Government may get rid of black money amnesty amid criticism

The interim government may scrap the provision allowing the legalisation of undisclosed income through investment in the housing sector.

An official of the National Board of Revenue (NBR) Income Tax Division told bdnews24.com that the interim government is facing “intense criticism” over the provision, considering its withdrawal and the issuance of a new ordinance.

NBR officials believe that the high tax rates for legalising such investments would deter anyone from using the facility.

On Jun 2, Finance Advisor Salehuddin Ahmed proposed a budget of Tk 7.9 trillion for the 2025-26 fiscal year, which included the controversial provision allowing undisclosed income to be legalised through investment in real estate, despite a tax rate of up to five times higher than the standard.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), criticised the move. “This discriminates against those who earn their money legally.

“Besides, the government is unlikely to gain significant revenue from it.”

Transparency International Bangladesh (TIB) also condemned the proposal, saying: “This initiative by the interim government contradicts its proposed aim of structural reform, particularly reform of the Anti-Corruption Commission. It is unethical, discriminatory, and unconstitutional.”

During a post-budget press conference, Salehuddin admitted that allowing this concession was “not a good decision”.

Currently, in Dhaka’s Gulshan Model Town, Banani, Baridhara, Motijheel Commercial Area, and Dilkusha Commercial Area, individuals are allowed to legalise black money by investing Tk 6,000 per square metre, in properties up to 200 square metres.

The new budget proposal increased this threshold to Tk 2,000 per square foot, or Tk 21,530 per square metre.

For new buildings in these areas, the proposed tax is Tk 900 per square foot: equivalent to Tk 9,688.5 per square metre on properties not exceeding 200 square metres.

For properties not exceeding 200 square metres in these same areas, the current threshold is Tk 4,000 per square metre.

Under the new budget, purchasing such flats would require paying Tk 1,800 per square foot, or Tk 19,377 per square metre, to legalise them.

In FY 2024-25, a blanket amnesty had been offered to legalise any undisclosed income, including cash or shares, by paying a flat 15 percent tax without any questions asked.

Anyone purchasing land, flats, or apartments could legalise them based on fixed area-wise rates without scrutiny.

Although the interim government scrapped the blanket amnesty in September, it did not remove the provision allowing legalisation of real estate investments.

The recent budget retained this option, albeit with revised, higher tax rates.