Bangladesh Bank Introduces New Excise Duty Rules for Islamic Banking Loan Accounts

Bangladesh Bank has clarified that when one or more deal accounts are opened or created against a single loan account under the Islamic banking system, excise duty will not be charged separately on each deal account. Instead, the duty will be applied once a year to the main loan account. The threshold for imposing excise duty on bank accounts has also been increased.

The Finance Ministry’s Internal Resources Division issued a notification on June 7. On Thursday, Bangladesh Bank issued a circular on the matter and sent it to the managing directors and chief executive officers of all scheduled banks.

According to the circular, the threshold for imposing excise duty in the relevant cases has been raised from Tk 300,000 to Tk 400,000. Under the Islamic banking system, if one or more deal accounts are opened or created against a single loan account, excise duty will apply only once a year to the main loan account.

As a result, banks will not be allowed to treat multiple deal accounts under the same loan account separately and impose excise duty multiple times in a year. The change is expected to reduce the risk of Islamic banking borrowers paying excise duty more than once on the same loan facility. Bangladesh Bank instructed banks to properly follow the guidelines outlined in the notification. The new rules will take effect on July 1, 2026.