Budget FY26Prices up, prices down

In the proposed national budget for the fiscal year 2025–26, amounting to Tk 7.90 trillion (7 lakh 90 thousand crore), the government has set a revenue collection target of Tk 4.99 trillion (4 lakh 99 thousand crore).

To meet this target and protect domestic industries, the government plans to impose or increase duties, VAT, and other taxes on a range of products, which could lead to price hikes in the market.

Products likely to see price hikes

VAT Increase on Rods and Steel

Rod is one of the key components in the construction industry. In the proposed budget, the government plans to increase Advance Income Tax (AIT) and Value Added Tax (VAT) to enhance revenue collection. Currently, the total duty and VAT at the import and production levels exceed 40%. The proposed budget includes a plan to increase VAT by 20–23% on imports and 20% on local production. However, the existing fixed import duty may be removed. If duties are increased, rod prices may rise by approximately BDT 1,400 per ton for consumers.

For reference, a fixed duty of BDT 1,500 per ton is currently imposed on imported steel scrap—the raw material for steel. Additionally, a fixed VAT of BDT 2,200 per ton is charged on billet and rod production. Altogether, the government currently collects BDT 3,700 per ton in duties and VAT.

VAT Increase on ACs and Refrigerators

Just six months ago, the corporate tax for manufacturers of refrigerators and air conditioners was doubled. Now, the government is planning to increase the VAT on these products. Currently, a 7.5% VAT is imposed at the production level for fridges and ACs. The National Board of Revenue (NBR) is considering raising this to 15% in the 2025–26 fiscal year, which may worry domestic producers.

Motorcycle and Bicycle Parts

In the 2024–2025 budget, all additional import, regulatory, and supplementary duties on motorcycle engine parts were withdrawn. However, this did not significantly lower motorcycle prices. In the upcoming fiscal year, the government may reintroduce some duties and VAT. Since 2018, over ten motorcycle factories have been established in Bangladesh, including brands like Honda, Yamaha, Suzuki (Japan), and Uttara Motors, TVS, Hero (India). Local brand Runner Automobiles is also in operation.

Cigarettes

In January, both prices and duties on cigarettes across four tiers were increased, with a 5–7% hike in supplementary duty on 10-stick packs in the lower, middle, and upper tiers. Thus, no new changes are expected in the upcoming budget. However, a proposal to increase the supplementary duty on cigarette paper used in the tobacco industry from 60% to 100% is likely, which may impact prices again.

Locally Manufactured Mobile Phones

The reduced VAT rate on mobile phone manufacturing and assembly is set to increase. The proposed budget suggests raising VAT by 2 to 2.5 percentage points depending on the category, which may lead to higher prices for locally made mobile phones.

Higher Duty on Batteries for Battery-Powered Rickshaws

Battery-powered rickshaws, considered hazardous and largely unregulated across the country, may become more expensive. The customs duty on their 1,200-watt DC motors is proposed to be increased from 1% to 15%.

Increased Cost for Cosmetics

The minimum import value of various cosmetics used by women—such as lipstick, lipliner, eyeliner, face wash, and makeup items—is being increased. For example, the minimum customs value for imported lipstick is currently USD 20 per kg, which may be raised to USD 40. Similar hikes are expected across other cosmetics categories.

VAT Doubled on Single-Use Plastic Products

A proposal has been made to double VAT on single-use plastic items such as tea and coffee cups, plastic plates, and bowls—raising VAT to 15%. As a result, these products may become more expensive. However, eco-friendly and natural substitutes for these items will remain VAT-free to encourage environmental protection.

Blades

The price of shaving blades used in salons may increase. The VAT on blades made from stainless or carbon steel strips is proposed to rise from 5% to 7%.

Tableware and Household Plastic Items

VAT on plastic tableware, kitchenware, hygienic, and toilet items used at home will be raised from 7.5% to 15%, likely increasing prices.

Locally Produced Yarn

VAT on yarn produced in local textile mills is going up. The specific tax per kilogram of cotton and man-made fiber yarn is proposed to rise from BDT 3 to BDT 5. This may increase the cost of products made from local yarns, such as gamchas (towels), lungis, and garments.

Helicopters

The new budget proposes a 10% import duty on helicopters, which were previously duty-free. This will increase the cost of importing helicopters.

Imported Chocolate

The budget proposes to raise the minimum customs value on chocolate imports from USD 4 to USD 10 per unit, which may result in higher prices for imported chocolates.

Imported Toys

To protect local industries, the tariff value of imported toys is being increased in the proposed budget, which could make imported toys more expensive.

Marble and Granite

The supplementary duty on marble and granite stones used in flooring is set to increase from 20% to 45%

Products likely to see price reduction

The upcoming budget is expected to propose reductions in source tax, import duties, and VAT on several products. As a result, the prices of these products may decrease.

Notable products on the price reduction list include LNG, fuel oils, over 30 agricultural and daily-use items such as paddy, paddy husk, rice, wheat, potatoes, livestock, fish, meat, onions, garlic, peas, chickpeas, lentils, ginger, turmeric, dried chili, pulses, corn, sugar, cancer medicines, foreign juices, and software.

On Monday, the 55th National Budget of the country was announced by the Economic Advisor of the Interim Government, Dr Saleh Uddin Ahmed.

The budget announcement for the fiscal year 2025-26 will be broadcasted live on Bangladesh Television at 3:00 pm. For the first time since independence, the budget size is shrinking.

According to the Ministry of Finance, the budget deficit has been kept manageable to control inflation and maintain macroeconomic stability. The proposed total expenditure for the upcoming fiscal year is Tk7.9 trillion, compared to Tk7.97 trillion in the current fiscal year’s budget, resulting in a reduction of Tk70 billion.