In a significant policy shift, the Bangladesh government has proposed extending tax exemptions on donations and gifts to include siblings, expanding the scope of familial tax relief. The measure, part of the national budget for the fiscal year 2025–26 presented on June 2, seeks to simplify intra-family asset transfers and address long-standing legal ambiguities surrounding personal gifts.
Until now, Bangladesh’s tax framework only provided exemptions on gifts made between spouses, parents, and children. Any donation or transfer of property—cash or immovable—to individuals outside this narrowly defined circle was subject to taxation under the Finance Act 2024. This included gifts between siblings, which were considered taxable income under the category of “income from other sources.”
The proposed exemption will now allow individuals to transfer cash, land, flats, or other assets to siblings without incurring any tax liability. This move is expected to ease the process of transferring assets within families, particularly in cases of shared inheritance, housing support, or inter-sibling financial assistance, which are common in Bangladeshi households.
The policy revision addresses growing concerns over the rigidity of current tax laws, which had imposed significant financial burdens on family members seeking to support one another outside the traditional nuclear structure. Taxpayers had frequently expressed confusion over which relationships qualified for tax-free gifting, and many transactions between siblings were either taxed or left undeclared to avoid potential legal complications.
The Finance Act 2024 had expanded the definition of taxable gifts, overriding earlier exemptions provided under the Gift Tax Act of 1990. Under that law, gifts to siblings were previously exempt from taxation. However, the newer legislation did not carry forward these exclusions and instead treated most gifts—except those made to spouses, parents, and children—as taxable. This created a conflict between the older and newer laws, leading to uncertainty in enforcement and compliance.
With the proposed change, the government aims to bring clarity to the tax regime and better reflect the realities of familial financial dynamics. By explicitly including siblings in the list of exempted relations, the measure provides greater certainty for taxpayers and reduces the likelihood of disputes or audits over genuine intra-family transfers.
The National Board of Revenue (NBR) has maintained existing rules that require any donation exceeding Tk 500,000 to be made via bank transfer or crossed cheque to qualify for exemption, regardless of the relationship between donor and recipient. This condition is intended to promote transparency and prevent the misuse of tax relief measures for money laundering or tax evasion.
The proposed exemption for sibling transfers aligns with broader efforts to simplify tax compliance and modernize personal income taxation. It is also part of the government’s strategy to increase voluntary compliance by reducing procedural hurdles and fostering goodwill among middle-income taxpayers.
The measure will come into effect with the enactment of the Finance Act for 2025–26. It is expected to have a positive impact on household financial planning and encourage formal documentation of personal asset transfers, thereby strengthening both transparency and trust in the tax system.
