Written by The Banking Post
The government has proposed allowing individual taxpayers to file income tax returns throughout the year, replacing the current deadline-based system with a staggered incentive and penalty structure.
Under the proposal included in the Finance Bill 2026, taxpayers who submit returns between July 1 and September 30 will receive a 5 per cent rebate on their tax liability, capped at Tk 25,000. The move is aimed at encouraging early compliance and reducing the annual rush for return submissions.
The proposed change comes after repeated extensions of tax return deadlines in recent years failed to significantly expand the taxpayer base.
If approved, taxpayers will be able to submit returns at any time during the fiscal year following the end of an income year. However, tax incentives and penalties will depend on when the return is filed.
Returns filed during the second quarter, from October 1 to December 31, will neither qualify for a rebate nor incur any penalty.
Those filing between January 1 and March 31 will face a late-filing penalty of 2 per cent of the payable tax, subject to a maximum of Tk 3,000.
For returns submitted between April 1 and June 30, the penalty will rise to 5 per cent of the tax amount, capped at Tk 5,000.
Tax analysts have welcomed the concept of rewarding early compliance but raised questions about how the rebate will be implemented. They say the incentive would be more effective if adjusted directly at the time of tax payment rather than through refunds.
Experts also caution that delays in refund processing could undermine the intended benefit. Taxpayers have long complained about difficulties in recovering excess advance tax and withholding tax, with concerns over lengthy administrative procedures.
Under the current system, taxpayers generally file returns by November 30 without any incentive for early submission. The government often extends the deadline by one month at a time, with filing periods in recent years stretching into February and March.
In the current fiscal year, multiple extensions and the introduction of mandatory online filing effectively allowed many taxpayers to submit returns throughout the year without penalties.
The proposed changes are intended to create a more structured filing system while encouraging timely compliance and improving tax administration.
