Tax-free income limit may remain the same

The government is likely to keep the tax-free income limit for individual taxpayers unchanged for the next fiscal year of 2021-22, said officials of the finance ministry yesterday.

Currently, annual income of up to Tk 3 lakh is exempted from tax payment and the ceiling is likely to prevail for a second year.

The National Board of Revenue (NBR) hiked the tax-free income threshold from Tk 2.5 lakh after five years to give relief to people in the lower-income bracket such that they can better manage the economic hardship brought on by the pandemic.

"We are not planning to raise the limit as it will be the second year of the change in the ceiling," said a senior official of the ministry.

Slabs of income and corresponding rates of taxes are unlikely to remain unchanged.

At present, taxpayers have to pay 5 per cent tax on income above Tk 3 lakh.

The rate of taxes go up to 10 per cent for taxpayers with an annual income above Tk 4 lakh and up to Tk 7 lakh.

The rate of income taxes go up progressively to 15 per cent, 20 per cent and 25 per cent for taxpayers with higher annual incomes.

In order to encourage investment and create jobs, the government is considering reducing corporate tax for listed and non-listed companies for the next fiscal year.

Non-listed firms may see their tax rates decline by 2.5 percentage points to 30 per cent.

The corporate tax rate for firms listed at the stock exchanges is likely to be 22.5 per cent, down 2.5 percentage points from 25 per cent at present, said officials.

The tax rate for banks, insurance and non-bank financial institutions, mobile phone operators and tobacco companies may remain unchanged.