The government is likely to reduce the corporate tax for financial institutions, even though the move would lead to revenue losses of about Tk 1,000 crore.

About 60 percent of the corporate tax comes from financial institutions, who have been demanding a cut for several years.

But the government is finally caving in to their demand, hoping the banks will go on to reduce the lending rates, which would then perk up the stagnant investment scenario, finance ministry officials said.

The corporate tax may be lowered to 40 percent from the existing 42.5 percent in the upcoming fiscal year.

Given the higher capital requirements from 2016 and the rising default loans and the accompanying provisioning, a cut in corporate tax would take some pressure off them, banks said.

The government is also considering cutting the corporate tax for listed and non-listed companies by around 2 to 2.5 percentage points, the officials said.

All that begs the question: how will the government offset the revenue loss?

Furthermore, the government is likely to set the revenue target for upcoming fiscal year at Tk 176,370 crore, which is an increase of about 31 percent over the current year's.

The government's revenue earning will increase by a big amount automatically thanks to GDP growth and inflation, said an official of the National Board of Revenue.

By intensifying its monitoring, it would collect another Tk 10,000 crore to Tk 12,000 crore. A good number of items will be added to the existing list containing 58 from which advance income tax is collected.

VAT will be increased for many items. Several items that get VAT exemption or lower rates at present will have to pay regular VAT in fiscal 2015-16. Small retailers currently enjoying package VAT, and save for the ones at the upazila level, may see their privileges withdrawn next fiscal year.

At present, the 5 percent advance tax is not deducted from 211 items at the import level. But in the upcoming budget, some essential products including rice, grain, onion, lentil, lifesaving medicines are likely to be taken off the list.

Garment entrepreneurs will have to pay 0.8 percent source tax on their exports instead of the existing 0.3 percent.

Other exporters, who now pay 0.6 percent tax at source, might have to pay 1 percent in the upcoming fiscal year.

The tax authority is looking to log in an additional Tk 3,000 crore from the increase in source tax on exports, officials said.