As the National Board of Revenue embarks on its customary round of pre-budget consultations with business associations, economists, journalists and other stakeholders ahead of the upcoming national budget, the fiscal pressures bearing down on the government appear to be among the most acute in recent times. The budget for fiscal year 2026-27, expected to be presented on June 11, may reach approximately Tk 9 trillion, an enormous figure that demands equally enormous revenue mobilisation. Financing such an expansive budget is never easy, and it has become even more formidable under current economic conditions. Persistent inflation has strained government finances by squeezing household spending and, with it, the consumption-based tax revenues the government depends on. The economic turbulence radiating from conflicts in the Middle East has further deepened the crisis. Revenue collection has already struggled to keep pace with targets this year. What makes that all the more worrying is that the budget itself was already smaller than the previous year's, meaning even a relatively modest ambition has proved beyond reach. In the first eight months of the current fiscal year alone, the revenue shortfall has reportedly exceeded Tk 700 billion, and analysts warn that the annual shortfall may breach Tk 1 trillion before the fiscal year ends. Against this backdrop, the government has little choice but to look carefully at sectors where revenue leakage is both significant and preventable. The real estate and land registration sector stands out as precisely such a case.
For some time now, successive governments aspired to align registration values of land with actual market transaction prices, moving away from the existing mouza valuation system. The mouza rate, a government-assigned floor value for land in a given locality, is supposed to function as a minimum benchmark for registration purposes. In practice, it functions as the standard value at which virtually all transactions are registered regardless of what price actually changes hands. Most buyers and sellers opt to register deeds at the lower mouza rate to evade high registration fees, taxes and stamp duties leading to a situation where the surplus transaction occurs outside of formal banking channels. This not only deprives the national exchequer of potential revenue but also forces legitimate sellers into becoming holders of black money simply because they do not officially document the full proceeds of a sale.
Fortunately, policymakers have recognised this distortion. Their approach to address it through rationalisation of registration fees and taxes, alongside aligning registration values more closely with market rates, shows sound thinking. Reducing tax rates while expanding the base is a well-established principle of effective taxation, and if a buyer can register property at or near market value without facing prohibitive transaction costs, the incentive to under-report collapses. Transparency returns to the sector, government collects more revenue and housing market begins to function with greater integrity. Of course, these are outcomes worth pursuing.
However, even as the authorities move toward this logical alignment of values, somewhat ironically, one regulatory barrier exists that prevent many from registering properties accordingly. The problem concerns who actually bears the cost of registration and whose name appears in the documentation as the payer. Under existing withholding tax provisions, the legal obligation to pay the tax on a land or property sale rests with the seller. This is the position the law takes. The reality on the ground is almost universally different. More often than not, it is the buyer who bears the full cost of registration including the associated taxes, typically calculated at around 10 to 20 per cent of the transaction value. This is not a secret arrangement. It is standard practice, widely acknowledged, and embedded in how real estate deals are structured across Bangladesh. Yet because the documentation records the seller as the payer, a fiction is introduced at the very foundation of the transaction record.
Because the law assumes the seller pays the tax, the official documents show the seller as the payer. When the buyer tries to reflect this total expenditure in their tax file or loan application, they encounter a paradox where they cannot legally claim an expense that is documented under someone else's name. On the one hand, if the buyer reports the full amount, they risk a double counting conflict since the seller is also credited for that same payment by the revenue system. On the other hand, if the buyer says nothing, their actual financial outflow is understated. Either way, the formal record diverges from reality.
This divergence is not without consequence. It creates precisely the kind of ambiguity that invites corruption. When transactions cannot be properly documented without producing apparent inconsistencies, such situations give officials in authority the opportunity to insist on informal fixes. It also means that the return filing requirement, which the government has introduced as a gatekeeping mechanism to ensure that buyers and sellers accurately disclose their income, expenditure and asset acquisition costs, cannot fully serve its intended purpose.
The government's aim to formalise an economy that remains heavily informal and to build a tax base that reflects actual economic activity rather than its diminished official representation cannot be realised through rate adjustments alone. It requires that the formal documentation of every transaction honestly capture what occurred. In the case of land and property registration, that means ensuring that whoever actually bears the cost of registration and withholding tax is recorded as doing so. Put simply, if the buyer pays, the buyer must be able to show it.
As the government prepares its next budget, it has before it an opportunity to address the procedural inconsistency that undermines the credibility of financial transactions in the tax record. In this instance, revenue mobilisation and reform are not competing priorities. They are the same priority viewed from different angles. Closing the gap between who pays and who is shown to pay is but a modest administrative correction, yet one that would yield significant gains in transparency, accountability and the government's ability to account for what it is actually owed.
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