The annual budget for the Fiscal Year 2014-15 was proposed by the Finance Minister Abul Maal Abdul Muhith at Jatiya Shangshad on June 5, 2014 and it was passed by the Parliament on June 29, 2014.
In the budget for the Fiscal Year 2014-15, the threshold for general individual tax payer is unchanged to an amount of BDT 220,000/-. The threshold for women taxpayer or taxpayer aged above 65 has been raised to BDT 275,000/- from BDT 250,000/- to empower women and to integrate them more in the economic activities and to reduce tax burden of senior citizens. The threshold for general individual tax payer in case of a handicapped person has been raised BDT 350,000/- from BDT 300,000/- in view of the responsibility of both the society and the State towards the physically challenged people. But the highest raise in the threshold of individual tax payer has been made in case of the War-wounded gazetted freedom fighters where the threshold has been raised to BDT 400,000/- from BDT 220,000/- last year.
In case of individuals earning up to BDT 220,000/- taxable income, no tax shall be imposed. For the next BDT 300,000/- taxable income the applicable tax rate is 10%. On next BDT 400,000/- taxable income, 15% tax shall be applicable. For the next BDT 500,000/- taxable income a tax rate of 20% shall be applicable. For the next BDT 3,000,000/- taxable income the applicable tax rate is 25%. For any income above the stipulated tax income, a tax rate of 30% shall be applicable. According to the Finance Minister, this raise was made considering “the principle of equity and progressivity with a view to ensuring equitable distribution of resources and to reducing economic disparity”.
For the publicly traded companies (subject to certain conditions) the tax rate is unchanged from the previous year and the tax rate shall remain at 27.5%. To ensure employment opportunities for the workforce as well as to attract foreign direct investment (FDI), provision has been made for a lower tax rate of 35% for the non-publicly traded companies where the previous tax rate was 37.5%. For banks, insurance and financial institution (other than merchant banks) the present tax rate is unchanged from the previous one and it is 42.5%. Similarly, no change has been made in case of the merchant banks and the tax rate is still 37.5%. No change of tax rates has been made in the areas of cigarette manufacturer (both publicly traded (40%) and non-publicly traded (45%)), mobile phone (both publicly traded (40%) and non-publicly traded (45%)) and dividend income (20%) from the previous rates. However, the proposed Minimum Turnover Tax is reduced from 0.50% to 0.30%.
Written by Junayed Chowdhury, Managing Partner
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