Up to Tk 25,000 tax rebate for early return submission

The government has proposed a major overhaul of the income tax filing system, allowing individual taxpayers to submit tax returns throughout the year while offering rebates for early submissions and penalties for late filings.

Under the proposed 2026-27 budget, taxpayers will be able to file their income tax returns at any time during the assessment year following the end of an income year.

However, incentives and penalties will be applied based on the timing of submission.

According to the Finance Bill 2026, individuals who file their returns between July 1 and September 30 will be eligible for a tax rebate of up to 5 percent on payable tax, capped at Tk 25,000. The government believes the incentive will encourage taxpayers to submit returns early and reduce the year-end filing rush.

Returns filed between October 1 and December 31 will neither qualify for a rebate nor incur any penalty, making the period effectively neutral for taxpayers.

However, taxpayers who submit returns between January 1 and March 31 will face a late-filing penalty of 2 percent of the payable tax or a maximum of Tk 3,000. For returns filed between April 1 and June 30, the penalty will increase to 5 percent of the payable tax or a maximum of Tk 5,000.

Tax experts have welcomed the proposal but noted that the mechanism for granting rebates remains unclear. They argue that the incentive would be most effective if the rebate is adjusted directly against tax liabilities rather than refunded later through administrative procedures.

Currently, taxpayers can generally file returns without penalty until November 30, with authorities often extending the deadline in subsequent months. If implemented, the new proposal is expected to reshape tax compliance practices by introducing a year-round filing framework backed by both incentives and financial consequences.