The government is planning to bring nearly 3 crore retail businesses across the country under the tax net in the upcoming 2026–27 fiscal year budget. To this end, it is proposing, for the first time, the introduction of a nominal turnover tax for retail businesses. Through this initiative, the National Board of Revenue (NBR) hopes to increase revenue collection from the informal economy, which has largely remained outside the tax system for years.

Under the proposed scheme, dealers and manufacturing companies will deduct tax at source at a rate of 0.2 percent on invoices when supplying goods to retail shops. In practical terms, a retailer purchasing goods worth Tk1,000 will have Tk2 deducted as tax and deposited into the government treasury.

According to NBR sources, the tax will be integrated with the mobile app-based e-Challan system to digitally record tax payments. Retail traders will receive SMS notifications every three months informing them how much tax has been deposited in their name. This will allow them to determine easily whether their income has reached the taxable threshold.

Tax officials say the model has been inspired by India’s experience. There, collecting tax at the upper levels of the supply chain has enabled a large number of small and informal businesses to be incorporated into the tax network. Bangladesh hopes to expand its taxpayer base through a similar approach.

According to business associations, Bangladesh has around 30 million retail shops and small business establishments, most of which remain outside the income tax network. As a result, a significant portion of economic transactions is not captured by the tax system. Stakeholders believe the new arrangement will at least create a documented database of their buying and selling activities.

Tax expert Snehasish Barua believes the source-based tax collection mechanism could play an important role in expanding the national tax network. He said that recording retailers’ purchase information would provide tax authorities with a clearer picture of their actual income. It would also help reduce the existing disparity in tax compliance between large corporate supermarkets and small businesses.

He further noted that the database would also benefit VAT administration. It could facilitate the future inclusion of retail businesses in the VAT network and contribute to higher overall revenue collection.