Income Tax Rate in Bangladesh 2024-2025 । CA Ripon

Table of Contents

Introduction – Income Tax Rate in Bangladesh 2024-2025

Income Tax Rate in Bangladesh 2024-2025 – The Finance Act 2024 has introduced significant changes to the income tax structure for individual taxpayers. The government has restructured the income tax slabs for the Assessment Year 2024-2025. This restructure will provide relief to the middle and high-income earners the most as their tax liability will be reduced.

What is the Tax-free limit for the year 2024-2025?

The government has maintained the existing tax-free income limits for the year 2024-2025. It’s important to note that the tax-free income threshold varies based on factors such as the taxpayer’s gender, age, and certain special circumstances.

Here is the list of tax-free income limits for the year 2024-2025:

Particulars of Income	Tax Rate	Remarks
On the first BDT 350,000 of total taxable income of male assessee	Nil	No Change
On the first BDT 400,000 of total income of female assessee	Nil	No Change
On the first BDT 400,000 of total taxable income of persons aged 65 years & above	Nil	No Change
On the first BDT 475,000 of total taxable income of third gender and physically challenged assessee	Nil	No Change
On the first BDT 500,000 of total taxable income for gazetted war wounded freedom fighters	Nil	No Change

What changes were made by the Finance Act 2024?

The Finance Act of 2024 introduced a restructuring of the income tax slabs for the Assessment Year 2024-2025. However, the tax-free limit remains unchanged. Below is a comparison of the personal income tax slabs for the previous and current assessment years:

Slab for AY 2023-2024		Slab for AY 2024-2025
Income	Rate	Income	Rate
On First 350,000	0%	On First 350,000	0%
On Next 100,000	5%	On Next 100,000	5%
On Next 300,000	10%	On Next 400,000	10%
On Next 400,000	15%	On Next 500,000	15%
On Next 500,000	20%	On Next 500,000	20%
On Balance	25%	On Balance	25%

Impact of the New Tax Slabs for the Financial Year 2024-2025

As shown in the comparison, the government has revised the tax slabs for the financial year 2024-2025. You might be wondering how these changes will affect taxpayers. Here’s a summary of our analysis:

- Employees with an annual income of Tk. 11.25 lac or less: No impact from the changes.
- Employees with an annual income above Tk. 11.25 lac but below Tk. 23 lac: Will benefit from the tax slab restructuring, with a maximum tax benefit of Tk. 25,000.
- Employees with an annual income of Tk. 23 lac or more: Will receive the maximum tax benefit, reducing their tax liability by Tk. 25,000.

Assumptions: This analysis assumes that individuals will receive the appropriate tax rebates as per Section 78 of the Income Tax Act 2023.

Minimum Tax Based on Location

The concept of Minimum Tax is a significant element of the income tax Rate in Bangladesh 2024-2025. This category specifically applies to individual taxpayers and is dependent on their geographical location. Please note minimum Tax is only applicable when the taxable income exceeds the tax-free limit. Below is the Minimum income tax rate in Bangladesh 2024-2025 based on location, as per the Finance Act 2024:

Location of the assessee	Taka
Assessee residing in Dhaka (both North & South) and Chattogram City Corporation area	5,000
Assessees residing in any other City Corporation area	4,000
Assessees residing in any area other than City Corporation area	3,000

Minimum Tax Based on Gross Receipts

In the Bangladeshi taxation system, there is a specific form of minimum tax known as the Minimum Tax based on gross receipts. As per Section 163(5) of the Income Tax Act 2023, any individual taxpayer with gross receipts exceeding Tk. 3 crore is required to pay a minimum tax of 0.25%.

Under this section, taxpayers must pay an additional tax obligation known as the “Alternative Minimum Tax”, which is calculated based on their gross receipts.

Final Tax Settlement

Final tax is a tax deducted or collected at source directly from an individual’s income, such as when they receive interest on government securities (Sanchaypatra) or sell land. The individual receiving the income does not require to pay any additional tax when filing their income tax return. This means the tax liability on such income is fully settled with the tax deducted or collected at source, hence it’s called “final tax settlement”.

Final tax applies only to specific types of income. In Bangladesh, for individual taxpayers, final tax is applicable to the following income types:

- Tax deducted at the time of interest received from Bangladesh Sanchayapatra (Government Securities) (Ref: SRO NO. 253-Law/Income Tax-09/2023, dated 23 August 2023).
- Tax collected at the time of sale of land (Ref: SRO NO. 286-Law/Income Tax-16/2023, dated 11 October 2023).
- Compensation received from the government (Ref: SRO NO. 17-Law/Income Tax-24/2024, dated 30 January 2024). Only for assessment year 2023-24

Investment Tax Rebate

For the Assessment Year 2024-2025, according to Section 78 of the Income Tax Act 2023, individuals are eligible for a tax rebate based on the following criteria:

The rebate is the lower of the following three amounts:

- 3% of total taxable income;
- 15% of actual investment in allowable areas; or
- 10 lakh.

For details on allowable investment options, please read the article below.

Best Tax Saving Investments in Bangladesh 2024

Surcharge Rate for the Year 2024-2025

A surcharge, also known as an additional tax charge, is a tax imposed on the amount of payable tax rather than on the total income generated.

For the assessment year 2024-2025, there have been no changes to the surcharge rates as per the Finance Act 2024. Here are the applicable surcharge rates for the year:

Net worth Value	Rate
Up to Tk. 4 Crore	Nil
More than Tk. 4 crore up to Tk. 10 crore; or	10%
Having more than one motor vehicles; or
Having housing property of more than 8,000 Sft in any city corporation
More than Tk. 10 crore up to Tk. 20 crore	20%
More than Tk. 20 crore up to Tk. 50 crore	30%
More than Tk. 50 crore	35%

*** Income from Tobacco products business (cigarette, biri, jardi, gul etc.) – Surcharge 2.5%

Special Provision to Whiten Black Assets

A new Part titled “Part 3 – Disclosure of Undisclosed Assets“ has been added to the First Schedule of the Income Tax Act 2023 through the Finance Act 2024.

According to the newly added provision, regardless of what is stated in the Income Tax Act 2023 or in any other law, no statutory government authority including the tax authorities, can raise any questions regarding the source of acquisition of any establishments, flats, buildings, apartments, floor space, and land by any person if he pays a specified tax rate for undisclosed immovable property as mentioned above, within the period from 01 July 2024 to 30 June 2025 (both days inclusive), before submitting the return or amended return for the assessment year 2024-25.

The Finance Act 2024 initially included provisions for legalizing undisclosed assets such as securities, cash, bank deposits, financial schemes and instruments, all forms of savings deposits, and other financial assets. However, this provision was later revoked by SRO No. 303-Law/Income Tax-46/2024, dated 2nd September 2024. As a result, only undisclosed establishments, flats, buildings, apartments, floor space, and land can now be disclosed by paying the rates specified under Clause 1 of Part 3 of the 1st Schedule of the Income Tax Act 2023.

New Rules for Gifts

The Finance Act 2024 has introduced a new clause (Clause 35) to Part 1 of the 6th Schedule. Under this clause, gifts received from parents, spouse, or children will be exempt from tax, provided that the gift is shown in both the receiver’s and the giver’s income tax files. Additionally, the proviso of Clause 35 states that if the gift is received from abroad through a banking channel, it is not required to be shown in the giver’s income tax files.

Tax on Government Service Holders

According to SRO No. 225-Law/Income Tax-7/2023, dated July 13, 2023, all components of a government service holder’s salary, except for the basic salary and festival bonus/allowance (called by whatever name), will be exempted from tax. This means government employees will only be taxed on their basic salary and festival bonus. For further details and to fully understand the scope of this tax exemption, it is recommended to read the SRO in its entirety.

Conclusion - Income Tax Rate in Bangladesh 2024-2025

Every year in Bangladesh, the government proposes new income tax rates to determine the tax payable. In this blog post, we try to cover income tax rate in Bangladesh 2024-2025 applicable to individual taxpayers so that you can get an understanding on income tax rates for the financial year 2024-2025. If you have any questions, please leave a comment below.