Advance Income Tax on Imports: A Burden on Businesses

Strategic Insights -

The National Board of Revenue (NBR) has introduced a 2.0% advance income tax (AIT) on the import of 150 items, including essential goods and capital machinery, under the tax-deduction-at-source rules 2025. The measure is expected to increase the cost of imports for manufacturers and potentially disrupt supply chains. Business leaders and economists warn that the tax could drive up prices of everyday necessities and make it difficult for businesses to adjust the tax at the end of the fiscal year.

Key Takeaways:

  • The NBR has imposed a 2.0% AIT on the import of 150 items, including cotton, wheat, flours, maize, rice, soybeans, and other essentials, under the tax-deduction-at-source rules 2025.
  • The list of items subject to the AIT includes machinery, spares, and raw materials for industries such as the ready-made garment (RMG) and textiles.
  • Economists and business leaders warn that the tax could increase the cost of imports for manufacturers and potentially disrupt supply chains.
  • The NBR officials claim that the tax is adjustable and will not affect consumer prices, but business leaders dispute this, citing complexities in adjusting the tax at the end of the fiscal year.
  • The BTMA President, Showkat Aziz Russell, alleges that the decision to impose the AIT was taken without consulting stakeholders and will impact the business activities negatively.
  • The BTMA President also claims that a group of government officials has taken this step to favour a neighbouring country, aiming to boost its local value addition and exports.
  • Saleudh Zaman Khan Jitu, managing director of ANZ Group, says that the AIT will make a burden on millers and increase the yarn cost, making it difficult for RMG makers to compete with imported yarn.

Statistics:

  • NBR has imposed a 2.0% advance income tax on over 150 items, including essentials and capital machinery.
  • The tax-deduction-at-source rules 2025 specify that the AIT is applicable on nearly 200 HS (Harmonized System) codes.
  • The BTMA President alleges that if the government does not revise this tax, it will increase the yarn cost for RMG makers.
  • The AIT on cotton imports will make a significant burden on millers, according to Saleudh Zaman Khan Jitu.
  • An estimated 150 imports, including essentials and capital machinery, are subject to the AIT.

Sources:

  • "A gazette notification on the AIT was issued by the NBR and signed by NBR member AKM Badiul Alam in June 2025."
  • The Bangladesh Textile Mills Association (BTMA) President, Showkat Aziz Russell.
  • Saleudh Zaman Khan Jitu, managing director of ANZ Group.
  • Prof Mustafizur Rahman, Executive Director of the Centre for Policy Dialogue (CPD).
  • Dr Masrur Reaz, Chairman of Policy Exchange Bangladesh.