The National Board of Revenue (NBR) has ended the fiscal year 2025-26 with revenue that is Tk 875 billion short of the target set in the budget.
The government had little choice but to increase revenue collection in the face of macroeconomic pressure, but now – six months into the BNP government’s tenure – the data indicates that tax collectors have had limited success doing so.
A number of factors – such as the stalling of development projects following the 2024 July Uprising, stagnation of business and trade, deterioration in law and order, and global economic headwinds – have disrupted supply chains and contributed to the shortfall.
The target was to collect Tk 5.03 trillion. As a result, the revenue deficit for the fiscal year stands at around Tk 875.27 billion.
The revenue collection figure is 12.03 percent higher year-on-year. The total revenue collection of the NBR for FY25 was around Tk 3.71 trillion.
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The revised budget had set a target of collecting Tk 5.03 trillion through the NBR, which the initial budget had set at Tk 4.99 trillion. Most economists and organisations have described the revenue collection target set in the current fiscal year’s budget, based on the revenue collection trend of the outgoing fiscal year, as “ambitious.”
It was believed that revenue growth of about 45 to 50 percent from the amount collected in the outgoing fiscal year would be required to reach the budget’s target.
Looking at past data, the NBR has never seen such a huge jump in revenue in a year. The agency’s revenue collection is usually done while accounting for inflation and GDP growth. Accordingly, in years where the agency has made significant progress, the jump in revenue is about 10-15 percent.
Income tax leads growth despite shortfall
The highest growth in NBR’s revenue collection in the outgoing fiscal year was the income tax sector. This includes company tax, travel tax and tax at source.
In FY26, the total revenue collected by the NBR from the income tax and travel tax sector was around Tk 1.46 trillion, up from approximately Tk 1.3 trillion in 2024-25. This means record revenue growth of 12.80 percent was achieved in the income tax sector.
Typically, Bangladesh’s largest source of revenue is from the value added tax, or VAT, sector. The total revenue from this sector in the outgoing fiscal year was around Tk 1.58 trillion.
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The NBR data says the amount in 2024-25 was approximately Tk 1.42 trillion, which means revenue collection grew 11.8 percent year on year. The revenue from the import and export duty sector in the outgoing fiscal year was around 1.12 trillion, which was around Tk 1.1 trillion in the previous fiscal year.
Overall, the growth in this sector was 11.90 percent.
Despite the overall shortfall, the finance ministry is pushing for a new approach to boost tax receipts. Officials argue that the revenue target is realistic if compliance improves.
Increased compliance could help the government meet its obligations without relying on borrowing. This shift is vital for stabilizing the economy.
For the upcoming fiscal year, the ministry plans to focus on widening the tax net. Officials believe this strategy will prevent the gap between collection and target from widening further.
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