Finance Act 2026 — Comprehensive Interactive Summary

The Finance Act 2026 (অর্থ আইন, ২০২৬) — tabled in the National Parliament on 11 June 2026 as Bill No. 95/2026, passed as a Money Bill on 29 June 2026, and published in the gazette with presidential assent on 30 June 2026 as Act No. 96 of 2026 — is the annual finance legislation that amends three core revenue statutes: the VAT and Supplementary Duty Act 2012, the Income Tax Act 2023, and the Customs Act 2023. Most provisions take effect on 1 July 2026, the start of FY 2026–27, but under the Provisional Collection of Taxes Act 1931, four sections (20, 21, 22 and 179) took legal effect immediately upon the declaration in Chapter 6 — a standard mechanism used to prevent pre-Budget forestalling on customs and VAT-sensitive items.

• Individual income tax: the tax-free threshold rises gradually over five years — from ৳4,00,000 (FY2026–27 & 2027–28) to ৳4,50,000 (FY2028–29 & 2029–30) to ৳5,00,000 (FY2030–31) — while a new top bracket of 35% is introduced from FY2028–29 onward for very high incomes (above ৳3 crore), up from a flat 30% ceiling today.
• Corporate tax rates are restructured with sharper incentives for publicly listed companies and companies transacting via formal banking channels, while cigarette/tobacco manufacturers and mobile operators remain the highest-taxed sectors at 45%.
• A new wealth-based surcharge (0–35%) and a new environment surcharge on multiple vehicle ownership (by engine capacity) are formalised, alongside tax rebates for employers hiring persons with disabilities or of the third gender.
• Turnover tax rates are differentiated by sector for the first time — 3% for tobacco manufacturers, 2.5% for carbonated/sweetened beverage makers, 1.5% for telecom operators, and 1% generally.
• A comprehensive Startup Tax Sandbox regime is introduced (Eighth Schedule, Part 2), giving registered startups a 9-year "growth period" with 0% turnover tax, extended loss carry-forward, and reduced reporting burden.
• The Customs Act gains an entirely new chapter — Chapter 16-Ka on Free Trade Zones — creating a duty-free import/export/manufacturing regime administered through a new "Importer on Record" and "Free Trade Zone Operator" framework.
• VAT compliance is tightened (digital/ERP record-keeping expectations, revised definitions of "tax period" and "business identification"), and the Customs Tariff (Schedule 1) and Supplementary Duty tables (Schedule 2) are comprehensively replaced, adjusting duty rates across food, tobacco, beverages, vehicles, electronics, and construction materials.

This report consolidates the full text of the gazette copy into an organised, English-language reference. Bengali legal/technical terms are retained in parentheses where precision matters. Figures are in Bangladeshi Taka (৳); "lakh" = 100,000 and "crore" = 10,000,000.

Chapter 2 amends definitions and procedural sections of the VAT & Supplementary Duty Act 2012 and replaces the Act's supplementary duty schedules (see Section 6). Key changes below.

3.1 Definitional & Procedural Changes

3.2 Supplementary Duty (SD) Rate Schedule

Schedule 2 to the VAT Act (referenced through Chapter 5 in the gazette) is replaced with an updated two-table structure: Table 1 (import-stage SD) and Table 2 (supply/local-stage SD). Representative changes are summarised in Section 6; the tables run to several hundred HS-code line items covering food and beverages, tobacco, cosmetics, footwear, electronics, vehicles, construction materials, iron and steel, and consumer glass/ceramics.

3.3 Section-by-Section Amendments (Sections 2–22)

Chapter 2 amends the VAT & Supplementary Duty Act 2012 section by section. The table below sets out every amending section of the Bill (2 through 22) against the VAT Act provision it touches.

4.1 New & Amended Definitions (Section 2)

Section 2 of the Income Tax Act 2023 is amended clause by clause. The full text of every re-defined or newly inserted term relevant to this Act is set out below.

4.2 Individual Income Tax Slabs, FY2026–27 to FY2030–31

The Act sets out three successive rate schedules (Schedule 2, Part 1, Paragraphs ক, খ and গ) applying over five assessment years (2026–27 through 2030–31). The general tax-free threshold rises in two steps — ৳4 lakh, ৳4.5 lakh, then ৳5 lakh — and a new 35% top marginal rate is phased in from FY2028–29 for total income above ৳3 crore.

4.3 Corporate Tax Rates (Schedule 2, Part 1, Paragraph D)

"Publicly traded company" means a public limited company registered in Bangladesh under the Companies Act 1994 whose shares were listed on a stock exchange before the end of the income year for which tax is being assessed. These corporate rates apply for the five assessment years 2026–27 through 2030–31.

4.4 Wealth Surcharge (Schedule 2, Part 2, Paragraph A)

A minimum 10% surcharge band also applies where net worth is below ৳4 crore but the taxpayer owns more than one motor car, or a house/apartment exceeding 8,000 sq ft in a city corporation area. Two additional flat surcharges apply under Anuched-Kha: a 2.5% surcharge on the income-tax liability of cigarette/tobacco manufacturers, and a 2.5% surcharge on educational institutions that fail to meet disability-accessibility compliance standards.

4.5 Environment Surcharge on Multiple Vehicle Ownership (Schedule 2, Part 3)

4.6 Tax Rebates for Inclusive Employment (Schedule 2, Part 4)

Schedule 2, Part 4 provides: where an employer engages persons with disabilities, or persons of the third gender, such that they constitute at least 10% of the establishment's total workforce, or number more than 25 employees (whichever criterion is met), the employer is entitled to a tax rebate equal to the lower of (a) 5% of the tax otherwise payable or (b) 75% of the salary/wages actually paid to those employees during the income year. The two categories — persons with disabilities and third-gender persons — are the only classes covered by this employer rebate; they are separate from (and additional to) the higher personal tax-free thresholds already available to disabled, third-gender and war-wounded freedom-fighter individual taxpayers under Section 4.2 above.

4.7 Turnover Tax (Section 163(6))

Specific exemptions from turnover tax continue for government agencies selling fertilizer/seeds, commission-based business, delivery-order business, money-changing business, and gold/silver/jewellery trade.

4.8 Startup Tax Sandbox Regime (Eighth Schedule, Part 2)

The Act inserts a dedicated "Startup Tax Sandbox" in Part 2 of the Eighth Schedule. Clause 1 provides that, for a registered startup's "growth years", the provisions of Sections 55 and 56 (which disallow business-expense deductions where tax was not properly deducted/collected/deposited at source) shall not apply in computing income from business or profession — i.e. startups in their growth years are shielded from expense-disallowance penalties for TDS lapses. Definitions and further conditions:

4.9 Withholding Tax (TDS) Changes

Chapter 4 amends multiple sections of the Customs Act 2023 (including updating the H.S.-classification reference to the latest revision of the International Convention on the Harmonized Commodity Description and Coding System) and inserts an entirely new chapter — ষোড়শ-ক অধ্যায় (Chapter 16-Ka), "Free Trade Zone" — running from Section 134-Ka through approximately Section 134-Sha. This is a full section-by-section breakdown of the new chapter.

5.1 Chapter 16-Ka — Free Trade Zone, Section-by-Section

5.2 Free Trade Zone — Key Features at a Glance

Note on section lettering: the gazette uses Bengali letter-suffixes (ক, খ, গ, ...) to insert new sections after Section 134 without renumbering the whole Act. Where OCR/translation of a specific letter is ambiguous, the section is identified here by its title and function rather than relying solely on the letter suffix.

Schedule 1 (Chapter 5) replaces the entire Customs Tariff (all 96/97 HS chapters), and the Second Schedule to the VAT Act — Supplementary Duty Table 1 (import stage) and Table 2 (supply stage) — is revised across hundreds of HS-code lines. Given the scale (several hundred individual HS-code entries), the tables below present the more granular, chapter-organised rate detail available from the gazette text; businesses should still confirm the exact HS-code rate against the published schedule before pricing or customs planning.

6.1 Motor Vehicles — Supplementary Duty by Category (H.S. Chapter 87)

Motorcycles (CBU/CKD, by engine type and displacement) carry revised SD in the 60%–250% range; hybrid and reconditioned-vehicle categories each have their own separate duty tables distinct from new petrol/diesel/EV imports.

6.2 Tobacco & Related Products (H.S. Chapter 24)

6.3 Food, Beverages & Agriculture (H.S. Chapters 1–24)

6.4 Cosmetics, Chemicals & Plastics (H.S. Chapters 28–40)

6.5 Textiles, Footwear & Leather (H.S. Chapters 41–67)

6.6 Metals, Construction Materials & Glass (H.S. Chapters 68–83)

6.7 Electronics, Machinery & Batteries (H.S. Chapters 84–85, 90)

This section presents the more granular categories extracted from the gazette text; the full Schedule still contains several hundred individual HS-code line items not reproduced line-by-line here. Confirm the precise HS-code rate against the official gazette schedule before pricing or customs planning.