The Bangladesh FY2025\u201326 Budget is critical, coming at a time when the economy faces high inflation, rising debt, low investment, and post-election tension. Here’s a simple breakdown of the budget\u2019s major points and what they mean for you.<\/p>\n
The FY2025\u201326 budget is being rolled out at a critical juncture. Bangladesh faces several economic challenges, including<\/p>\n
High Inflation<\/strong><\/p>\n<\/li>\n Rising Debt Pressure<\/strong><\/p>\n<\/li>\n Low Private Investment<\/strong><\/p>\n<\/li>\n Post-Election Economic Strain<\/strong><\/p>\n<\/li>\n<\/ul>\n This budget isn\u2019t just about numbers; it\u2019s a strategic response to the country\u2019s economic survival and recovery. As a taxpayer, business owner, policy analyst, or concerned citizen, you need to pay attention to what\u2019s inside.<\/p>\n Here\u2019s your easy-to-digest breakdown of the most important parts of the budget, along with expert insights from the Centre for Policy Dialogue (CPD).<\/p>\n The government is projecting a GDP growth of 6.75%<\/strong> in FY2025\u201326, but many economists, including CPD, believe a more realistic estimate is 5.5%<\/strong>. Key challenges include:<\/p>\n Slow post-pandemic recovery<\/p>\n<\/li>\n Weak private sector confidence<\/p>\n<\/li>\n Inflation reducing household purchasing power<\/p>\n<\/li>\n<\/ul>\n Key Targets:<\/strong><\/p>\n Inflation<\/strong>: Targeted at 6.5%, down from 9.0% last year<\/p>\n<\/li>\n Exchange Rate<\/strong>: Expected to hit BDT 128.2 per USD<\/strong><\/p>\n<\/li>\n Reserves<\/strong>: Aiming for USD 34 billion<\/strong><\/p>\n<\/li>\n Budget Deficit<\/strong>: Set at 5.2% of GDP<\/strong><\/p>\n<\/li>\n<\/ul>\n Reality Check:<\/strong> The government plans to raise Tk. 5,41,000 crore<\/strong> in revenue, with Tk. 4,80,000 crore<\/strong> coming from NBR taxes.<\/p>\n However, CPD experts believe that to balance the budget, an additional Tk. 128,000 crore<\/strong> is needed, translating to a 29.4% growth in tax revenue. But the government’s target growth is only 8.9%<\/strong>.<\/p>\n Revenue Breakdown:<\/strong><\/p>\n VAT<\/strong>: Tk. 1,68,200 crore<\/p>\n<\/li>\n Income Tax<\/strong>: Tk. 1,61,100 crore<\/p>\n<\/li>\n Import Duty<\/strong>: Tk. 52,000 crore<\/p>\n<\/li>\n Excise & Supplementary Duties<\/strong>: Tk. 81,300 crore<\/p>\n<\/li>\n Non-NBR Taxes<\/strong>: Increased by 31%<\/p>\n<\/li>\n<\/ul>\n Budget Financing Plan:<\/strong><\/p>\n Bank Borrowing<\/strong>: Tk. 104,000 crore<\/p>\n<\/li>\n Foreign Loans<\/strong>: 42.5% of the deficit<\/p>\n<\/li>\n Non-Bank Borrowing<\/strong>: Tk. 36,000 crore<\/p>\n<\/li>\n<\/ul>\n Concerns:<\/strong><\/p>\n Heavy reliance on domestic bank borrowing could restrict credit access for the private sector.<\/p>\n<\/li>\n<\/ul>\n The Annual Development Programme (ADP)<\/strong> is set at Tk. 2,30,000 crore<\/strong> (3.7% of GDP). Key ministries will receive 73.3% of the ADP allocation.<\/p>\n Top Mega Projects in FY26:<\/strong><\/p>\n MRT-6 Expansion<\/strong><\/p>\n<\/li>\n Rooppur Nuclear Power Plant<\/strong><\/p>\n<\/li>\n Padma Bridge Rail Link<\/strong><\/p>\n<\/li>\n Matarbari Deep Sea Port<\/strong><\/p>\n<\/li>\n<\/ul>\n However:<\/strong><\/p>\n None of the 8 major projects planned for completion in FY25 are expected to finish on time.<\/p>\n<\/li>\n Execution risk<\/strong> is high, as only 60\u201370% of ADP funds are typically utilized.<\/p>\n<\/li>\n<\/ul>\n Individual Income Tax (AY 2025\u201326):<\/strong><\/p>\n Tax-Free Threshold<\/strong>: Tk. 3,50,000<\/p>\n<\/li>\n Minimum Tax<\/strong>: Tk. 1,000<\/p>\n<\/li>\n Top Slab Rate<\/strong>: 30% (reintroduced)<\/p>\n<\/li>\n<\/ul>\n From AY 2026\u201327:<\/strong><\/p>\n Threshold<\/strong> increases to Tk. 3,75,000<\/strong><\/p>\n<\/li>\n Slab System<\/strong> reduced from 7 to 6<\/p>\n<\/li>\n<\/ul>\n Impact:<\/strong><\/p>\n Middle-income earners will face a higher effective tax rate than high earners due to changes in tax slabs.<\/p>\n<\/li>\n<\/ul>\n A person earning Tk. 15 lakh\/year<\/strong> will now pay Tk. 109,000<\/strong>, up from Tk. 93,000<\/strong>.<\/p>\n Corporate Tax Rate (Standard):<\/strong><\/p>\n Listed Companies<\/strong>: 20% (if all income is transacted via banking channels)<\/p>\n<\/li>\n Non-listed Companies<\/strong>: 27.5%<\/p>\n<\/li>\n Merchant Banks<\/strong>: Reduced from 37.5% to 27.5%<\/p>\n<\/li>\n<\/ul>\n TDS and Advance Income Tax (AIT) Revisions:<\/strong><\/p>\n Digital services, rent, and consultancy services now face new TDS rates.<\/p>\n<\/li>\n AIT on commercial vehicles<\/strong> has been raised by 60\u201388%, impacting logistics and SMEs.<\/p>\n<\/li>\n<\/ul>\n VAT Increases:<\/strong><\/p>\n Construction Services<\/strong>: 7.5% \u2192 10%<\/p>\n<\/li>\n Plastic Tableware<\/strong>: 7.5% \u2192 15%<\/p>\n<\/li>\n Online Sales Commissions<\/strong>: 5% \u2192 15%<\/p>\n<\/li>\n<\/ul>\n VAT Exemptions Withdrawn:<\/strong><\/p>\n Durable goods<\/strong> like ACs and refrigerators<\/p>\n<\/li>\n Medical Sutures<\/strong> and diagnostic reagents<\/p>\n<\/li>\n<\/ul>\n Extended VAT Exemptions:<\/strong><\/p>\n Sanitary Napkins<\/strong><\/p>\n<\/li>\n Pharma Raw Materials<\/strong><\/p>\n<\/li>\n Fertilisers and Pesticides<\/strong><\/p>\n<\/li>\n<\/ul>\n Middle-class consumers will likely feel the pinch, especially for durable goods and healthcare.<\/p>\n Budget Share (% of Total):<\/strong><\/p>\n Education & Technology<\/strong>: 14.3%<\/p>\n<\/li>\n Transport & Communication<\/strong>: 12.8%<\/p>\n<\/li>\n Health & Family Welfare<\/strong>: 5.4%<\/p>\n<\/li>\n Agriculture<\/strong>: 4.7%<\/p>\n<\/li>\n Public Administration<\/strong>: 7.5%<\/p>\n<\/li>\n<\/ul>\n Sectoral Observations:<\/strong><\/p>\n Education gets the highest increase in allocation (25.1% of total incremental funds).<\/p>\n<\/li>\n Health<\/strong> received a positive 30.4% increase, while Power & Energy<\/strong> got less than expected despite rising demand.<\/p>\n<\/li>\n<\/ul>\n The Social Safety Net Budget<\/strong> is Tk. 1,26,000 crore<\/strong> (around 2.5% of GDP). However, many programs remain underfunded or poorly managed.<\/p>\n Concerns:<\/strong><\/p>\n High leakage in cash-based transfers<\/strong>.<\/p>\n<\/li>\n Taxpayer base<\/strong> remains stagnant, with only 1.3% of the population filing returns.<\/p>\n<\/li>\n<\/ul>\n 1. Is the 6.75% GDP growth realistic?<\/strong><\/p>\n Answer<\/strong>: Most economists, including CPD, believe a growth of 5.0\u20135.5%<\/strong> is more realistic due to weak investment and high inflation.<\/p>\n<\/li>\n<\/ul>\n 2. Who benefits most from the personal income tax changes?<\/strong><\/p>\n Answer<\/strong>: Low-income individuals see some relief, but middle-income earners<\/strong> face a heavier tax burden due to changes in the tax slab system.<\/p>\n<\/li>\n<\/ul>\n
\nMacroeconomic Ambitions: Bold or Too Bold?<\/strong><\/h3>\n
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\nThe average inflation rate in FY25 exceeded 10%, so the 6.5% target seems overly optimistic unless substantial price control measures are introduced.<\/p>\nRevenue Targets and Budget Financing: Ambition vs Execution<\/strong><\/h3>\n
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ADP Allocation and Mega Projects: Deadline Drama<\/strong><\/h3>\n
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Income Tax Changes: Who Will Pay More<\/strong><\/h3>\n
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Corporate Tax & TDS Reforms: Major Overhaul<\/strong><\/h3>\n
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Indirect Tax Reforms: Who Bears the Burden?<\/strong><\/h3>\n
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Sector-Wise Allocation: Prioritizing Key Area<\/strong><\/h3>\n
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Social Safety & Equity Concerns: Still a Long Way to Go<\/strong><\/h3>\n
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FAQs: Understanding the FY 2025\u201326 Budget Ordinance<\/strong><\/h3>\n
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