Tax-free income limit for individual taxpayers unchanged

In the proposed budget for the forthcoming fiscal year 2021-2022, there are no changes in the tax-free income limit and tax structure for individual taxpayers

While placeing budget in the parliament on Thursday, Finance minister AHM Mustafa Kamal proposed to keep the tax-free income threshold unchanged for the next fiscal year.

In addition, he also proposed to reduce the highest limit of investment for getting tax rebate by individual taxpayers to Tk 1 crore from current Tk 1.50 crore.

The amendment in the Income Tax Ordinance-1984 will be brought through the Finance Bill 2021 placed before the parliament on Thursday.

Kamal, however, proposed to reduce the business turnover tax for individual taxpayers engaged in doing business to 0.25 per cent from existing 0.50 per cent.

Tax-free income ceiling for individual taxpayers has been increased to Tk 3 lakh in FY2021 after five years from Tk 2.50 lakh in FY2020.

The current applicable tax rates range from minimum 5 per cent to the highest 25 per cent for individual taxpayers.

The existing tax-free income limit is Tk 3.50 lakh for women and senior citizen taxpayers, Tk 4.50 lakh for physically challenged people, Tk 4.75 lakh for gazetted war-wounded freedom fighters.

Individual taxpayers need to pay 5 per cent income tax on the next Tk 1 lakh income after enjoying tax exemption on income of the first Tk 3 lakh while the highest income tax rate is 25 per cent on annual income above Tk 16 lakh.