The National Pay Commission (NPC), which is drafting a new pay scale for government employees, is set to examine the tax privileges enjoyed by public servants in an effort to reduce longstanding disparities with the private sector.

Officials said the move comes as part of a broader review of fiscal policies, even as the interim government focuses on improving Bangladesh’s low tax-to-GDP ratio, which fell by 0.7 percentage points last year.

Headed by former finance secretary Zakir Ahmed Khan, the NPC has sought a detailed report from the National Board of Revenue (NBR) outlining the tax concessions currently available to government officials. The commission’s Terms of Reference include a specific mandate to assess taxation-related provisions within the public sector. Its final report is expected to be submitted by December.

Although the NPC recently circulated a stakeholder survey, it did not include questions on taxation. A senior commission member explained that the omission was deliberate, saying the survey was designed to capture broader views rather than delve into technical issues.

The commission plans to hold consultations with business chambers and other stakeholders this month to address such “tricky issues.”

Revenue officials said the government has also been under pressure from the International Monetary Fund (IMF) to phase out tax exemptions for individuals, including those in public service.

Currently, government employees pay income tax only on their basic salary and festival bonuses, while private-sector workers are taxed on their entire income. Moreover, provident and gratuity funds in the private sector are taxable, unlike those of government officials.

Sources close to the commission said members have reached consensus on recommending an upward revision of salaries, gratuity, and provident funds in the upcoming pay scale, while tax-related privileges are likely to undergo review.