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Budget for fiscal 2015-16 Thursday

03 June,2015

RTNN News Desk: Finance Minister AMA Muhith is set to unveil
nearly a Tk 3 lakh crore budget for the fiscal year 2015-16 on
Thursday likely eying a 7.1 percent GDP growth, down from 7.3 percent
in the outgoing fiscal year.

This will be the country’s 44th budget, while 16th by the Awami
League government. And for Muhith, it will be his 9th budget
presentation and 7th budget presentation in a row.

Like the previous years, the Finance Minister will begin his budget
presentation at 3:00 pm through digital method or power-point
presentation.

According to a competent source at the Ministry of Finance, the
target for the GDP growth seems to be set at 7.1 percent, down from
7.3 percent in the outgoing fiscal year.

The GDP growth rate for the last couple of years is hovering over 6
percent on average. Even in the outgoing fiscal year, it is expected
to be 6.51 percent. The next budget is also likely to set the target
of containing inflation within 6.2 percent.

The development budget for the new fiscal year or the ADP has already
been fixed at Tk 97,000 crore while the non-development expenditure
would stand at around Tk 1,76,000 crore.

The size of the next national budget is likely to stay below Tk 3
lakh crore mark as it is expected to be around Tk 2,97,100 crore of
which the budget deficit would be around Tk 88,657 crore -- 5 percent
of the Gross Domestic Product.

To finance this huge and ambitious budget, the government has made an
estimation of overall revenue collection of around Tk 2,10,443 crore
of which around Tk 1,77,370 crore would come from the National Board
of Revenue (NBR), Tk 6,500 crore from non-NBR tax revenue and Tk
27,345 crore from non-tax revenue.

To meet the budget deficit, the Finance Ministry official said the
government would have to depend more on the domestic bank borrowings
as its target in the FY16 budget has been set at around Tk 38,623
crore while around Tk 18,000 crore is likely to come from the
domestic savings certificates. The rest of the deficit financing
would come from the foreign sources.

The new budget is likely to come up with a set of new features as
well, including announcement for a separate budget for children,
expanding the district budget, outline for forming a separate bank
for the public servants, announcement for Palli Sanchay Bank to
facilitate the rural people to go for savings, reducing the corporate
tax for the businesses, including that of the banking sector, special
stimulus for the capital market alongside various facilities to woe
more investment, including providing tax holiday facility, to the
entrepreneurs.

Besides, there will be specific directions in the budget speech of
the Finance Minister towards implementation of the Padma Bridge
Project, construction of a tunnel beneath the River Karnaphuli in
Chittagong, Tunnel beneath the River Buriganga, metro rail project
and construction of double rail line on Dhaka-Chittagong route.

The next budget is giving the highest importance to human resource
development sector with increased allocation while the Ministries of
Defence, Home, Education, Agriculture, power, Road Transport and
Bridges and Health are also set to get higher allocations considering
the growing demand.

The new budget for FY16 would have announcement for implementation of
the new pay scale for government officials and employees for which
the Finance Minister would have to feel the pinch for collecting the
fund for meeting the additional demand of salaries and allowances of
the public servants.

The proposed budget for the next financial year is likely to slash
the subsidy expenditure of the government and expand the coverage of
social safety net programme moderately by taking advantage of the
cheap fuel oil prices on the international market and planned hike in
tax rates on apparel exports.

Another official at the Finance Ministry hinted that the corporate
tax for the publicly traded companies (listed with the capital
market) is likely to come down at 25 percent from the existing 27.5
percent while that of the banks, insurance companies and financial
institutions (except merchant banks) at around 40 percent from the
existing level of 42.5 percent. However, the tax on the publicly and
non-publicly traded cigarette manufacturing companies is unlikely to
witness any change.

The individual tax free ceiling is likely to be increased to Tk
2,50,000 from the existing Tk 2,20,000 with the minimum tax to be
raised to Tk 4,000. Besides, the individual tax free ceiling for the
women and elderly citizens above 65 years is likely to be made Tk
3,00,000 from the existing Tk 2,75,000 while that of the physically
challenged people to Tk 3,75,000 from the existing ceiling of Tk
3,50,000.

The new budget would also propose a tax-free income of Tk 4,25,000
for the gazetted wounded freedom fighters up from the existing Tk
4,00,000.

It is also likely to withdraw the provision of 10 percent fine for
whitening undisclosed money since the facility is yet to draw any
good response. The government has also decided to allocate only
Tk2,000 crore for public -private partnership (PPP) initiatives in
the next fiscal year.

Besides, the Finance Minister is likely to increase the tax at source
for the RMG sector while there would be increased duty on Biri and
tobacco. The SIM tax on the mobile phone operators is likely to be
increased, too.

The Finance Minister will hold a post-budget press conference on
Friday at 4:00 pm at the Osmani Memorial Auditorium in the city.

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