Any gifts given outside of parent-child, spousal and child-parent relationships would be subject to taxation, as per fiscal measures in the proposed budget for the fiscal year 2024-25.
The Finance Bill-2024 excludes gifts between parents, spouses and children from the tax net.
Apart from these, any gifts exceeding Tk500,000 not made by crossed cheques or bank transfers would be taxable for the recipient, even among siblings, in-laws or other relatives.
Individual taxpayers who receive gifts, grants, loans or other deposits exceeding Tk 500,000 without a crossed cheque or bank transfer will have to pay tax next financial year, according to the new provision in the bill.
To claim tax exemption for a gifted asset, taxpayers must declare it in their tax returns, officials said.
This new provision is meant to curb tax evasion through gifts to close relatives, according to AKM Badiul Alam, an income tax member of the National Board of Revenue (NBR).
"We have exempted gifts to parents, children and spouses from tax, and the requirement for bank transfers for these gifts has also been removed," he added.
However, tax exemption for gifts from abroad to parents still requires transfer through banking channels.
Several law enforcement agencies and the Anti-Corruption Commission (ACC) have previously flagged irregularities involving illegally accumulated assets being disguised as gifts to avoid taxes.
Another tax official said while inherited properties are currently taxable, the proposal seeks to relax this for parents, spouses and children.
Any receipt or gain is taxable, but there are implementation ambiguities, he added.
Gifts and grants for religious institutions and charitable organisations will not be considered taxable from July 1, 2024.
"Gifts between spouses and to and from parents are not subject to income tax, provided certain conditions are met. Under the Finance Bill-2024, gifts from others will be considered income from other sources," explained Snehasish Barua, a member of the Institute of Chartered Accountants Bangladesh (ICAB).
Also, the donor will have to pay income tax for gifting property to a trust under revocable trust, he added.
Tax experts questioned the possible contradiction between the new provision and the 'Gift Tax Act 1990'.
Mr Barua said the Gift Tax Act offers a list of exemptions for donors. Although a donor might be exempt from paying gift tax due to these exemptions, they will have to pay tax under the Income Tax Act 2023, he added.
Apurba Kanti Das, a former income tax member, said the government proposes to treat gifts as "other income" from July 1, 2024 to prevent people from disguising assets such as gold as gifts for weddings or other ceremonies to avoid taxes. "This provision shifts gifts, previously exempt from income tax, to a new tax head to be taxed at the regular rate," he added. However, a chartered accountant said, "This contradicts the Gift Tax Act 1990, which exempted all blood relatives from taxes."
In March 2024, the High Court ordered Nobel Laureate Dr Muhammad Yunus, founder of the non-profit Grameen Kalyan, to pay Tk 1.19 billion in taxes for the 2011-2017 tax years. Earlier, Dr Yunus donated Tk 767.3 million to three trusts -- 'Professor Muhammad Yunus Trust', 'Yunus Family Trust', and 'Yunus Centre' -- between the tax years 2011-2012 and 2013-2014. The tax authorities then imposed a "gift tax" on the donated money.
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