Govt backtracks on plans to tax motorbikes, auto-rickshaws and wealth

The National Board of Revenue (NBR) had considered introducing an advance income tax on motorcycles and auto-rickshaws in the budget for the 2026–27 fiscal year to boost revenue. The agency had also drawn up plans to levy a wealth tax on affluent individuals.

However, the NBR has temporarily backtracked on these proposals after failing to secure the green light from the highest levels of the government.

Sources within the Ministry of Finance and the NBR revealed that NBR Chairman Abdur Rahman Khan held a second round of talks on the budget with Prime Minister Tarique Rahman last Tuesday.

During the meeting, the prime minister issued several directives keeping the general public in mind. In accordance with these instructions, the NBR dropped several proposed measures, including the advance income tax on motorbikes and auto-rickshaws.

Speaking to Prothom Alo on condition of anonymity, an NBR official said, “We were moving forward with certain measures to expand the tax net, but due to the lack of a green light from the government, we have had to abandon these taxation plans at the last minute.”

“Therefore, we have no choice but to focus on collecting taxes as per the budget proposals, as tax rates are not being significantly increased this time,” he added.

The official further said that the government is placing the utmost focus on easing business and trade at the individual level.

In the new budget, the NBR had initially planned to provide tax exemptions for net wealth up to Tk 40 million (4 crore), while levying a wealth tax ranging from 0.25 to 2 per cent on assets exceeding Tk 40 million.

Discussions with Ministry of Finance officials revealed that the government is not in favour of increasing the tax burden on citizens during its first year in office. Consequently, various tax proposals, including those related to VAT, are being scrapped.

The NBR had planned to bring battery-run auto-rickshaws under the advance income tax bracket for the first time in the budget. It was considering setting the tax rates between Tk 1,000 and Tk 5,000, depending on rural or urban locations, which could have potentially generated billions of taka in revenue from this sector.

Similarly, the NBR had also contemplated levying an advance income tax on motorcycle owners. Under the agency's initial proposal, plans were in place to impose an annual advance income tax of Tk 2,000 for 111cc to 125cc motorbikes, Tk 5,000 for 126cc to 165cc, and Tk 10,000 for those exceeding 165cc.

However, bikers launched protests against this new proposal, forming a human chain outside the NBR office where a large number of young motorcyclists gathered. As a result, the government backtracked on its decision to impose a tax burden on motorbikes.

Businesses have long complained that even though a 'minimum tax' is collected, it is subsequently neither refunded nor adjusted. Consequently, the NBR is set to introduce major changes to the minimum tax and Tax Deducted at Source (TDS) systems in the budget for the 2026–27 fiscal year.

Under the new rules, tax deducted at source will no longer remain locked as a final minimum tax liability. Instead, taxpayers will have the opportunity to adjust it against their actual tax liability at the end of the year. Any excess tax deducted will either be adjusted in the following year or refunded within three months upon application.

At present, even if the tax deducted at source exceeds the actual tax liability in many instances, there is no scope for a refund or adjustment. As a result, even low-profit firms are forced to bear the burden of excess taxation. The NBR has initiated this change in response to long-standing demands from the business community.

The new system for adjusting source tax will be managed digitally via an e-TDS platform. According to the NBR, export-oriented industries, importers, suppliers, and contracting firms will benefit the most from this move. Businesses had been voicing grievances for a long time over the non-refundable nature of this minimum tax.

Finance Minister Amir Khasru Mahmud Chowdhury will present the budget for the new fiscal year in the National Parliament on 11 June. The size of the budget this year is expected to be around Tk 9.3 trillion (9.30 lakh crore), which is Tk 1.4 trillion (1.40 lakh crore) higher than that of the current 2025–26 fiscal year.

The budget size for the ongoing fiscal year stands at Tk 7.9 trillion (7.90 lakh crore). To secure the vast amount of funding required for the new budget, initiatives are underway to implement major reforms in tax and VAT collection, alongside expanding the tax net.

The NBR’s total revenue target for the upcoming fiscal year is likely to be set at Tk 6,040 billion (6.04 lakh crore).