In a significant policy shift, the government has reduced the income tax rate on private educational institutions—from 15% to 10%—in response to growing concerns from students and academic stakeholders.
The new rate applies to private universities, private medical and dental colleges, private engineering institutions, and organizations exclusively engaged in IT education. An official press release, signed by Gazi Touhidul Islam, Public Relations Officer of the Ministry of Finance, was issued on Sunday announcing the decision.
This development comes just days after student protests erupted in Dhaka. On June 18, demanding the withdrawal of a renewed decision to impose a 15% tax on private universities, members of the Private University Student Network gathered in Shahbagh.
The issue of taxation on private universities has a long legal and administrative history. Back in June 2007, the National Board of Revenue (NBR) issued a notification requiring all private universities (those not classified as public and approved by the University Grants Commission) to pay a 15% income tax. This was later reaffirmed in a 2010 circular that included private medical, dental, engineering, and IT-based institutions.
Following these directives, 46 writ petitions were filed by private universities challenging the legality of the tax.
In February 2021, the High Court declared the 15% tax illegal, prompting the NBR to seek permission for appeal. The Appellate Division granted leave to appeal and instructed the NBR not to collect taxes until a final verdict was delivered.
This interim suspension on tax collection continued through June 2023, with the Supreme Court maintaining its previous stance and allowing the High Court to move ahead with final hearings on the pending writ petitions.
However, earlier this week, the Appellate Division resolved the long-standing legal battle, ruling that all private universities are legally obligated to pay the 15% income tax. In light of the judgment and subsequent reactions, the NBR has now revised the applicable tax rate, lowering it to 10%.
