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Author: starpath
Date: February 3, 2025

Understanding Property Taxes in Bangladesh: Rates, Payment Methods, and Exemptions

Property taxes are an essential factor of real estate possession and investment. Property taxes in Bangladesh make sure government revenue and contribute to infrastructure development. Property owners must be knowledgeable about their tax obligations to avoid consequences, secure informed financial decisions, and comply with the tax laws.

Whether you own a home, are a commercial real estate investor, or are a landlord, understanding property taxes in Bangladesh is essential for budgeting. The real estate market in Bangladesh is rapidly evolving, leading to frequent updates in tax policies. Moreover, keeping yourself informed will help property owners steer clear of legal issues and unexpected costs.

"The power of taxation is not just a means to raise revenue; it is an instrument for economic growth and social justice." – Joseph E. Stiglitz, Economist

Overview of Tax Obligations for Property Owners

Property tax obligations in Bangladesh depend on various factors, including property type, location, and usage. The primary types of property-related taxes in Bangladesh include:

  • Land Tax: Charges are based on the ownership and size of the land.
  • Holding Tax: Levied by municipal corporations on property owners.
  • Advance Income Tax (AIT): Deducted at the time of property transactions.
  • Value Added Tax (VAT): applicable whilst selling an asset for earnings.
  • Capital Gains Tax: Applicable when selling a property for profit.

Understanding these tax categories is vital for everybody involved in actual estate transactions in Bangladesh. Below, we will explore each of those taxes in element.

Types of Property Taxes in Bangladesh

 

Land Tax: 

Land tax is one of the primary property-related taxes in Bangladesh. The rules are applied to all landowners. However, their application is varied based on the location of the land. Additionally, the usage of the land affects how the rules are enforced. Furthermore, the classification of the land plays a significant role in determining how the rules are applied.

Land Type Tax Rate per Decimal (BDT)
Agricultural Land Varies by district
Residential Land 2,000 - 10,000
Commercial Land Higher than residential rates

The government updates land tax rates periodically to reflect economic conditions and land value changes.

Holding Tax: 

Holding tax is imposed by local government authorities (such as city corporations or municipalities) to fund civic services like waste management, road maintenance, and drainage.

  • Calculated based on property size and location.
  • Paid annually.
  • Properties within Dhaka and Chattogram have higher holding tax rates than rural areas.

Advance Income Tax (AIT): 

AIT is deducted when buying or selling a property. The rate varies based on the property’s size, value, and whether the transaction is between individuals or institutions.

Property Value (BDT) AIT Rate (%)
Below 10 million 1%
10-50 million 3%
Above 50 million 4%

AIT is non-refundable and must be considered when budgeting for property purchases.

Value Added Tax (VAT): 

VAT is much more relevant to transactions involving commercial real estate, including high-end residential homes, at a rate pegged at 15% by the National Board of Revenue (NBR). Most first-time purchases of residential properties however do not need to pay VAT.

Capital Gains Tax: 

Properties are assessed for capital gains tax based on the sales price exceeding their purchase price. The tax is usually 15% of the profit but there is special consideration in pricing for long-term homeowners and inherited properties.

Ownership Duration Capital Gains Tax Rate (%)
Less than 5 years 15%
More than 5 years 10%
Inherited Property Exempt

Additional Fees in Property Transactions

 

Stamp Duty: Importance and Current Rates

Stamp duty is an important fee in property transactions, acting as a legal recognition of ownership transfer. It is usually calculated as a percentage of the property's total value. According to current regulations, the stamp duty rate in Bangladesh is established at 3% of the deed value.This fee legally validates property documents and ensures official recognition of the transaction by the authorities.

Registration Fees: How They Impact Property Transactions

Registration fees play a crucial role in officially documenting the transfer of ownership in government records. Typically, the registration fee is set at 2% of the property's total value. However, for the fiscal year 2023-24, there is a proposal to increase the property registration tax in several areas, including Dhaka, Chattogram, Narayanganj, and Gazipur, from 4% to 8%. For example, in neighborhoods such as Gulshan, Banani, and Motijheel, the tax could be raised to 8% of the deed price or Tk 20 lakh, whichever amount is higher. It's advisable to consult the latest government notifications or the National Board of Revenue (NBR) for the most current rates.

( Source: The Daily Star )

Municipal Taxes: Other Government-Imposed Charges

Municipalities implement extra taxes to support local services like street cleaning, water supply, and drainage maintenance. These fees differ based on the city and the particular services offered. For instance, property owners in city corporations and municipal areas who create rooftop gardens can receive a 10% discount on their holding tax, as announced by the government in June 2023. ( Source: bdnews24 )

It is crucial to check with your local municipal office for the most accurate and up-to-date information on these taxes. Therefore, contacting them directly will provide you with the latest details.

Payment Procedures for Property Taxes

 

Step-by-Step Guide on How to Pay Property Taxes in Bangladesh

  1. Identify Applicable Taxes: Figure out which taxes are relevant to your property, such as land tax, holding tax, or any other local taxes.
  2. Calculate the Total Tax Amount: Use the current rates to determine the total amount owed.
  3. Gather Required Documents: Collect all necessary documents, including the property deed, tax identification number (TIN), and previous tax payment receipts.
  4. Choose Payment Method: Decide if you want to pay online or in person.
  5. Make the Payment: Follow the procedures for your chosen payment method to complete the transaction.
  6. Obtain a Receipt: Make sure to get a receipt as proof of payment for your records.

Online vs. Offline Payment Options

Property taxes can be paid through government online portals or specific banks. Online payments are recommended for added convenience. Moreover, the Bangladeshi government is actively promoting digital payments to improve efficiency and transparency. Property taxes can be settled online via the National Board of Revenue's (NBR) official website or through the online platforms of designated banks. For example, starting July 1, 2024, the collection period for land development tax will coincide with the fiscal year (July 1 to June 30), and the use of electronic payment systems is being encouraged.

Where and How to Pay Property Tax Online

The National Board of Revenue (NBR) website allows digital property tax payments. Local municipal corporation websites also provide online tax payment options.

To pay property taxes online:

  1. Visit the NBR Website: First, navigate to the official NBR portal.
  2. Register or Log In: Then, create a new account or log into an existing one.
  3. Access the Payment Section: Afterward, find the property tax payment section.
  4. Enter Property Details: Next, enter the required property details.
  5. Calculate Tax: The system will likely calculate the tax automatically based on the provided information.
  6. Choose Payment Method: Following that, the preferred payment option (such as bank transfer or mobile banking) should be selected.
  7. Confirm and Pay: Once the team reviews the information, they can process the payment.
  8. Save the Receipt: Finally, the receipt should be saved or printed for future reference.

Property Tax Exemptions and Deductions

 

House Rent Tax-Free Threshold in Bangladesh

As of the latest regulations, rental income up to BDT 2,50,000 per year is tax-free. Therefore, any income above this threshold is subject to taxation. Furthermore, it's advisable to consult the NBR or a tax professional for the most current information.

Property Tax Exemptions and Who Qualifies

Certain properties and individuals are exempt from property taxes, including:

  • Government-Owned Properties: The government generally exempts the buildings and lands it owns, applying such exemptions in most cases.
  • Religious Institutions: Properties used exclusively for religious purposes may qualify for exemptions because they serve religious activities. Consequently, such properties are often considered eligible for tax relief.
  • Registered Charities: Government-registered non-profit organizations may therefore qualify for tax exemptions.
  • Agricultural Land Below a Certain Size: The Land Development Tax Bill, 2023, suggests that individuals or families engaged in agricultural work who own up to 25 bighas (around 8.25 acres) of agricultural land will be exempt from the land development tax. However, if the land exceeds 25 bighas, the tax will apply to the entire property.

Property Taxes Be Deducted from Capital Gains

When calculating taxable capital gains from selling a property, you can deduct the property taxes you paid while owning it. This deduction can help lower your overall taxable gain, which may reduce your capital gains tax liability. Therefore, it's a good idea to keep detailed records of all expenses and consult a tax professional to ensure you comply with current tax laws.

How Property Taxes Work and Their Impact

 

Calculation of Property Taxes in Bangladesh

In Bangladesh, authorities assess property taxes based on various factors, including the type of property, its location, usage, and market value. There are different types of taxes—like land tax, holding tax, and capital gains tax—that are calculated using distinct methods. Below is a general formula used for property tax calculation:

Property Tax = (Assessed Property Value × Tax Rate) + Additional Fees (if applicable)

For instance:

  • Holding Tax: Local municipal corporations usually determine a percentage of the property's annual rental value.
  • Land Tax: Calculated based on the size, location, and type of land (such as agricultural, residential, or commercial).
  • Capital Gains Tax: The seller pays a percentage of the profit from selling a property, with rates varying based on how long they have owned it.

By grasping these tax calculation methods, property owners can effectively manage their finances and, consequently, avoid unforeseen liabilities.

Affect of Mortgage Payments in Property Taxes 

Property taxes are essential in assessing how affordable a mortgage is. Lenders take property taxes into account when reviewing loan applications since they add to the total cost of owning a home. Here’s how it works:

  • Higher Taxes = Higher Monthly Expenses: When property taxes rise, homeowners must set aside more money for these payments, which can impact their ability to keep up with mortgage payments.
  • Impact on Loan Approval: Lenders include property tax obligations when determining loan-to-income ratios, which affects the maximum amount a person can borrow.
  • Escrow Accounts for Tax Payments: Moreover, many banks and mortgage companies require borrowers to maintain an escrow account to ensure timely payment of property taxes.

What Property Taxes Pay for in Bangladesh

Property tax revenue plays a crucial role in funding infrastructure development, sanitation, public safety, and various municipal services. The funds collected from property taxes are generally directed towards:

  • Urban Infrastructure Development – This encompasses road construction, drainage systems, and street lighting. Additionally, it ensures the improvement of essential infrastructure for smoother urban living.
  • Public Safety Services –  This includes funding for fire departments, law enforcement, and emergency response teams. Moreover, it aims to strengthen the overall safety and security of the community.
  • Sanitation and Waste Management – This involves cleaning services, garbage collection, and wastewater treatment. Consequently, it plays a key role in maintaining public health and cleanliness.
  • Public Parks and Recreational Facilities –This pertains to the maintenance and upkeep of green spaces and playgrounds. In addition, it ensures that residents have access to well-maintained recreational areas.
  • Water Supply and Electricity Distribution – This focuses on ensuring the availability and maintenance of essential public utilities. Therefore, it is crucial for supporting daily activities and sustaining a functional community.

When Are Property Taxes Due in Bangladesh?

Property taxes in Bangladesh are usually due once a year, with a deadline set for June 30th. However, the specific due date can differ based on the type of tax and the municipality or city corporation responsible for collection.

  • Land Tax: The local tax office determines the deadlines for this annual payment.
  • Holding Tax: Generally paid once a year, although some city corporations may permit payments every six months or quarterly.
  • Advance Income Tax (AIT) & Capital Gains Tax: Buyers and sellers pay these during property transactions.
  • Stamp Duty & Registration Fees: These are due at the time of property registration.

Failing to meet payment deadlines can result in penalties, late fees, or even legal issues. Therefore, property owners should verify the deadlines with their local tax offices to ensure they have the correct information for their area.

Where to Pay Property Taxes Online and Offline

Property owners in Bangladesh can pay property taxes both offline and online, offering them flexible payment options.

Offline Payment Options:

  • Municipal Offices & City CorporationsProperty owners can either visit their local city corporation, municipal office, or union parishad to pay holding tax and other local property taxes. Additionally, customers typically pay in cash or deposit funds through a bank.
  • Designated Banks – Several government-approved banks, such as Sonali Bank, Janata Bank, Agrani Bank, and Rupali Bank, also facilitate property tax payments. You can make payments at designated branches by completing the necessary tax forms.
  • Sub-Registrar Offices – You should make payments for taxes associated with property registration, stamp duty, and registration fees at the local sub-registrar’s office during the property transfer process.

Online Payment Options:

  • The National Board of Revenue (NBR) Portal – The official website of the National Board of Revenue (NBR) allows taxpayers to pay various property-related taxes online, including Advance Income Tax (AIT) and Capital Gains Tax. Furthermore, you can easily and securely make payments for these taxes through the platform.
  • City Corporation Websites – Major city corporations, such as Dhaka North, Dhaka South, and Chattogram, therefore provide online tax payment options on their websites. Consequently, users can log in, input property details, and make payments through digital banking.
  • Mobile Financial Services (MFS) – Moreover, services like bKash, Rocket, Nagad, and Upay allow taxpayers to pay holding tax and municipal taxes directly from their mobile wallets.
  • Online Banking & Agent Banking – Many commercial banks provide e-payment services for property taxes, which you can easily access through internet banking apps. For example, BRAC Bank, Dutch-Bangla Bank (NexusPay), and City Bank all offer this convenient option.
  • Union Digital Centers (UDCs) – In rural areas, Union Digital Centers assist landowners with online tax payment services; consequently, those who may lack access to banking facilities can conveniently manage their payments.

As digital payments continue to gain popularity, the government is actively promoting online transactions for greater efficiency and transparency. Therefore, property owners should always keep payment receipts as proof of tax compliance to prevent any future legal or financial complications.

Future Trends and Updates

 

Expected Changes in Property Taxes for 2025

The government is planning to implement higher tax rates on luxury properties while promoting digital tax payments. Rapid urbanization and rising land values in Bangladesh will drive significant changes in property tax policies in 2025. In particular, some of the anticipated reforms include:

  • Increased Tax Rates for Luxury Properties – As a result, owners of high-value properties in Dhaka, Chattogram, and other major cities may experience an increase in their tax rates.
  • Enhanced Tax Collection Measures – The government might roll out automated tracking systems to oversee property ownership and ensure tax compliance.
  • Incentives for Eco-Friendly and Smart Buildings – Furthermore, tax benefits or reductions can reward properties featuring sustainable elements like solar panels, rainwater harvesting, or energy-efficient designs.
  • Streamlining Online Tax Payments – Efforts are underway to make e-taxation more accessible; moreover, plans are in place to integrate payments with national ID and mobile banking.

Will Property Taxes Increase or Decrease in Bangladesh?

Experts anticipate that property taxes in Bangladesh will rise in the coming years, particularly in urban areas. Several factors will drive this trend:

  • Rising Land Prices – Due to the increasing demand for land, the government will most likely raise tax rates.
  • Inflation & Economic Growth – There are reasons for rural development such as increased revenue needed from taxes for aid and infrastructure construction.
  • Enhanced Tax Enforcement –Authorities are putting mechanisms in place to help reduce tax evasion, which may cause property taxes to rise.

Nonetheless, rural areas and affordable housing initiatives may experience reduced tax rates to promote property development and investment.

 

Comprehending property taxes in Bangladesh is crucial for homeowners, renters, and investors to avoid fines and plan their spending wisely. As construction increases in urban areas and land prices escalate, it is essential to stay updated on taxation policies by following reliable sources like the National Board of Revenue (NBR) and the corresponding municipal authority. The latest developments in e-payment of taxation make it possible for property owners to conduct transactions faster and easier and with more transparency. Sound tax strategies are critical in these circumstances in optimizing real estate business activities for permanent wealth. According to a renowned economist Milton Friedman - A fair and efficient tax system is the cornerstone of a nation's economic stability and long-term prosperity.

 

FAQ:

1. Are Property Taxes Deductible?
Ans: In Bangladesh, property taxes cannot offset individual income taxes. However, rental property owners can deduct holding tax and VAT as business expenses. Moreover, previously paid property taxes reduce capital gains tax, lowering overall tax liability.

2. Are Property Taxes Paid in Advance or Monthly?
Ans: In Bangladesh, property taxes like holding and land tax are paid annually, usually before the June 30 deadline. When transferring property, owners deduct Advance Income Tax (AIT). Moreover, some municipalities offer installment options, allowing payments every three or six months.

3. Are Property Taxes Included in Mortgage Payments?
Ans: You do not have to worry about paying property taxes as they are not included in your mortgage payments. You will have to pay these separately to the local tax office. However, you should note that banks incorporate property taxes in their calculations to determine your affordability for a home loan.

4. Can Property Taxes Go Down or Be Reduced?
Ans: In Bangladesh, property taxes cannot offset individual income taxes. However, rental property owners can deduct holding tax and VAT as business expenses. Moreover, previously paid property taxes reduce capital gains tax, lowering overall tax liability.

5. Can Property Taxes Be Paid with a Credit Card?
Ans: This is true in some situations. It is possible to pay taxes online using a debit card or a credit card through various government and bank portals, as well as mobile applications. Since not all local tax offices accept credit cards, it's advisable to confirm first.

6. Which Property Taxes Are Deductible?
Ans: Business expenditures cover things like holding tax, land tax, VAT, and even AIT, which reduces the burden of taxes. Individuals, on the other hand, can deduct paid property taxes when calculating the capital gains tax after selling a house.

 

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