Bangladesh

Budget Highlights
2016-17

Macroeconomi
c Outlook

Budget Deficit & Financing

Description
Revenue Collection
Total Expenditure
ADP
Non- ADP
Overall Deficit (Excl
Grants)

RB FY16

BFY17

% of
GDP

% of
GDP

10.3
15.3
5.3
10.0
5.0

12.4
17.4
5.6
11.7
5.0

Financing
Foreign Grants
0.3
Foreign Loan-Net
1.2
Foreign Loan
1.6
Amortization
0.4
Domestic Borrowing
3.6
Bank Borrowing (Net)
1.8
Non- bank Borrowing (Net)
1.8

Growth
BFY17
over
RBFY16
36.8
28.7
21.6
32.5
12.3

Growth and Investment

Indicator

FY15-16
7.0

7.2

30.1

31.0

Private (as % of GDP)

22.8

23.4

Public (as % of GDP)

7.3

7.5

4.3

4.3

6.2

6.0

GDP growth (%)

Investment (as % of GDP)

0.3
1.6
2.0
0.4
3.1
2.0
1.2

9.7
54.2
44.0
15.2
(1.0)
22.9
(25.9)

FY16-17

ICOR
CPI inflation (%)

Graph: NON-DEVELOPMENT &

DEVELOPMENT BUDGET: 2016-17
(TAKA 3,406.05 BILLION)
Resources Coming From
Foreign Grants
Foreign Loan
Domestic Financing
2%

9%

Non-Tax Revenue
18%

Tax Revenue (NON-NBR)

Tax Revenue (NBR)

60%

10%
2%

Tax Revenue (NBR):

Taka 2,031.52 Billion
(59.7%)
VAT
35.8%
Import Duty
11.1%
Income Tax
35.4%
Supplementary
14.8%
Duty
2.9%
Others

Pension
Industrial & Economic
SErvices
Recreation, Culture &
Religious Affairs
Housing

1%
7%
15%
12%
11%

5% 5% 1%
6%
1%5%
7%
6%
4%
7%

4% 5%

Public Offer & Security

Social Security & Welfare
Public Administration
Defence
Agriculture
Health
Energy & Power
Local Govt. & Rural Dev.
Transport & Communication
Interest
Education & Technology
Miscellaneous Expenditure
Subsidies & Incentives

***Sector Wise Resource Distribution (Subsidies &

Incentives, Pension & Interest are shown separately)

Graph: NONDEVELOPME
NT &
DEVELOPME
NT BUDGET:
2016-17
( TAKA
3,406.05
BILLION) Use
of Resources

Industrial & Economic

SErvices

Recreation, Culture &

Religious Affairs
Housing
Local Govt. & Rural Dev.
Subsidies & Incentives
18%

3%
5% 0%1% 1%
8% 1%
4%
6%

14%
8%

3%
13%
8%

7%

Agriculture
Health
Social Security &Welfare
Transport &
Communication
Public Administration
Pension
Public Order & Safety
Defence
Education & Technology
Interest
Miscellaneous Expenditure

Graph:
NON-DEVELOPMENT
BUDGET: 2016-17
(TAKA 2,280.79
BILLION) Details of
Sector-wise
Allocation

Others
Social Security
&Welfare

Graph:
DEVELOPMENT
BUDGET : 201617
(TAKA 1,125.26
BILLION)
Details of
Sector-wise
Allocation

13%

7% 3%

27%

5%
6%
6%
15%

18%

Public Administration
Health
Agriculture
Education &
Technology
Local Govt. & Rural
Dev.
Transport &
Communication
Energy & Power

Annual Development Programme

ADP of Tk. 110,700 crore has been proposed for
FY17
45,163 crore (46.6% of original ADP FY16) was
implemented up to April 2016mn(last year it was
51.8%)
New
6% 3%
49%
New
33%

1% 3%

5%
14%

44%

Development
Assistance
Unapproved
Carryover
Concluding
Continuing

6%
13%
23%

Development
Assistance
Unapproved
Carryover
Concluding
Continuing

Tax Ratesfor other than

Companies

Threshold of Total Income

Status
General Tax Payers
Women and senior citizen aged 65 years or above
Person with disability
War-wounded gazetted freedom fighters

Threshold of Total Income (in Tk.)

2 lakh 50 thousand
3 lakh
3 lakh 75 thousand
4 lakh 25 thousand

Individual Tax Rate

Total Income
On first Tk. 2 lakh 50 thousand of total income
On next Tk. 4 lakh of total income
On next Tk. 5 lakh of total income
On next Tk. 6 lakh of total income
On next Tk. 30 lakh of total income
On the balance of total income

Tax rate
Nil
10 percent
15 percent
20 percent
25 percent
30 percent

Tax Rate for cigarette, bidi, zarda, chewing tobacco, gul, or any other tobacco products
manufacturers other than Companies
Cigarette, bidi, zarda, chewing tobacco, gul or any other tobacco products
manufacturers

45 percent

Tax rate for non-residents (other than non-resident Bangladeshi)

Income of non-resident

30 percent

Tax Rate for registered Co-operative Society

Income of Co-operative Society.

15 percent

Other
Fiscal Measures
Wealth
Surcharge:
Tax
on
net
wealth
above Tk. 20 crore
has been raised to
30% (from 20%)progressive taxing
for Tk. 5 crore and
above net assets,
higher
revenue
collection

Tax deduction at source

(TDS):
RMG and accessories, terry
towel, jute goods, frozen
food,
vegetables, leather goods
and packed food exporters
have to pay advance income tax
at the rate of 1.5% (increased
from 0.6%)
Payments from royalties and
certain
services
(such
as
professional
services,
consultancy,
eventmanagement,
supply
of
manpower etc.) will be taxed at
10% if base amount is below Tk.
25 lakh, and at 12% for

Tax compliance
and combating
tax evasion:
Compulsory return
submission by all
employees of
government, nongovernment, semigovernment and
autonomous bodies
with monthly basic pay
of Tk. 16,000 or higher

Custom Duties on Different

Sectors
Items

FY15-16

FY16-17

Comment

Increased (%)
Rice (all), Maize (flour)

10

25

Higher protection for farmers

Wheat, Maize and Potato starch

10

15

More protection for farmers

Tubes, pipes and hallow profiles

10

25

Local industry protection

Dietary foods (Soya cakes, Inulin etc)

10

Helpful for local industry

Optical fibers

10

15

Access to internet will be costlier

Will reduce industrial cost

Decreased (%)
Lubricating oil, petroleum jelly, dextrin, glues,
stripping chemical gum rosin, poly salt, organotin
compounds

25

15

Plastic products

25

10-15

Pharmaceutical (Stability/Humidity chamber,

Laboratory refrigerator

25

For VAT registered importers, several equipments

under HS code 73; 83; 84; 85;94

25

0-15

Likely to be harmful for local

industry
Will help the industry
May encourage VAT registration

***Major changes in some important sectors

Major Changes in
Supplementary Duty
Increased
50% on Tobacco and other manufactured tobacco substitutes; 10% on Broken
or
crushed stone; 10% on Other perfumery
Imposition
10% on boulder stone; 45% on most of the bars and rods, hot rolled, in
irregularly
wound coils, of iron or non-alloy steel; 20% on angles, shapes and sections of
iron
or non-alloy steel; 10% on Electrical goods(lamp holder, connector)
Decreased
10% decrease for agricultural good (stabilizer for milk), Coffee mate; 10%
decrease
on electrical good (DOP); 45% to 20% motor cycle assembling (next two
years)
Exemption

Incidenc
e
According to the budget
documents, CD, SD and
VAT at import stage was
planned
to grow at more than 30%
in FY17

An
additional
Tk.80217
crore (1.5%
of GDP)
worth of
private
investment
has been
targeted

Sectoral Measure:
Industry
Highlights
Rationalization of
duties and taxes on
some inputs used
by toiletries,
ceramic, paper and
rubber industries,
electrical
equipment, IT, gas
and power

Continuation of
incentives for
exports with an
allocation of
Tk.4500 crore

Prospect of
positive changes
in global and local
demand for
industrial products
in FY17 will
directly influence
investors decision
to invest

Sectoral Measure: Oil, Gas

and Electricity
Total allocation for the power and energy sector in FY17 is Tk. 15,035 crore
(9.5% lower than RB16, mainly driven by lower allocation for development
project).
Share in total budget has reduced (from 6.3% in FY16 to 4.4% in FY17)
About 87% of total allocation for the sector will go to the power sub-sector
Only 13.1% of total sectoral allocation is for energy sub-sector

Sectoral Measure: Defence

The budget allocation for Defence for FY17 is Tk. 21,144.6 crore, which is 20.4%
higher than the allocation for the previous year
Of this amount, 98.2% (Tk. 21,738.8 crore) is non-development expenditure, while
only 1.8 percent (Tk. 405.8 crore) is development expenditure
**** Other important changes in incentives declared for different sectors are provided earlier

Sectoral Measure: Construction

Sl.
No.
1

Description
of goods
Boulder stone

CD-25 percent, VAT-15 percent

Broken or
crushed stone

CD-25 percent, SD-20 percent,

VAT-15 percent

3
4

Ferro alloy
Billet

RD-25 percent
Specific duty BDT 7000/MT, VAT-0 Tariff
Value $ 400/MT, percent
CD-10 percent, 25 percent, RD-4Tariff Value
$ 400/MT, percent, VAT-15 percent

Bars and rods

Angle

Fly ash

Existing Rate

Proposed Rate

CD-10 percent, 25 percent, RD-4CD-5

percent percent, VAT-15 percent
CD-10 percent

CD-5 percent, SD-10 percent,

VAT15
percent
CD-5 percent, SD-30 percent,
VAT-15
percent
RD-15 percent
CD-0 percent, RD-20 percent,
VAT-15 percent
CD-5 percent, RD-20 percent,
SD-20 percent, VAT-15
percent
SD-20 percent, VAT-15
percent
CD-5 percent

Sectoral Measure: ICT

Total allocation for Ministry of Science and Technology and ICT Division is Tk.3,904
crore
Cyber security A monitoring and regulatory framework titled Internet Safety
Solution will be developed a right initiative.
**** Other important changes in incentives declared for different sectors are provided earlier

End
Note!!
It can be concluded that if exigent, prudent, context specific and
creative policies are pursued, the economy would march forward and
the country may soon graduate out of its least development status. It
can also be emphasized that the proposed actions for FY 2016-17
should be able to bring about fiscal discipline in implementation of
government expenditure on the one hand, and to increase income
through reforming the tax system on the other.

Sources:
http://www.mof.gov.bd/en/index.php?option=com_content&view=article&id=343&Itemid=1
http://www.unnayan.org/reports/meu/April_2016/MEU%20Full%20Report_April_2016.
http://lankabd.com/mubasherFileServer/File.Exchange_English_Reports/LBSL%20Bangla
desh%20Budget%20Analysis%20FY'17.pdf