Description

The National Budget of Bangladesh for the fiscal year 2020-21 has been published on June 11, 2020. The proposed budget size is BDT 5,680 billion which is 13.24% higher than that of the FY20 revised budget with GDP growth target of 8.2%. The total ADP size in the budget FY21 is BDT 2051.45 billion which is 6.34% higher than that of FY20 revised budget. This ADP is 95.40% of the total development expenditure. Bank will be a major source of funds to finance the budget deficit. There is a plan to borrow BDT 849.80 billion or 44.73% of deficit from banking sector which was BDT 824.21 billion or 53.69% of deficit in the FY20 revised budget. Most of the allocations of the proposed budget expenditure was allocated to human resource and general services which followed the last year’s allocation trend. The budget for FY21 has been prepared keeping health sector emergencies and economic revival of different sectors in the post-Covid situation into consideration. The government has set GDP growth target at 8.20% and inflation of 5.40% for FY21 with the expectation of V-shaped post-pandemic recovery. Due to the declining exports, lower remittance inflow and worldwide lockdowns, the GDP growth rate of FY20 have been revised to 5.20%, down by 300 bps than the actual target. The FY21 budget proposed to increase the tax-free income threshold for both male and female taxpayers. It also reduced the minimum tax rate for individuals from 10% to 5%, and the maximum tax rate for individuals from 30% to 25%. A 2.5% reduction in the tax rate of non-publicly traded companies have been proposed. Dividend income from the listed companies was made tax-free up to BDT 50,000 and double taxation on dividend from listed companies was removed. Declaration of cash dividend for at least 50% of the profit of listed companies has been made mandatory.