Tax-free income limit remains unchanged, taxes for the rich increase

 The tax-free income limit for individuals remained unchanged in the proposed budget for the next 2021-2022 fiscal.

However, the surcharge on highly wealthy individuals has been increased. People whose assets are less than Tk10 crore will have to pay 10% tax, which was 15% in the previous year.

Taxes for the more affluent, with assets over Tk10 crore, have been increased. Last year the maximum tax rate on assets was 30% which has been increased to 35%.

Tax-free income limit

As in the last financial year, the tax-free income limit in the proposed budget is Tk3 lakh.

However, the tax-free income limit for third gender, female, and taxpayers aged 65 years or more, has been made Tk3.5 lakh while for disabled persons it is Tk4.5 lakh.

The proposed budget states that after the tax-free income limit of up to Tk1 crore, income tax will be 5% of the total income. An income tax of 10% on Tk1 crore to Tk4 crore, 15% on an income of Tk4 crore to Tk8 crore, 20% on Tk8 crore to Tk13 crore, and 25% on Tk13 crore and above has been proposed.

In the proposed budget, the finance minister has recommended keeping the individual tax rate unchanged.

"I propose to keep the rate of tax applicable for individual taxpayers unchanged, as significant changes have already been brought to this effect in FY 2020-2021," Kamal told parliament.

In the previous budget, the government had raised the threshold of tax-free income to Tk3 lakh from Tk2.5 lakh after five years.

In the proposed budget, the finance minister made it clear that the existing tax rate for individual taxpayers will also be applicable for taxpayers of the third gender community.

This proposal was made for social inclusion of third gender people in addition to introducing a special provision for them, said Kamal.

In the proposed budget, the tax-exempt income limit of the war-wounded, gazette-enlisted, freedom fighter taxpayer, is Tk4.75 lakh. The tax-free income limit for the maintenance of each disabled child of a parent or legal guardian will be more than Tk50,000. If both the father and mother of the disabled person are taxpayers, then one of them will enjoy this benefit.

The minimum tax rate for taxpayers of Dhaka North and South City Corporation and Chattogram City Corporation areas is to be Tk5,000. In other city corporation areas it is Tk4,000 and for non-city corporation areas it is Tk3,000.

Phases of surcharge decreases, tax on highly wealthy increases

In the proposed budget for the next financial year, the phases of surcharge have been reduced from seven to five. More tax has been imposed on those who have more wealth.

In the proposed budget, surcharge on up to Tk3 crore in net assets of individual taxpayers, is zero.

If the value of net assets is between Tk3 crore and Tk10 crore, the individual will have to pay 10% tax.

If the value of net assets is more than Tk10 crore but not more than Tk20 crore, the tax will be 20%, if it is more than Tk20 crore but not more than Tk50 crore, the tax will be 30%, and if net assets exceed Tk50 crore, the tax will be 35%.