Staff Correspondent:

The Centre for Policy Dialogue (CPD) has recommended increasing the tax-free income limit to Tk4 lakh in the upcoming fiscal year (FY) budget, considering the high inflation rate.

CPD Executive Director Fahmida Khatun made this statement on Sunday (March 16) at an event organised by the think tank to discuss its recommendations for the national budget of FY2025-2026.

“Inflation was on an upward trend during the July-February period, with food inflation rates exceeding non-food inflation. Additionally, food inflation rates in rural areas were significantly higher than in urban areas. People are breaking into their savings to afford food,” she said.

“In this situation, we believe it is logical to increase the tax-free income limit. Therefore, we think it should be raised to Tk4 lakh in the next fiscal year,” Fahmida added.

The CPD executive director also said Bangladesh Bank’s plan to bring the inflation rate down to 7-8% by the end of June would be impossible to achieve.

The government had set the tax-free income limit at Tk3.5 lakh in the current fiscal year’s budget.

Fahmida also expressed concern that the government’s revenue shortfall will reach Tk1,05,000 crore by the end of the current fiscal year of FY2024-25.

She said total revenue collection recorded a meagre growth of 4.4% during July-December in FY25. “If the annual growth target of 32.2% is to be met, then total revenue collection will need to increase by a whopping 55.5% during the remainder of FY25 — a highly unlikely prospect.”

“If the current trend of revenue mobilisation continues, then the revenue shortfall could reach Tk1,05,000 crore at the end of FY25,” she said.