Finance Bill 2026: Observations on Income Tax Amendments

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

156(ঙ)

6th Schedule, Part 1, Paragraph (37)

6th Schedule, Part 1, Paragraph (37)
The substantive intent of the Bill is that employee benefits received under a group insurance policy are tax-exempt.

Concern: Paragraph (37) of the 6th Schedule (the list of tax-exempt income) is instead drafted to state that such benefits constitute “income from other sources” - directly contradicting the intended exemption. This is an apparent clerical/drafting error requiring correction before enactment.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

23(জ) (ড)

2(31), (69)

Clause 2(31) — "Company", read with Clause 2(69) — "Person"
Clause (31) includes in the definition of "company" any fund other than a recognized provident fund, approved superannuation fund, pension fund, gratuity fund, or employees' welfare fund.

Concern: Clause (69) separately classifies "fund" as an artificial juridical person (AJP) and an assessee in its own right. The Bill does not clarify whether a fund excluded from "company" under clause (31) is automatically treated as an AJP under clause (69), or actually to which classification the fund belongs.

23(জ) (ড)

2(31), (69)

Clause 2(31) vs Clause 2(69) — Statutory Bodies
Clause 31 includes any state-owned enterprise, corporation, board, or statutory/autonomous body with commercial activities within "company." Clause 69 separately includes "company" and, independently, any statutory body or authority irrespective of profit motive, within "person."

Concern: The same category of entity (a statutory body) appears under both "company" and "person" without express demarcation, creating uncertainty over which rate and compliance regime applies. The Bill should specify which classification prevails for such bodies.

23(থ)

2(77)

Clause 2(77) — "Capital Asset" — Digital Currency
The definition of "capital asset" is expanded to include digital currency, alongside personal gold, silver, diamonds and other items.

Concern: Bangladesh does not currently recognize digital/cryptocurrency as legal tender, and dealing in it is restricted under prevailing foreign exchange regulation. Bringing digital currency within a taxable "capital asset" category — without a corresponding legalization — creates an apparent conflict between the ITA 2023 and existing currency/banking law, and may be read as implicit tax recognition of an otherwise restricted asset.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

26(খ)
53(ঙ)
72
157(গ)

18(3)(গ)
67(9)
118
7th Schedule, Para (3)

Section 67(9) — Housie, Betting and Racecourse Betting
Income from housie, betting and racecourse betting is brought within “special income from other sources,” taxable at 25% under the 7th Schedule, which is also the applicable tax deduction at source (TDS) rate.

Concern: These activities are not generally legally sanctioned in Bangladesh. Taxing such income presupposes either its legality or its recognition as a taxable activity despite that status, which is inconsistent absent a corresponding legalizing framework. The provision should clarify the legal basis for recognizing such income, or confine its scope to specifically licensed activities, if any exist.

53(ছ)

67(13)

Section 67(13), Additional Proviso — Unrepaid Loans/Deposits Exceeding Tk. 5 Lakh
A loan, advance, or deposit exceeding Tk. 5 lakh received by an individual through bank transfer is deemed to be “special income from other sources” if it remains unpaid for a period exceeding six years from the year following its receipt.

Concern: The provision does not exclude loans obtained from banks or financial institutions, many of which commonly have repayment periods exceeding six years (for example, housing loans and long-term term loans). It also provides no mechanism for reversing the deemed income or granting a corresponding deduction where the amount is subsequently repaid. This may result in double taxation of the same amount and create inequitable consequences for genuine long-term borrowings.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

41(ছ)

46(6ক)

Section 46(6ক) - Accrued interest unpaid beyond 3 years
Interest expense accrued but unpaid for 3 years is deemed special business income, reversible on actual payment.

Concern: Section 52(1) already restricts deductibility of interest expense to amounts actually paid, not merely accrued. Since unpaid accrued interest is therefore never allowed as a deduction in the first place, deeming it as income under section 46(6ক) appears redundant - there is no expense being neutralized, and section 28 in any case bars taxing the same income twice.

41(ঠ)
45
46
49

46(11ক)
Proviso of 52(2)
53
56

Sections 46(11ক), proviso of section 52(2) & section 53 - Associate enterprise lending
Where an enterprise borrows funds and re-lends to an associate enterprise at a minimum mandated rate of 12%, the borrowing interest becomes fully deductible (replacing the earlier proportionate disallowance); the associate’s interest payment is allowable; and the lender’s interest income is taxed as special business income, outside the regular-rate provision.

Concern: This creates a profit-shifting channel. An entity enjoying a concessional rate (e.g., a garment exporter at 10%) can lend to an associate taxed at the regular corporate rate (27.5%) at the mandated 12%, with the lender taxed at only 10% on that interest - a tax differential of roughly 17.5 percentage points on the same interest flow. Anti-avoidance safeguards (e.g., taxing such interest at the higher of the lender’s or borrower’s applicable rate) or treating it as income from financial assets should be considered.

41(ঠ)

46(11ক)

Section 46(11ক) - Interest-rate mandate vs. Bangladesh Bank regulation
Companies are effectively required to charge a minimum 12% interest rate on loans extended to associate enterprises out of borrowed funds.

Concern: This presupposes that the lending entity is permitted to earn interest on inter-company loans in the first place. Absent Bangladesh Bank’s specific permission, non-financial entities are generally not permitted to extend interest-bearing loans to other entities. The provision should be reconciled with prevailing banking regulation governing lending.

48(খ)
48(ঘ)

55(ক)
55(জ)
55(ড)

Sections 55(ক), 55(জ) and 55(ড) - Cash/entertainment-type expenditure
Section 55(ক) allows cash/retail expenditure on items such as refreshments, stationery, etc. up to 0.10% of turnover. Section 55(জ) separately caps allowable entertainment expense. Section 55(ড) disallows 25% of expenses where over 50% of non-raw-material/salary/rent payments are made in cash.

Concern: The items covered under 55(ক) substantially overlap with “entertainment” under 55(জ), and also fall within the scope of the cash-payment restriction under 55(ড). The Bill does not clarify the order of application, or whether these limits are alternative or cumulative, risking inconsistent assessment practice. A clear hierarchy or mutual exclusion should be specified.

49
53(গ)

56(ক)
67(7)

Sections 56(ক) vs 67(7) - Inconsistent treatment of TDS default
Section 56(ক): TDS default on expense payments - TDS shortfall plus 50% additional tax.

Section 67(7): TDS default on fixed-asset purchase - TDS shortfall plus 50% additional tax, and a corresponding income is deemed as income from other sources.

Concern: The same compliance failure (non-deduction/non-deposit of TDS) attracts materially different consequences depending solely on whether the underlying payment relates to a revenue expense or a fixed asset. This inconsistency should be removed by aligning treatment across both provisions, i.e. in both cases either the tax so payable will be directly added to the total tax liability or a corresponding income will be deemed as income from other sources.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

50

58

Section 58 - Land-for-consideration transactions with real estate developers
Capital gain = signing money + value of flats received – proportionate cost of acquisition of land; taxed at 15%.

Concern: No valuation methodology is prescribed for flats received in kind, leaving valuation to the tax authority’s discretion and inviting arbitrary assessment. Where the landowner receives only flats (no cash), the resulting tax - computed on notional/market value - may exceed the landowner’s available cash, since no actual sale proceeds are received. A deferral mechanism (e.g., taxing on eventual sale of the flats) or a prescribed valuation basis should be introduced.

51

61(4), (5)

Section 61(4)/(5) - Firm-to-company conversion
Capital gains exemption on a firm’s asset transfer to a company is conditional on specified tests (full asset/liability transfer, proportional shareholding, 50% voting rights retained for 5 years, etc.). On failure, the exemption is withdrawn and the “successor company” becomes liable for capital gains tax “at the regular rate.”

Concern: Two issues arise.

First, the successor company is the purchaser/transferee of the assets, not the party that realized the gain - taxing it, rather than the transferor firm or its partners, is conceptually inconsistent with capital gains being a tax on the seller’s gain.

Second, “regular rate” is undefined in this context: under the 7th Schedule, corporate capital gains are taxed at 15%, distinct from the standard corporate tax rate used elsewhere in the Act. The assessee should be corrected to the transferor, and the rate terminology made precise.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

77

94
130ক
Rule 3 of the Tax at Source Rules, 2026 (SRO 210-Law/IncomeTax-1/2026 dated 08 June 2026)

Section 94 vs new Section 130ক - Retailers
A new 0.2% tax collection mechanism is introduced on sales to retailers under section 130ক, in addition to the existing section 94 TDS regime.

Concern: The Bill does not state whether retailers are now excluded from section 94, risking dual deduction on the same transaction. Please note that vide Paripatra 2024 (example 10) it was clarified that section 94 applied to retailers.

Further, while Tax at Source Rules 2026 (Rule 3(3)) allows suppliers to adjust tax already collected under section 94 against their liability under section 89, no equivalent adjustment is provided for tax collected under section 130ক, creating a real risk of double taxation for retailers.

77

130ক

Section 130ক - Tax collection from retailers
Sellers (manufacturers/importers/suppliers/distributors/commission agents) must collect 0.2% tax from retailers; sellers who instead bear the tax themselves may claim it as a deductible business expense.

Concern: Allowing the seller to absorb the collectible tax and claim a deduction gives sellers a built-in incentive not to pass the tax to retailers, defeating the collection mechanism’s purpose. If a deduction for tax borne on another’s behalf is intended, it more appropriately belongs under section 49 (allowable deductions) rather than within a TCS provision.

70

112ক

Section 112ক - Gold/jewelry trade TDS
Gold, silver, diamond and platinum traders must deduct 0.5% TDS from sellers at the point of purchase.

Concern: Where individual sellers (e.g., distressed sellers of personal gold) repeatedly transact in small amounts, requiring a fresh TDS challan at each sale is operationally burdensome for both trader and seller, and may discourage formal-channel sales. A de minimis threshold or simplified reporting mechanism should be considered.

Rule 4 of the Tax at Source Rules, 2026 (SRO 210-Law/IncomeTax-1/2026 dated 08 June 2026)

Tax at Source Rules 2026, Rule 4 (Serial 4) - Freight forwarders, shipping/stevedoring and security/cleaning service providers
TDS at 10% on commission and 1% on gross bill. The earlier proviso specifying that the higher of the two rates applies where both exist is absent from the 2026 Rules.

Concern: Without the “higher of the two” clarification, it is unclear whether both rates apply cumulatively (10% + 1%) or only the higher rate where both commission and gross bill feature in the same transaction - risking over-deduction and inconsistent practice. The earlier clarificatory proviso should be retained.

103
177

140(3)
177

Sections 140(3) and 177 - Withholding-return threshold mismatch
Section 140(3) does not designate natural individuals with business turnover exceeding Tk. 10 crore as specified person (i.e. a withholding entity). But section 177 requires such persons to file withholding tax returns.

Concern: The natural individuals having business turnover exceeding Tk. 10 crore covered by section 177 are not “specified persons” under section 140(3) and have no underlying withholding obligation to report on. These should be aligned.

83

147

Section 147 - TDS verification proceedings
A time limit (current year plus 2 preceding income years) is introduced for initiating TDS confirmation/verification proceedings.

Concern: It remains unclear whether such verification proceedings may still be initiated after a normal assessment under section 183 has already been completed for the relevant year. Express clarification is needed to avoid duplicative or conflicting proceedings on an already-assessed year.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

84

153(3ক)
153(6)

Section 153(6) and new 153(3ক) - AIT on motor vehicles
AIT on motor vehicles remains non-refundable even where actual tax liability is lower (unchanged from the existing law). A new subsection 3ক separately provides that such AIT is to be treated as “advance tax.”

Concern: The continued non-refundability of excess AIT on motor vehicles - effectively a notional minimum tax - sits at odds with the Bill’s broader move away from treating advance tax/TDS as minimum or final tax (e.g., withdrawal of final-tax treatment on sanchaypatra interest, capital gain from land and export cash incentives). This provision should be revisited for consistency.

Separately, the new subsection 3ক is redundant, since Chapter 5, Part 7 of the ITA 2023 already governs and labels this as “Advance Tax Payment.”

155(5)
162

Section 155(5) read with Section 162 - Advance tax estimation
Section 155(5) is amended to allow an assessee to “estimate” advance tax payable where it is either lower or higher than the section 155(1) computed amount.

Concern: Section 162 imposes interest where an assessee who “estimates” advance tax pays less than 75% of the eventual regular tax liability. Previously, “estimation” applied only where the assessee expected liability below the statutory minimum. Under the proposed wording, an assessee who pays above the statutory minimum - but whose payment still falls under 75% of eventual liability - could now be treated as having “estimated,” and become liable to interest despite paying more than required at the time. This penalizes good-faith over-payment and should be clarified.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

89

163

Section 163 - Proportionate reduction for reduced-rate assessees
The Bill does not carry forward the proportionate-reduction mechanism for turnover tax where the assessee is subject to a concessional tax rate.

Concern: Previously, an assessee taxed at a concessional rate (e.g., 12%) paid turnover tax proportionately reduced (turnover × 1% × 12/27.5), based on its reduced corporate tax liability. Its absence under the proposed section 163 effectively raises the turnover tax burden on concessional-rate assessees to the full 1%, eroding the benefit of the concessional rate itself. This withdrawal should be reconsidered.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

57
122(খ)

72ক
212(4)

Section 72ক vs Section 212(4) proviso - Record retention vs. reopening of assessment
Books and vouchers must be retained for 6 years (12 years for companies), while the proviso to section 212(4) allows the tax authority to reopen assessments for undisclosed income/assets/expenditure beyond the preceding 6 assessment years, without limit.

Concern: An assessee has no statutory obligation to retain records beyond 6 (or 12) years yet may be assessed for years beyond that period. This creates an evidentiary asymmetry: the assessee cannot reasonably be expected to substantiate or rebut a finding for a year it is no longer required to hold records for. The reopening power should be capped consistently with the record-retention period.

58

73

Section 73 - Mandatory income computation sheet
Companies, firms, AOPs and AJPs above prescribed turnover/capital thresholds, specified traders (e.g., gold, ornaments etc.) and suppliers to retailers, must submit an income computation sheet certified by a CA, CMA or ITP, alongside audited financial statements.

Concern: A mandated third-party certification requirement signals that the underlying computation under the ITA 2023 is considered too complex for self-assessment, effectively compelling recourse to paid professionals for a basic filing obligation.

58

73

Section 73 - Certification requirement vs. mandatory online filing
Individuals with long-term contracts, or those in the gold/jewelry trade and businesses as referred under section 130ক, must submit a CA/CMA/ITP-certified income computation sheet and audited financial statements with their return.

Concern: Online return filing is mandatory for most individual assessees, with limited exceptions. The class of persons mentioned under section 73 may include individual assessees as well. The Bill does not clarify how such individuals are to attach certified documents and/or audited statements within the e-filing system. The platform’s capacity to accommodate these attachments should be confirmed, or the requirement reconciled with the online filing mandate.

Reference to the Finance Bill, 2026

Reference to the Income Tax Act, 2023

Provision & Proposed Amendment

Concern / Discrepancy / Impact

95

170(2)

Section 170(2) table vs. new return-filing deadline for non-individual assessees
For assessees other than individuals/HUFs, the proposed deadline is the 15th day of the 9th month after year-end (or 15 September, if earlier).

Concern: This conflicts with the graduated timeline under section 170(2). For a 30 June year-end, the provision sets 15 March as the deadline if 15th day of 9th month is considered, while the table under section 170(2) permits filing up to 15 April without loss of incentive or penalty exposure. Hence, the deadline should apply only where the 15th-day-of-9th-month date falls before 15 September; otherwise, the existing section 170(2) structure (6 months, then +3 months 15 days, then +2 months 15 days) should continue to govern.