Merit of Finance Act 2026

FE Team | Published: July 01, 2026 21:00:21

With as many as 64 amendments, the proposed Finance Bill was passed in parliament as the Finance Act 2026 on Monday last. If the budget is a comprehensive financial plan or a roadmap for projected income and expenditure over a specific period, the finance act is a legislative instrument that outlines in details a government's new taxation, revenue and duty measures for the upcoming fiscal year. In effect, the Finance Act legalises the generation of incomes from different sources as proposed in the national budget. Some of the amendments including the tax-free slab at Tk 400,000 were proposed by Prime Minister Tarique Rahman and were duly accepted. The long vision of raising this threshold of individual income tax at Tk 500,000 by the fiscal year 31was also endorsed. However, the lowest rate of taxation has been raised from 5.0 per cent to 10 per cent.
In this connection, the provision for 2.5 per cent corporate rebate for both listed (barring those paying tax at special rates) and unlisted companies conditional to their entire transactions through the banking system apparently looks lucrative. But this can be tricky. It would be more pragmatic if the condition applied for major transactions instead of the 100 per cent. Under the revised provision, however, listed companies will be eligible for tax incentives if they raised capital through repeat public offerings (RPOs) and made room for public shareholding to at least 10 per cent of their paid-up capital. So there is space for manoeuvrability for companies but how many of them will be ready for taking advantage of the measures offered remains unpredictable. After all, this is not a propitious time for business and manufacture due to the murky international politics and trade. Without massive investment in industries and factories, employment generation is impossible and prospect of industrial and commercial turnaround looks dim.
Unless internal sources become modestly robust, raising the government income becomes particularly challenging. At a time when an already dull global business climate is made further complicated by disruption of supply lines of fuels due to wars in the Persian Gulf and in Ukraine, mobilisation of internal resources becomes more daunting with cautious approach by investors. Even in normal time, internal financing has fallen far short of meeting the expenditures as proposed in the national budget. The National Board of Revenue (NBR) could never reach revenue targets set by successive governments. Equally lamentable has been the execution of annual development plan (ADP).
The concessionary measures the incumbent government has taken to broaden the base of revenue income looks good. But there is no guarantee the beneficiaries of the concessions will reciprocate the government's well-intentioned move. The concessions made in business and education sectors are highly appreciable but there was expectation that transactions in both sectors would be transparent enough for mutual benefits. Reduction of tax rate for private universities in particular was made with the expectation that poor students would receive its benefits and more money would be set aside for research and scholarships. Similarly, small groceries and kitchen markets have been kept out of the tax net. But will this be enough to rein in inflation? Meanwhile, the Bangladesh Bank's tight monetary policy, as announced, will persist but this too may fall short of the requirement to bring down the rate of inflation.