum tax amount at Tk 1,000/-.
We believe that the benefit of reducing the tax rate of merchant banks from 37.5% to 27.5% will come to the capital market. At the same time, the proposal to increase the tax rate gap between listed and non-listed companies from 5% to 7.5% and reduce the tax collection rate at source from brokerage houses from 0.05% to 0.03% will help restore investor confidence.
If more than 10 percent of the paid-up capital of publicly traded companies is transferred through IPO, their tax rate has been reduced from 22.5 percent to 20%, which is a positive initiative. However, the condition can be relaxed.
Several positive initiatives have been taken to eliminate the existing inconsistencies in the tax structure and expand the tax net. In this regard, the proposals of FBCCI have been taken into special consideration. Notable among these are –
Reduction of the rate of tax deduction at source from 7% to 5% for contract work.
Reduction of the rate of tax deduction at source from 1% to 0.5% for supply of paddy, rice, wheat, potato, jute, raw tea leaves, etc.
Reduction of the rate of capital gains tax collected at source from land transfer to 6%, 4% and 3% respectively, instead of the existing 8%, 6% and 4%, depending on the area.
Reduction of the rate of tax deduction at source from 3% to 1.5% for supply of raw materials for environment-friendly recycling industry.
Reduction of the rate of tax deduction at source from internet services to 5% instead of 10%.
The rate of tax deduction at source during payment of electricity purchase has been fixed at 4% instead of 6%.
Keeping income from agriculture up to 5 lakh taka tax-free, increasing the maximum deductible amount from 4.5 lakh taka to 5 lakh taka in calculating taxable income of private employees, and increasing the maximum limit of perquisites allowed to employees from 10 lakh taka to 20 lakh taka will encourage voluntary compliance by taxpayers.
The rate of advance tax has been reduced from 3% to 2% in the case of import of industrial raw materials by manufacturing companies, which is very positive. However, in the case of commercial importers, the advance tax has been increased from 5% to 7.5%.
The VAT rate on services provided by construction companies has been increased from 7.5% to 10%, the VAT rate on self-copy paper, duplex board/coated paper has been increased from 7.5% to 15%, the VAT rate on plastic products has been increased from 7.5% to 15%, the specific tax on cotton yarn has been increased from 3 taka per kg to 5 taka per kg, and the specific tax on yarn made from a combination of artificial fibers and other fibers has been increased from 3 taka per kg to 5 taka per kg. Similarly, the specific tax on MS products has been increased by about 20% – which may have a negative impact on these sectors.
The VAT rate on commission for online sales of products has been increased from 5% to 15%. This will harm small entrepreneurs. Since e-commerce is playing a role in digital inclusion, I request you to withdraw the proposal to increase the VAT rate in the interest of expanding the sector.
In the case of import of capital equipment, parts and raw materials/equipment of industrial establishments, the penalty for making false statements regarding HS code and product description has been reduced to at least the same amount but not more than double the previous amount. This will reduce the financial loss of importers and will help them avoid harassment – which will be helpful in trade facilitation.
In the case of income tax, the minimum tax rate on goods has been increased from 0.60% of gross receipts to 1%. This will further increase the effective tax rate. I request that this rate be maintained at 0.60% as before.
The existing VAT exemption facility has been increased for local production of API, mobile phones, elevators, LPG cylinders, washing machines and various electronic items, motor cars and motor vehicles, four-stroke three-wheelers, etc., which will be helpful for these industries.
In addition, the duties on several industrial products, including printing and publishing, pharmaceutical packaging, car tires, and raw materials and some petroleum products, have been reduced, which is a positive initiative.
In the context of the recent imposition of additional duties on exports to the United States, import duties on several products have been withdrawn and reduced as a preparation for trade dialogue with the United States. This will also reduce the tax burden on the public to some extent.
The current interim government assumed responsibility in the face of difficult challenges such as controlling high inflation, improving the collapsed law and order situation, restoring normalcy in the industrial sector, restoring discipline in the banking sector, and restoring the confidence of businessmen. In the midst of facing these challenges, the government has announced the national budget for the next fiscal year. We believe that the steps taken in the budget will play a role in bringing the economy back to normal.
The government has taken the initiative to review power purchase agreements and conduct energy audits to reduce electricity production costs. In addition, it has taken the initiative to increase the capacity of the domestic gas exploration company Bapex, which is a positive decision. Proper implementation of these decisions will play an important role in the development of the power and energy sectors.
Several important proposals of FBCCI have been taken into consideration in the national budget. For this, I sincerely thank the government.
The income tax, VAT and customs notifications related to the finance bill and budget are being reviewed. We have sought their views from the member organizations of FBCCI. After receiving the views of the organizations, the post-budget recommendations of FBCCI on the proposed budget will be presented to the government after discussion.
