Details Summary of Budget 2020-21 PDF

Proposed
Budget
2020-2021
Contact, if needed.
Mahamud Hosain FCA
Managing Partner,
MMH & Co. Chartered Accountants
mmhosain@yahoo.com
Learn to enhance Confidence @ Mahamud Hosain FCA +880 1713 24 58 58 mmhosain@yahoo.com
HIGHLIGHTS…
 Budget is proposed of Tk. 5.68 trillion which was last year Tk. 5.01 trillion (higher by 13.24% and Tk.
66,423 crore than revised budget FY 19-20)
 2020-21 Budget is 17.9% of GDP [estimated GDP for 20-21 is Tk. 31.71 trillion and Tk.28.057 trillion FY
2019-21 (while original estimate was Tk. 28.858 trillion)
 Budget sets a target of Tk. 3.78 trillion revenue earnings of which was Tk. 3.30 trillion is expected
from the NBR. It will be very challenging task.
 For 20-21, GDP Growth is proposed to 8.20% and for FY 2019-20, proposal made to revise it to 5.20%
from Original 8.20%. Obviously, it is ambitious and would be very challenging to achieve given
considerable drop of demand in consumer level due to COVID-19 & drop in remittances earnings
 The revenue growth target is 8.6% for 2020-21 than 19-20 revised budget
 Budget deficit is Tk. 1.90 trillion which is 6% of GDP in comparison to 5.5% of revised budget and 5%
in original budget 2019-20
 Development budget estimated to be Tk. 2.05 trillion while in 2019-20 it was Tk. 1.92 trillion (higher
by 6.34%)
 GoB will borrow Tk. 1.0998 trillion from to domestic sources and Tk. 0.888 trillion from foreign
sources which is respectively 12.98% and 39.53% higher than last year revised budget
 Foreign grants estimated to increase to Tk. 0.04013 trillion from Tk. 0.03454 trillion (higher by 16%)
Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

HIGHLIGHTS…allocation
 Operating and other expenditures is budgeted to Tk. 3.48 trillion in place of Tk. 2.95 trillion in 2019-20
(17.96% higher)
 Tk. 29.247 trillion allocated for Health & Family Welfare which is 13.66% higher and Tk. 0.10 trillion
allocated to combat COVID-10
 Disaster fund lowered to Tk. 09.836 trillion & better be reviewed given increases of natural calamities
 Social safety Net increases to Tk. 0.95574 trillion which is 3.01% of GDP and definitely a positive
move but regard shall had to be given to assess adequacy of allocation for packages excluding govt.
employee retirement benefits (i.e. pension fund)
 For subsidies and incentives highest allocation is made with 13.9% in view of sector wise allocation
 Defense Ministry’s allocation remains as high as 8.2% despite pandemic with an amount of Tk. 34,842
crore
 Education Budget remain somewhere same of FY 19-20 and given allocation of Tk. 0.664 trillion which
is 2.09% of GDP
 Tk. 0.58 trillion is being kept for the interest recovery on internal loans
 Tk. 0.042 trillion is allocated for loans and advances (net) in government institutions
 For Health research Tk. 0. 01 trillion is proposed
 Hon'ble FM remain completely silent regarding crisis in mega projects during budget session, despite
major projects in transport sector being either halted or delayed due to the coronavirus outbreak
HIGHLIGHTS…
 Cash incentive at a rate of 1% for RMG & 2% for Inward Remittances to continue
 Tobacco products to become costlier in FY 2020-21
 RMG sector to be allowed to pay reduced tax @ 12% (RMG enterprise having green
factories to pay tax @ 10%) for further 2 years
 To facilitate small and medium-size businesses, reduction of turnover tax from 4 percent to
3 percent is proposed.
 Tax payment at export level is proposed to reduce from 1% to 0.5%
 Simplification of Tax Return (1 pager)
 Whitening untaxed money through payment of tax @ 10% if invested in capital market and
maintain investment for 3 years
 In-order to promote effective Bond Market, tax deduction at source is proposed to be made
at a rate of 10% on ascertained commission, while payment is made instead of upfront
payment on value of Bond/Sukuk transaction
 ADP Implementation in 2019-20 is only 31.74% only till March 20

HIGHLIGHTS…
 Whitening black money now to be more lucrative than ever. As a special scheme,
Significant relaxation is proposed by means of restricting/limiting jurisdiction of all
authorities regarding sources of untaxed money by individual tax payer:-
 if tax paid at a rate of 10% and investment made in movable property;
 If tax paid at lower rate, prior year investment in immovable properties, i.e.
Land, Building, Apartments could be declared in Tax return of current year.
 Proposed to reduce the tax rate by 2.5% for not publicly traded company (at present
35%) thus resulted reduction of the gap with publicly traded (which is 25%). This is,
indeed a good move. However, no reduction of tax rate for publicly traded company
may adversely impact to the pursuit of listing the stock into capital.
 Proposed to widen the scope of tax holiday by additional 7 industrial sector, ((i)
Electrical transformer; (ii) Artificial fiber or manmade fiber manufacturing; (iii) Automobile parts and
components manufacturing; (iv) Automation and Robotics design, manufacturing including parts and
components thereof; (v) Artificial Intelligence based system design and/ or manufacturing; (vi)
Nanotechnology based products manufacturing; (vii) Aircraft heavy maintenance services including
parts manufacturing)
HIGHLIGHTS…
 As a penalty, tax at a rate 50% to be imposed on laundered money/capital flight/false
investment through over/under invoicing or other means
 Proposed to reduced rate of VAT collection at import stage on raw materials for manufacturing
industries to 4% from 5% which is good move
 Proposed to increase tax free income limit by Tk. 50,000 for each category of tax payers and
lowest tax rate of 5% (in place of 10% now) for the first Tk. 1 lac of taxable income and
Abolishment of Super Tax rate of 30%. This proposal, if approved will results benefits mostly to
assessee having taxable income (i) lower than Tk. 20 lac; and (ii) higher of Tk. 60 lac.
Meaning middle class people (i.e. assesse) having taxable income between Tk. 20 lac plus to
Tk. 60 lac won’t have much of relief in term of direct tax. However, middle class left out as
always
 Proposed to increase in excise duty on bank balance above Tk. 10 lac, which may turn to be
counter productive to the continuous pursuit in bringing discipline in financial transaction
 Proposal of Tax deduction at a rate of 2% on local LC of commodities may results rises of price
at consumer level
 Proposed increase of supplementary duty by 5 percent on all telecom-related services
Graphical Presentation and
Sectoral Analysis

Sources of Fund & Income

Sector wise -Resources Distribution

Sector wise –Expenditures, incentives, etc.

Allocation of Funds- Operating Budget

Allocation of Funds-Development Budget

Comparison btw’n Budget
& Revised Budget FY 19-20
Supplementary Budget for
Tax revenue reduced by
8% and actual collection
is only 47% (up-to Mar
20) of revised Budget
2019-20
Non Development
Revenue Expenditure
reduced by 5% and
expended 48% (up-to
March 20)
ADP achieved 31.5% (up-
to March 20) whereas
reduced to 5% from
original budget
Comparison with Revised
Proposed Budget Structure for FY Budget 19-20
 Targeted growth for Tax
revenue is 8.6%
 Non Development
Revenue Expenditure
increased by 13.2%
2020-21
 ADP increased by 6.34%

 Budget Deficit increased
to 6% from revised target
of 5.5% and Originally it
was budgeted 5% for FY
19-20
 GDP estimated to Tk.
31.71 trillion from revised
Tk. 28.057 trillion
Comparison with
(Sectoral Allocation) for FY 2020-20

2020-21
Annual Development Programme Revised Budget 19-20

Increased allocation
by 2.9% for Human
Resources
Reduced by 1.7% !!!
for Agricultural &
Rural Development
Reduced by 0.5%%
!!! for Energy
Infrastructure
Increased allocation
by 1.5% for
communication
Infrastructure
Sectoral Allocation in Budget 2020-21

Priority Sector/Incentivized Sector …2020-21
 SMEs: HPM has declared Light Engineering as the ‘Product of the Year’ for 2020. Therefore it is
proposed to reduce tax rate on import of raw materials of some products
 Export Sector: It is proposed to reduce the existing duty rate on the import of certain products
(such as RFID Tag, Industrial Racking System, Cutting Table, etc.) to promote export-oriented
garments and textile industries
 Footwear Industry: Hon'ble FM proposed to reduce the duty rate of three raw materials
imported by this industry
 Electronics Industry: It is proposed to expand the existing concessionary duty benefit on the
import of raw materials by the refrigerator and air conditioner compressor manufacturing
industry
 Shipbuilding Industry: It is proposed to withdraw the existing duty exemption on the
importation of dredgers
 Detergent Industry: It is proposed to decrease the existing rate of customs duty of Linear Alkyl
Benzene Sulphonic Acid
 Sanitary Napkin and Diaper Industry: It is proposed to expand the tax benefit on sanitary napkin
and diaper industry by decreasing the rate of customs duty on the import of a raw material
 Steel Industry: it is proposed to reduce the duty on the import of refractory cement to
promote the steel industry. In addition, further propose to increase regulatory duty of three
raw materials (Ferro-Manganese, Ferro-Silicon, Ferro-Silico-Manganese) to protect the steel
raw materials manufacturing industry
 Plastic and Packaging Industry: It is proposed to reduce the duty on the import of
photographic plates of plastic to promote the plastic and packaging industry
 Paper Manufacturing Industry: It is proposed to reduce the duty on the import of washing and
cleaning agent for the paper industry
 Lube-blending Industry: It is proposed to reduce the existing custom duty rate on the import
of base oil, the main raw material of the lube-blending industry
 C.R. Coil Industry: It is proposed to increase the existing regulatory duty on the import of
finished products for the C.R. coil industry
 LPG Cylinder and Auto Tank Industry: To provide incentives to the emerging LPG cylinder and
auto tank manufacturing industry, it is proposed to extend concessionary tax benefits on
several new raw materials and rationalize existing tax benefits

 Health Sector : To combat the outbreak of the COVID-19, special notification has been
issued as an interim mechanism before budget to exempt all import duties and taxes on
coronavirus testing kits, masks and personal protective equipment (PPE) and on the raw
materials required to locally produce hand sanitizers, masks and PPE. To further
strengthen the health sector, It is propose to reduce import duty on essential raw
materials for locally producing Autoclave machines used for sterilizing medical
instruments
 ICT Sector :To encourage cellular phone manufacturing and further strengthen the
industry, It is proposed to rationalize the existing import tax concessions and make it
more investment-friendly
 It is proposed to reduce the duty rate on the import of electrical signaling equipment

HIGHLIGHTS…2019-20
 Cash Incentive of 2 percent on remittance earnings by non-resident Bangladeshis
results, a new record of US$ 16.56 billion in remittance inflows in just 11 months
surpassing the previous record of US$ 16.42 billion in 12 months
 To boost Exports Of Readymade Garments, the government is providing 1 percent
cash incentive to exports of readymade garments (RMG) in all sectors since 1st July
2019
 To Enhance Competitiveness of Our Industrial And Business Sector, the interest rate
on bank loans was reduced to a maximum rate of 9 percent from 1st April 2020
 To introduce New Financial Tools in the banking and financial sector: (a) the Venture
Capital Guideline has been formulated; (b) the Bangladeshi Taka denominated ‘Bangla
Bond’ was introduced for the first time at the London Stock Exchange; and (c) Stamp
Duty on trust deeds in the bond market have been reduced
 As part of our budget commitment for year 2019-20, to reform the bank, financial and
revenue sectors, GoB has taken up the task of amending 10 existing laws, and drafting
6 new laws
HIGHLIGHTS…2019-20
 So far brought about 2 lakh 20 thousand pensioners under online payment through electronic
fund transfer (EFT) system, the ongoing Mujib Borsho, all pensioners will be brought under the
EFT
 As pursuit to bring discipline, GoB have DIGITISED the sales, profit encashment, etc. of
national savings certificates (NSCs) by introducing the 'National Savings Scheme Online
Management System'. Besides, the postal savings scheme and the postal banking system have
also been automated
 As part of our commitment to Introduce Insurance Schemes in different sectors: (a) GoB has
introduced the livestock insurance scheme; (b) we have begun the task of formulating the
health insurance scheme for government employees; and (c) we will take steps to introduce
insurance in the agriculture sector
 A total of 2 THOUSAND 620 secondary, higher secondary and technical education instituions
and madrasas have been brought under the Master Pay Order (MPO) system in the current
fiscal year
 A Guideline has been prepared To Rehabilitate the affected people from the river erosion-
prone areas, and an allocation of Tk. 100 crore has been made
Income Tax

High level snap shot
 Tax free limit increased by Tk. 50,000 for each category of assesse
 Tax rate of 5% proposed for the first Tk. 1 lac of taxable income
 Super Tax rate of 30% is proposed to abolish therefore highest tax rate of 25%
about to get reinstated for individual tax payers.
 Tax rebate of Tk. 2,000 is proposed for all the taxpayers who will file their
income tax returns online for the first time
 For not publicly traded company a reduction of tax rate by 2.5% is proposed
 Surcharge and other tax rate remain unchanged. Therefore, Business
enterprise would have challenge to survive in era of COVID-19 era post COVID-
19
 Reduction of withholding tax rate for 26 essential commodities incl. rice,
wheat, potato, onion is proposed to 2% from 5% thus control the commodities
price & inflation
High level snap shot
 A reduction of collection of tax at import level for sugar and garlic is
proposed to 2% from 5% thus control the commodities price at consumer level
 A reduction of collection of tax at import level for wheat and raw materials for
poultry is proposed to 2% from 5%
 A reduction of collection of tax at import level for raw materials for Ispat
Industry (ferro alloy) is proposed to 3% from 5%
 Advance Tax Payment for registration & renewal of fitness for vehicle propose
to increase significantly
 Proposal of imposing tax on payment of gratuity scheme, if not approved by
NBR are against the sprit and cannon tax therefore needed further review

Personal Tax

Enhancement of Non Taxable Limit

Sur Charges..remain un-changed

Corporate Tax
32.5 Percent

Changes of Price

PRICE HIKE
 Ticket of Air conditioned Steamer
 Chartered (renting) Aircraft and Helicopter
 Cosmetics items
 Furniture
 Imported Onion
 plastic products,
 Cellular phone/service usages
 Registration and fitness of car/jeep
 Ceramics silk
 Imported Honey
 Cigarettes

PRICE DECLINES
 Gold
 mobile phone services,
 Automobiles,
 Air conditioner,
 Detergent,
 Sanitary napkin & diaper
 Steel product (re-bar, etc.)
 LPG Cylinder
 Local Refrigerator and AC

Progress

Progress

HIGHLIGHTS…
এবার প্রস্তাববত বাজেজে:
সরকারর অনু দানসহ আয় ধরা হয়য়য়ে ৩ লক্ষ ৪২ হাোর ০১৩ ক াটি ো া
এর ময়ধে এনরিআর আয় ধরা হয়য়য়ে ৩ লক্ষ ৪৫ হাোর (৯০.৩১%)
িেয় ধরা হয়য়য়ে ৫ লক্ষ ৬৮ হাোর ক াটি ো া।
ঘাটরি থাকয়ে বেবিবির ৬শতাাংশ । ক াে ঘােবত ১ লক্ষ ৯০ ক াটি ো া
প্রস্তারিি উন্নয়ন বযয় ধরা হয়য়য়ে ২ লক্ষ ০৫ হাোর ১৪৫ ক াটি ো া
অভ্েন্তরীণ িেিস্থা থথয়ক ঋণ ধরা হয়য়য়ে ১ লক্ষ ৯ হাোর ৯৮৩ ক াটি ো া।
থমাট থদশজ উৎপাদয়ন (বেবিবি) প্রিৃ রির হার ধরা হয়য়য়ে ৮ দশব ২০ শতাাংশ।
বেবিবি ধরা হজয়জে ৩১ লক্ষ ৭১ হাোর ৮০০ ক াটি ো া । সাংজশাবধত
বাজেজে বেবিবি ব জয় ২৮ লক্ষ ০৫ হাোর ৭০০ ক াটি ো া বনধধ ারণ রা
হজয়বেল।

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Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

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 ADP increased by 6.34%

(Sectoral Allocation) for FY 2020-20

Annual Development Programme Revised Budget 19-20

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

Learn to enhance Confidence @ Mahamud Hosain FCA mmhosain@yahoo.com

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