The proposed national budget for FY2025–26 has brought disappointing news for workers, as Finance Adviser Salehuddin Ahmed announced a 10% tax on funds withdrawn from worker welfare schemes.
Finance Adviser Dr Salehuddin Ahmed presented the proposed budget for the 2025-2026 fiscal year, amounting to Tk7,89,999 crore, in a televised speech on Monday.
According to the budget speech, any amount withdrawn by a worker or employee from profit participation funds, welfare funds, or the Workers' Welfare Foundation Fund—constituted from a portion of a company’s net profit, will now be subject to tax deduction at source.
For example, if a worker attempts to withdraw Tk1 lakh from any such fund, they will receive Tk90,000 in hand, with the remaining Tk10,000 deposited to the government treasury as tax.
Current regulations mandate that 5% of a company’s net profit be allocated in an 80:10:10 ratio to the participation fund, welfare fund, and the Workers' Welfare Foundation Fund, respectively.
Workers and employees directly receive cash assistance from the participation fund.
The welfare fund is operated through the company's own trustee board, while the Workers' Welfare Foundation Fund is managed by the Ministry of Labour and Employment. This ministry disburses financial aid for workers’ medical needs, accident assistance, and education grants for their children.
Stakeholders have expressed concern that this new tax will effectively reduce the actual amount of aid designated for workers.
Economists warn that the measure could diminish workers' rightful entitlements and send a negative signal regarding social protection in the industrial sector.
However, the government has clarified that the tax is part of broader efforts to expand the tax base, which will contribute to the overall implementation of the national budget.
