---
title: "Bangladesh Tax and Payroll 2026 | Income Tax, Provident Fund"
description: "Bangladesh payroll 2026: no social insurance, 30% top income tax, six bands from 0%, provident fund at 10% each side where a scheme exists."
canonical: https://www.teamed.global/country-hiring-guides/bangladesh/tax-and-payroll
---

Bangladesh · Tax & payroll child

Served by Teamed vetted partner-entity network in Bangladesh

# How does *Bangladesh payroll tax* work in 2026?

Bangladesh has no mandatory national social insurance. The employer pays 0% in payroll tax on top of salary. What you do pay is a provident fund matched at 10% each side where a scheme is set up, plus income tax withheld from a six-band schedule that starts at 10% and reaches 30%.

Last reviewed 12 June 2026 · Bangladesh guide

![Dhaka skyline with modern office towers rising above the Buriganga River at golden hour.](/images/country-guides/bangladesh-tax-payroll.webp)

Illustration · Dhaka, Bangladesh

Answer.cite this

Bangladesh has no mandatory national social insurance scheme for private-sector workers. The employer pays 0% in social insurance contributions on top of salary.

Where a provident fund is set up, both employer and employee each contribute 10% of basic salary. The employer deducts income tax from pay using six rate bands. The first BDT 375,000 of annual income is tax-free. The top rate is 30%.

Payroll runs monthly. Wages must be paid by the last working day of each month under the Bangladesh Labour Act 2006.

![A payroll ledger open on a wooden desk next to a cup of tea in a Dhaka office.](/images/country-guides/bangladesh-tax-payroll-polaroid-1.webp)

Payroll, Dhaka-style

## What does an employer pay in Bangladesh payroll contributions?

Bangladesh has no mandatory national social insurance tax on employers. You pay 0% in social insurance on top of gross salary.

Where a provident fund scheme exists, the employer contributes 10% of basic salary. This is the main employer payroll cost beyond gross pay.

| Contribution type | Employer rate | Applies when |
| --- | --- | --- |
| National social insurance | 0% | Never (no mandatory scheme) |
| Provident fund contribution | 10% of basic salary | Where a provident fund is established |

### Is the provident fund mandatory?

Under the [Bangladesh Labour Act 2006 (sections 264 to 270)](https://mccibd.org/wp-content/uploads/2021/09/Bangladesh-Labour-Act-2006_English-Upto-2018.pdf), a provident fund is mandatory for establishments where at least a set number of workers are employed and the employer chooses to set one up, or where the fund has been established by practice. Once a scheme exists, both employer and employee must each contribute at the prescribed rate. Many formal employers in Bangladesh do run a provident fund as standard practice, so budget 10% of basic salary as a normal employer cost.

### Other employer costs

Employers pay full salary during approved sick leave (up to 14 days per year) and must fund statutory severance and gratuity on exit. Those are covered in the termination guide. Festival bonuses (two per year, equating to two months of basic salary combined) are customary and widely treated as mandatory in practice. Budget for them in your total employer cost model.

Bangladesh Labour Act 2006 · Provident Fund (sections 264 to 270)

Where a provident fund is established, the employer and employee each contribute at the prescribed rate. The fund is managed by a board of trustees and must be kept separate from company assets.

Source: [Bangladesh Labour Act 2006, MCCI](https://mccibd.org/wp-content/uploads/2021/09/Bangladesh-Labour-Act-2006_English-Upto-2018.pdf)

## What does an employee pay in Bangladesh payroll deductions?

The employee pays 0% in mandatory social insurance contributions. There is no national social insurance deduction from gross pay.

Where a provident fund is set up, the employee contributes 10% of basic salary. Income tax is deducted monthly from taxable earnings using the six-band schedule.

| Deduction type | Employee rate | Applies when |
| --- | --- | --- |
| National social insurance | 0% | Never (no mandatory scheme) |
| Provident fund contribution | 10% of basic salary | Where a provident fund is established |
| Income tax (withholding) | Six-band rate; see income tax section | All taxable earnings |

The employee's provident fund contribution is matched exactly by the employer. Both amounts go into the same fund. The employee's share is tax-deductible up to a prescribed limit under the Income Tax Act 2023.

### Minimum wage reference

The ready-made garments (RMG) sector minimum wage is BDT 12,500/month. Bangladesh does not have a single universal minimum wage. Different sectors have their own gazetted rates set by Wage Boards. The RMG rate is the most widely cited reference figure. Non-RMG employers should check the applicable gazette for their sector.

## Bangladesh income tax bands for 2025 to 2026

Income tax has six bands. The first BDT 375,000 a year is tax-free. The top rate is 30% on income above BDT 3,575,001.

Tax is withheld monthly by the employer and settled with the National Board of Revenue. Women, senior citizens, persons with disability, and war-wounded freedom fighters have higher tax-free thresholds than the general rate.

| Income band (FY 2025/26) | Rate |
| --- | --- |
| Up to BDT 375,000 | 0% (tax-free) |
| BDT 375,001 to BDT 675,000 | 10% |
| BDT 675,001 to BDT 1,075,000 | 15% |
| BDT 1,075,001 to BDT 1,575,000 | 20% |
| BDT 1,575,001 to BDT 3,575,000 | 25% |
| Above BDT 3,575,001 | 30% |

### Enhanced tax-free thresholds

Certain groups receive a higher tax-free band than the general threshold: women and senior citizens (aged 65 and over) get a higher exemption limit, persons with disability receive an even higher limit, and war-wounded freedom fighters receive the highest threshold. A payroll running employees in multiple categories must apply the correct threshold per individual.

### Tax identification and filing

Employees must hold a Tax Identification Number (TIN) to receive any salary above the tax-free threshold. The employer withholds tax monthly based on estimated annual income. At year-end, employees file a personal income tax return with the National Board of Revenue. The employer issues a salary certificate (Form 108) confirming total pay and tax deducted, which the employee needs for their annual return.

## How does Bangladesh payroll filing work?

Bangladesh payroll is monthly. Wages must reach workers by the last working day of each month.

The employer withholds income tax from salary each month and deposits it with the National Board of Revenue. Annual pay and tax certificates (Form 108) must be issued to employees after the fiscal year closes.

Key monthly payroll obligations for employers in Bangladesh:

- **Pay wages on time.** The Bangladesh Labour Act 2006 (section 123) requires wages to be paid at least monthly, by the last working day of the month. Delays expose the employer to Labour Court claims.
- **Withhold and deposit income tax.** The employer deducts income tax from each monthly pay run and deposits it with the National Board of Revenue. Monthly deposits are due within the prescribed period following the pay date.
- **Maintain payroll records.** Employers must keep wage books, pay slips, and tax deduction records for inspection by the labour authority and the National Board of Revenue.
- **Issue Form 108.** After the fiscal year ends (30 June), each employee receives a salary certificate (Form 108) showing total taxable pay and tax deducted. Employees need this for their personal tax return.
- **File annual return.** The employer submits an annual statement of tax deductions at source to the National Board of Revenue after year-end.

Bangladesh Labour Act 2006 · Wage payment rules (section 123)

Wages must be paid at least monthly and not later than the last working day of the wage period. Failure to pay on time is an offence under the Act.

Source: [Bangladesh Labour Act 2006, MCCI](https://mccibd.org/wp-content/uploads/2021/09/Bangladesh-Labour-Act-2006_English-Upto-2018.pdf)

1. Collect pay data Gather basic salary, allowances, bonuses, and any additional payments for the month before the payroll run closes.
2. Calculate gross pay Add all earnings for the period. Include basic salary, house rent allowance, medical allowance, and any variable pay.
3. Deduct income tax Apply the correct tax band to the employee's estimated annual income. Divide the annual tax liability by twelve and deduct that amount from monthly pay.
4. Deduct and match provident fund Where a provident fund is in place, deduct 10% of basic salary from the employee and add the matched 10% employer contribution.
5. Pay wages by month-end Transfer net pay to employees by the last working day of the month. The Bangladesh Labour Act 2006 requires on-time payment. Late wages are an offence.
6. Deposit tax and file records Deposit the month's withheld income tax with the National Board of Revenue. Update payroll records and retain pay slips for labour authority inspection.

## Provident fund and retirement savings in the payroll stack

Bangladesh has no mandatory public pension scheme for private-sector workers. Retirement savings run through a provident fund where one is established.

Both sides contribute 10% of basic salary each. The employer matches the employee contribution exactly.

The provident fund is the main retirement savings vehicle in Bangladeshi employment. Key facts:

- **Both sides at 10%.** Where a fund is established, employer and employee each contribute 10% of basic salary monthly. The contributions accumulate tax-free in the fund.
- **Fund governance.** The fund is managed by a board of trustees drawn from employer and employee representatives. It must be kept separate from company assets and audited annually.
- **Withdrawal.** An employee who leaves after qualifying service can withdraw their full accumulated balance, including the employer's matched contributions. Rules on the qualifying period vary by scheme rules.
- **Tax treatment.** Employee contributions to a recognised provident fund are deductible from taxable income up to prescribed limits under the Income Tax Act 2023. Employer contributions are not taxable in the employee's hands while in the fund.

### Gratuity as a retirement benefit

Gratuity is a statutory lump-sum paid on exit to workers with at least five years of continuous service. For service under ten years, the rate is 30 days of wages per completed year. For ten years or more, the rate rises to 45 days per completed year. Many Bangladeshi employers treat gratuity as a de facto retirement benefit for long-serving workers. It is separate from the provident fund and does not reduce the provident fund balance.

### No auto-enrolment age or earnings threshold

Unlike some jurisdictions, Bangladesh has no statutory auto-enrolment trigger. Whether a provident fund exists at a given employer depends on the establishment's size, sector, and history. When hiring through Teamed, we confirm the applicable provident fund arrangement at onboarding.

## How does Teamed handle Bangladesh payroll for you?

Teamed becomes your legal [employer of record](/lp/employer-of-record) in Bangladesh for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency.

Payroll, tax, provident fund, and the full Bangladesh employment law stack run on **one platform**.

**Real HR and legal experts** handle your Bangladesh hires, from offer letters through monthly income tax deposits and annual Form 108 certificates. **An actual person**, not a chatbot or a pooled queue. There is **no setup fee** and **no exit fee**. Employer cost **passes through at cost, itemised** on every invoice.

EOR payroll, contractor onboarding, and entity setup all live on **one platform**. A Bangladesh contractor who converts to direct employment keeps their record. That same employee can **graduate** from EOR to your own Bangladesh entity without switching systems. Run the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to see the full picture. EOR is the right model for a first Bangladesh hire, **until it isn’t**. Start from the Bangladesh hiring overview.

Key sources: [Bangladesh Labour Act 2006](https://mccibd.org/wp-content/uploads/2021/09/Bangladesh-Labour-Act-2006_English-Upto-2018.pdf) and [PwC Bangladesh tax summary](https://taxsummaries.pwc.com/bangladesh/individual/taxes-on-personal-income).

## Frequently asked questions

Does an employer in Bangladesh pay social insurance contributions?

No. Bangladesh has no mandatory national social insurance scheme for private-sector employers. The employer pays 0% in social insurance on top of gross salary. Where a provident fund is established, the employer contributes 10% of basic salary, matched by the employee. That is the main payroll contribution beyond gross pay.

What is the income tax rate in Bangladesh in 2026?

Bangladesh uses a six-band income tax system. The first BDT 375,000 of annual income is tax-free. The bands then run at 10%, 15%, 20%, 25%, and 30% at the top. The top rate applies to income above BDT 3,575,001. These rates are for general taxpayers under FY 2025/26 rules.

How does the provident fund work for Bangladesh employees?

Where a provident fund is established, both employer and employee each contribute 10% of basic salary monthly. The fund accumulates tax-free. On leaving, an employee with qualifying service withdraws their full balance including the employer's matched contributions. The provident fund is separate from statutory gratuity, which is a lump sum paid on exit after five or more years of continuous service.

When must wages be paid in Bangladesh?

The Bangladesh Labour Act 2006 (section 123) requires wages to be paid at least monthly. Payment must reach workers by the last working day of each month. Payroll frequency is monthly across nearly all formal employers. Late payment is an offence under the Act and can give rise to Labour Court claims.

What is the minimum wage in Bangladesh?

Bangladesh does not have a single national minimum wage. The most widely cited reference rate is the ready-made garments (RMG) sector minimum, which is BDT 12,500/month. Other sectors have their own rates set by sector-specific Wage Boards. Employers should check the gazette applicable to their industry before setting a salary floor.

Teamed Legal Operations

The thing that surprises new employers in Bangladesh is that there is no social insurance to budget for on the employer side. But then the provident fund, gratuity, and festival bonuses together add up to more than people expect. Model the full cost before you make the offer.

A note from Tom Price-Daniel

Bangladesh payroll has no social insurance line. The employer pays 0% in mandatory payroll tax on top of salary.  
But the provident fund at 10%, gratuity, and two annual festival bonuses are costs just as real as any headline rate.  
Know what you are actually committing to before the contract is signed.

Tom Price-Daniel · Co-founder, Teamed

## Related Bangladesh guides

- Hiring in Bangladesh, overviewparent
- [Bangladesh termination and severance](/country-hiring-guides/bangladesh/termination-and-severance)sibling
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the National Board of Revenue and the Bangladesh Department of Labour before relying on any specific framework. The income tax bands shown apply to general taxpayers for FY 2025/26; enhanced exemption thresholds apply to women, senior citizens, persons with disability, and war-wounded freedom fighters. The minimum wage reference rate shown is for the RMG sector; other sectors have different gazetted rates.