Bangladesh Income Tax Guide 2026–27: Major Amendments and Compliance Requirements

For most individuals and businesses, the income year runs from 1 July to 30 June.

Income earned between 1 July 2025 and 30 June 2026 is generally assessed in Assessment Year 2026–27.

Banks, insurance companies and financial institutions ordinarily follow the calendar year. An eligible subsidiary or branch of a foreign company may apply to the NBR for permission to follow a different income year aligned with its foreign parent.

Tax rates and filing requirements must always be applied according to the correct assessment year.

A person claiming a special exemption must possess the required certificate, gazette notification or other legally acceptable evidence.

Important clarification

The BDT 375,000 threshold that appeared in the original budget proposal is not the final enacted threshold. The applicable general threshold under the enacted Finance Act 2026 is BDT 400,000.

For a resident individual or a non-resident Bangladeshi citizen:

A non-resident individual who is not a Bangladeshi citizen is generally subject to tax at 30%, subject to any specific statutory provision or applicable tax treaty.

Example of individual tax calculation

Suppose a general resident taxpayer has taxable income of BDT 1,200,000:

• First BDT 400,000: Nil
• Next BDT 300,000 at 10%: BDT 30,000
• Next BDT 400,000 at 15%: BDT 60,000
• Remaining BDT 100,000 at 20%: BDT 20,000

The gross tax is BDT 110,000, before considering investment rebate, minimum tax, surcharge, tax deducted at source or other adjustments.

The 35% rate for the later assessment years generally applies to income exceeding BDT 30 million. Future rates should nevertheless be checked against any subsequent Finance Act before preparing a return.

One-third of income from employment or BDT 500,000, whichever is lower, is exempt from tax.

Employment income may include:

• salary and wages;
• bonuses and commissions;
• allowances and perquisites;
• benefits provided by an employer;
• share-based employment benefits;
• termination compensation; and
• certain payments from a former or future employer.

Medical benefits received under a qualifying group-insurance policy may also qualify for exemption subject to statutory conditions.

The investment tax rebate is generally the lowest of:

• 3% of qualifying taxable income;
• 10% of permitted investment and expenditure; or
• BDT 750,000.

Qualifying investments may include permitted life-insurance premiums, recognised provident-fund contributions, approved superannuation contributions, eligible securities, mutual funds and approved charitable payments.

The taxpayer should retain certificates, bank statements, payment evidence and investment records.

Premature encashment of certain government securities, mutual funds, exchange-traded funds or specified investments may create an additional tax liability in the year of withdrawal.

Where total income exceeds the applicable tax-free threshold:

• the general minimum tax is BDT 5,000; and
• the minimum tax for a new taxpayer is BDT 1,000.

Minimum tax may remain payable even where a rebate would otherwise reduce the calculated liability below the prescribed amount.

Surcharge is imposed as a percentage of the income tax payable.

A 10% surcharge may also be triggered by ownership of more than one motor car or house property having an aggregate area exceeding 8,000 square feet, subject to the applicable provisions.

Return filing may be mandatory where:

• taxable income exceeds the exemption threshold;
• the person was assessed during any of the preceding three years;
• the person is a shareholder-director of a company;
• the person is employed in an executive or managerial position;
• the person is a government employee;
• the person is a partner of a firm;
• the person receives exempt income or income taxable at a reduced rate;
• a non-resident has a permanent establishment in Bangladesh;
• taxpayer registration is legally required; or
• Proof of Submission of Return is required for a specified transaction or service.

A person may therefore be required to file a return even where no tax is ultimately payable.

Electronic return filing has been mandatory for most individual taxpayers since 28 June 2026 under the NBR’s Special Order No. 1/2026 (opens in a new tab).

The mandatory requirement does not apply to certain taxpayers, including:

• persons aged 65 or above;
• persons with certified disabilities or special needs;
• Bangladeshi taxpayers residing abroad;
• legal representatives filing on behalf of deceased taxpayers; and
• foreign nationals working in Bangladesh.

These taxpayers may still file electronically voluntarily.

For a first-time individual return filer, the filing date is generally 30 June following the end of the income year.

A delayed return filed outside the permitted framework may attract additional tax. A voluntarily filed delayed return may attract the higher of 10% of the tax payable or BDT 5,000. Filing after the period specified in a reassessment notice may attract the higher of 15% or BDT 10,000.

Where an asset-and-liability statement or statement of living expenses is required, failure to submit it may make the return incomplete.

Taxpayers should reconcile:

• land, flats and buildings;
• motor vehicles;
• bank and mobile-financial-service balances;
• shares, securities and savings instruments;
• business capital;
• loans and liabilities;
• gifts and inheritances;
• foreign assets and income, where reportable; and
• annual personal and household expenses.

A substantial unexplained difference between declared income, expenditure and growth in assets may lead to tax assessment and further investigation.

The reduced corporate rates depend on compliance with the prescribed banking-channel conditions. A company must not apply the reduced rate merely because most of its transactions were conducted through a bank.

Where regular tax on business or professional income is lower than the applicable turnover tax, turnover tax may apply irrespective of profit or loss.

A 0.20% rate may apply to a qualifying industrial undertaking during its first three income years after commencing commercial production.

VAT, supplementary duty and income from other sources are excluded from the turnover-tax base under the amended framework. Certain specified businesses are also subject to separate treatment.

A business expense is generally deductible where it is:

• revenue in nature;
• incurred wholly and exclusively for the business or profession;
• not personal expenditure; and
• not capital expenditure.

Invoices, contracts, banking records, proof of receipt and withholding-tax documents should be preserved.

Specified disallowances are no longer taxed separately as special business income. Instead, the disallowed amount is added when calculating business income and taxed at the applicable rate.

The applicable withholding-tax rates are governed by the amended Withholding Tax Rules 2026 (opens in a new tab).

Important requirements include:

• withholding returns are generally filed quarterly;
• the return is ordinarily due by the 25th day of the month following the quarter;
• the taxpayer’s TIN is used for relevant withholding administration;
• the applicable rate may increase by 50% where a resident recipient fails to provide Proof of Submission of Return, unless exempt; and
• the rate depends on the actual nature of the service, supply or payment.

Failure to deduct, collect or deposit tax at source can create liability for the shortfall together with an additional amount equal to 50% of that shortfall, in addition to other consequences under the Act.

Because withholding rates vary according to the payment, recipient, PSR status and treaty position, the current rules should be checked before making a substantial payment.

The corporate return is generally due on:

• the 15th day of the ninth month following the end of the income year; or
• 15 September following the income year, where the first date would fall earlier.

Advance tax is generally payable by:

• 15 September;
• 15 December;
• 15 March; and
• 15 June.

Any remaining self-assessment tax must be paid before submitting the return.

Where tax deducted, collected or paid exceeds the regular assessed liability, the excess may be:

• refunded;
• adjusted against previous tax arrears; or
• carried forward against a future tax liability.

The amended law provides for an approved refund to be issued within 60 days of the refund application. Where a refund is not issued, the taxpayer may approach the Commissioner or the Board through the statutory process.

For individuals earning only employment income, financial-asset income and agricultural income, the relevant refund processing should be completed within 120 days after filing, followed by electronic transfer to the taxpayer’s bank account.

The amended pre-deposit requirements are calculated on the difference between assessed tax and the taxpayer’s admitted liability:

The pre-deposit concerns the admissibility of the proceeding and does not determine the merits of the tax dispute.

A taxpayer should immediately review the limitation period, correct forum, service date, admitted liability and deposit requirement after receiving an adverse assessment or appellate order.

Where a landowner transfers development rights and receives money, flats, apartments or other benefits from a developer, the consideration is taxable as capital gain.

The applicable rate is 15% on the net gain, calculated after deducting the legally admissible acquisition cost from the consideration received.

Before entering into a development agreement, the landowner should review:

• title and acquisition documents;
• valuation of the property and development rights;
• allocation of flats or apartments;
• timing of possession and transfer;
• cash or other consideration;
• registration-related taxes; and
• applicable tax deduction or collection.

A non-resident enterprise may create a permanent-establishment exposure in Bangladesh through digital or online activities where it has at least 100,000 digital or online customers or subscribers in Bangladesh.

Foreign digital platforms and online service providers should review their Bangladesh customer base, contractual arrangements, local representatives, payment collection and treaty position.

Tax deducted from relevant income paid to a non-resident without a permanent establishment in Bangladesh is generally treated as final tax on that income.

Where a double taxation avoidance agreement provides a reduced rate or exemption, the prescribed NBR certificate should be obtained before applying the treaty benefit at source.

Recent provisions include:

• full exemption on qualifying income of eligible solar-power producers operating their own solar-power centres until 30 June 2035;
• phased exemptions for eligible edible-oil manufacturers using locally grown oilseeds;
• a 5% income tax rate for qualifying private universities and specified private educational institutions; and
• conditional capital-gains relief for conversion of a firm into a company where all statutory conditions are satisfied.

Tax exemptions normally depend on timely return filing, approved business activities, commencement dates, location, investment and documentary conditions.

• e-TIN and identification records;
• salary statement and employer’s tax certificate;
• bank interest and withholding certificates;
• savings instruments and investment records;
• rent and property income;
• business or professional income;
• capital gains;
• eligible investments and rebates;
• tax deducted or collected at source;
• assets, liabilities and living expenses;
• gifts, inheritances and loans; and
• foreign income or assets, where reportable.

• applicable corporate rate;
• banking-channel conditions;
• turnover-tax exposure;
• audited financial statements;
• certified tax computation;
• quarterly withholding returns;
• vendor PSR records;
• expense disallowances;
• advance-tax payments;
• fixed assets and depreciation;
• related-party transactions;
• non-resident payments;
• tax-treaty certificates;
• incentive conditions;
• refund entitlement; and
• appeal deadlines.

This article has been reviewed against the official materials available on 23 August 2026:

• Income Tax Act 2023 and Authentic English Text—NBR (opens in a new tab)
• Finance Act 2026—NBR (opens in a new tab)
• Withholding Tax Rules 2026—NBR (opens in a new tab)
• Special Order No. 1/2026 on Individual e-Filing—NBR (opens in a new tab)
• Relevant income tax SROs, general orders and applicable double taxation avoidance agreements