CPD Calls for Raising Tax-Free Income Limit to Tk 4 Lakh to Ease Inflation Burden

The Centre for Policy Dialogue (CPD) has urged the government to raise the tax-free income limit to Tk 4 lakh in the upcoming fiscal year’s budget, citing rising inflation and increasing financial strain on taxpayers.

At a discussion today, at its office in Dhaka’s Dhanmondi, the think tank presented its recommendations for the national budget of FY2025-26. 

At present, individual taxpayers in Bangladesh are taxed progressively at rates of 5%, 10%, 15%, 20%, and 25%. The existing tax-free income ceiling stands at Tk 3.5 lakh for most taxpayers, with slightly higher exemptions for specific groups:

• Women and individuals over 65: Tk 4 lakh
• Persons with disabilities and third-gender taxpayers: Tk 5.5 lakh
• Gazetted freedom fighters: Tk 5 lakh

"Inflation has been on an upward trend, with food prices rising at a faster rate than non-food inflation," CPD Executive Director Fahmida Khatun said at the event. She also said that Bangladesh Bank’s projection of bringing inflation down to 7-8% by June is unrealistic, given the current economic conditions.