Tax-free income ceiling unchanged
Dhaka: Finance Minister AMA Muhith on Thursday proposed to raise the tax exemption threshold for person with disability to Tk 400,000 in place of Tk 375,000 keeping others unchanged.
"I propose that the tax exemption threshold will remain unchanged for the next fiscal year except that the threshold for person with disability will be Tk 400,000 in place of Tk 375,000," he said in his budget speech in Parliament.
He also mentioned that tax exemption threshold for the parents or legal guardians of a person with disability shall be 25,000 higher.
The Finance Minister mentioned that the existing tax exemption threshold is Tk 250,000 in general cases.
Muhith said what should be the ideal tax exemption threshold is a subject of interesting and enlightening intellectual debate in the country. "There should be a philosophy for determining the tax exemption threshold. Per capita income and the rate of inflation may be two important determinants in this case," he said.
In Bangladesh, the Finance Minister mentioned, the tax exemption threshold is more than 200 percent of per capita GDP, which is in most developing countries, the ratio is about 100 percent. "Besides, our inflation rate is low at this moment, point to point inflation measuring at around 5 percent only."
The Finance Minister proposed to not to change the minimum tax who have a total income exceeding tax exemption threshold.
Currently, the rate is Tk 5000 if residing in any of the city corporations of Dhaka North, Dhaka South, or Chittagong, Tk 4000 if residing in any other city corporation, and Tk 3000 if residing in any other places.
Talking about the corporate tax, the minister opted for not changing the rate. "We often say that our corporate tax rate is very high. But the close examination of facts does not support this assertion. The existing tax rate for publicly traded companies is 25 percent, which is very compatible with global average (24.29 percent)."
He mentioned that the corporate tax rate is low in various sub-regional and regional comparisons. The existing tax rate for non-publicly traded companies is 35 percent. "This difference in tax rates should be maintained for encouraging the companies to be listed with the stock exchanges."
Muhith also mentioned that he is planning to bring the tax rate for a limited number of sectors including non-listed banks, non-listed mobile phone operators and cigarette manufacturing companies are paying tax at more than 40 percent rate to below 40 percent gradually.
Finance Minister AMA Muhith placed Tk 400,266 crore budget for the 2017-18 fiscal year in Parliament on Thursday.
In the proposed budget, the target of gross domestic product (GDP) growth has been set at 7.4 per cent.
A cabinet division meeting chaired by Prime Minister Sheikh Hasina was held on Thursday at the cabinet room of National Parliament for approving the fiscal bill.
Finance minister AMA Muhith and other ministers were present in the meeting. After the cabinet passed the bill, President Abdul Hamid signed the bill and sent it to the parliament secretariat for presenting before the house.
The finance minister started budget speech at about 1:30pm with Speaker Shirin Sharmin Chaudhury in the chair.
This is the country’s 46th national budget while the 18th budget of the Awami League government and the 11th for Muhith.
The revenue collection target for the next fiscal year has been set at Tk 2,87,991 crore, which is 13.0% of GDP, of which NBR tax revenue is Tk 2,48,190 crore. Revenue from Non-NBR sources has been estimated at Tk 8,622 crore. In addition, Tk 31,179 crore will be collected as Non-Tax Revenue.
Annual Development Programme (ADP)
Tk 153,331 crore has been allocated to the Annual Development Programme (ADP), which is 6.9pc of total GDP, and Tk 42,631crore more than the current fiscal year.
The budget deficit for the next fiscal year is Tk 1,12,275 crore, which is 5pc of total GDP. Tk 51,924 or 2.3pc of the budget will be drawn from the foreign sources, and Tk 60,352 or 2.7pc will be collected from non-bank borrowing. Bank borrowing is Tk 28.203 crore, which is 1.3pc of GDP.
In the current fiscal year’s budget, primarily it was mentioned that Tk 19, 61,017crore would be collected from external sources. However, in the revised budget plan it has been reduced to Tk 19, 56,055crore.
Inflation rate for the next fiscal year has been set at 5.5pc. Currently, the inflation rate, which is falling, is 5.4pc until April 2017.