NBR plans Tk 2 advance tax per Tk 1,000 in retail sales

New app to launch in January; small traders fear higher costs amid growing tax pressure The National Board of Revenue (NBR) is developing a special app to collect advance income tax from retail traders at the rate of Tk2 for every Tk1,000 worth of goods purchased, with the system expected to become operational in January.

The initiative aims to bring more businesses into the tax net and boost revenue collection amid a widening shortfall against the government's target.

Initially, distributors of large manufacturers will use the app to record sales to retailers, issue receipts and generate electronic invoices. The NBR's information technology wing is developing the system.

Under the Finance Act 2026, manufacturers, importers, suppliers, distributors and wholesalers must collect advance tax at 0.2 per cent of the invoice value when supplying goods to retail traders.

Distributors will collect the tax from retailers and deposit it into the government treasury at the end of each month. The app will automatically record transactions and calculate the tax due. The NBR is also considering mobile financial services for tax payments.

The advance tax will not be a final income tax payment. Retailers will be able to adjust the amount against their total tax liability when filing annual income tax returns. 

Helal Uddin, president of the Bangladesh Dokan Malik Samity, told The Daily Observer that bringing retail traders under the VAT system was a hasty decision.

He said traders were willing to pay taxes as required by law, but the government should have consulted all stakeholders before introducing the measure.