Economy
NBR raising source tax on income of univs, other edu institutions
The government plans to increase the source tax on the interest income of educational institutions, including public universities and schools under monthly pay orders (MPOs), as well as the income of the Bangladesh Telecommunication Regulatory Commission (BTRC) from mobile phone companies, up to double the current rate of 10% in the upcoming budget, according to finance ministry sources.
Additionally, sponsor shareholders and director shareholders in listed companies may experience a threefold increase in tax on their capital gains from share transfers in the upcoming financial year.
The National Board of Revenue (NBR) also intends to raise the corporate tax for cooperative societies by 5%, up from the current 10%, according to the sources.
Experts fear that increasing source tax on the sectors may become an indirect tax and ultimately be passed on to consumers.
The NBR aims to collect a substantial amount of revenue through source tax, targeting over Tk16,000 crore in FY25, a decision already communicated to the International Monetary Fund (IMF).
“In the upcoming fiscal policy, the NBR plans to restructure tax deduction at source for certain groups of educational institutions, BTRC’s earnings from cellular phone companies, and sponsor shareholders,” a senior finance ministry official told the news reporter, requesting anonymity.
He said, “In some cases, TDS may triple, while in others, it might be reduced.”
Meanwhile, according to sources, the income from interest for provident funds and gratuity funds, which currently faces a 15% TDS, may decrease to 10%.
Currently, public universities and educational institutions under MPOs pay a 10% source tax on their interest earnings from savings. Sources from the NBR hinted that this rate might increase to 20%.
However, sources say primary schools are likely to see TDS within the range of 10%.
There are about 57 public universities operating in the country, while the number of schools under MPOs is over 29,000.
Currently, sponsor shareholders and director shareholders have a TDS rate of 5% on capital gains from share transfers, which may increase to 15%. Additionally, other shareholders might face a 15% tax on gains over Tk50 lakh in a year, according to sources.
Moreover, the TDS on BTRC’s earnings from revenue sharing, annual fees, and spectrum charges is currently 10%. Mobile phone companies deduct the TDS amount during payment to BTRC.
Sources within the mobile phone industry said while a TDS hike on BTRC earnings may not directly impact the sector, however, any tax increases would ultimately be passed on to consumers.
Shahed Alam, chief corporate and regulatory officer at Robi Axiata Limited, told reporter, “Apparently, any tax hike on BTRC may not hurt cellular phone companies directly. However, any tax hike leads the regulator to increase charges, and we, as the company, have no other option but to pass these costs on to consumers.”
According to industry insiders, mobile companies pay 22% of every Tk100 of talk time to the BTRC as part of revenue share and other fees. In FY23, companies paid around Tk7,000 crore to the BTRC, and the NBR collected about Tk700 crore as TDS. If the TDS rate doubles, the tax earnings from the BTRC would likely increase by another Tk700 crore.
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told the news reporter, “Most of the country’s source tax comes from wages and salaries. However, in Bangladesh, it mostly comes from transactions, which are treated as a minimum tax.”
He added, “When any TDS cannot be adjusted, it ultimately passed on to the consumer as an indirect tax. In Bangladesh, most of the TDS cannot be refunded or adjusted, which may ultimately lead to an increase in product or service prices. It’s a distortion of the standard tax system, and the NBR seems to choose this as an easy way.”
The NBR collected over Tk1.12 lakh crore in income tax in FY23, with more than 50% coming from tax deduction at source. The revenue authority also collected about half of the value-added tax (VAT) through at-source deductions, known as VAT deduction at source (VDS).
Sources involved with fiscal policy measures indicated that they aim to significantly increase VAT collection through VDS by expanding its net.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
