The government is expected to increase the tax-free income limit for individual taxpayers to Tk4 lakh from the proposed Tk3.75 lakh through amendments to the Finance Bill, 2026, ahead of the passage of the FY2026-27 national budget.
The revised Finance Bill is scheduled to be passed in Parliament on Monday, incorporating a number of amendments to the tax and customs regime aimed at encouraging private investment, improving the business climate and easing the burden of inflation on taxpayers, according to finance ministry and National Board of Revenue (NBR) sources.
Among the key changes, the NBR is expected to reduce corporate tax rates by 2.5 per cent points for certain companies over the next five fiscal years to stimulate private-sector investment. The tax rate for listed companies with less than 10 per cent public shareholding is likely to be cut from 25 per cent to 22.5 per cent, while other corporate tax rates will remain unchanged.
The government also plans to reduce the income tax rate for private universities, medical colleges, engineering institutions and IT-based higher education institutions from 10 to 5 per cent.
The measure is intended to encourage investment in research and infrastructure and provide relief to the country’s 103 operational private universities and a number of private medical and dental colleges.
In another significant move, the government is expected to lower the proposed capital gains tax on gold sales from 15 to 5 per cent following demands from traders.
The NBR is also likely to withdraw its proposal to impose a fixed monthly VAT on small businesses and retailers. The original budget proposed a flat VAT ranging from Tk1,000 to Tk10,000 for 16 retail and service sectors, including grocery shops, restaurants and sweetmeat businesses, even if their annual turnover remained below Tk50 lakh.
The government has also decided to retain the existing 20 per cent flat tax on dividend income instead of imposing regular corporate tax rates, a move aimed at protecting the capital market.
Meanwhile, the proposed provision allowing undisclosed wealth to be legalised through investment in the real estate sector without questioning the source of funds is also expected to be dropped from the final Finance Bill.
