Govt SalaryLast Updated: September 2026•Read Time: 7 min read•Verified by NBR SRO & Tax Act 2023

Government Employee Salary Tax: Complete SRO 225 Guide & Calculation Method

Under SRO 225, only 'Basic Pay' and 'Festival Bonuses' of government employees under the National Pay Scale are taxable. House rent, medical, and conveyance allowances are 100% tax-free. Step-by-step return filing guide.

Key Takeaways & Core Points

For government employees, only Basic Salary and Festival Bonuses are taxable.
House rent allowance, medical allowance, and conveyance allowance are 100% exempt from tax.
Bengali New Year (Boishakhi) allowance, travel allowances, and tiffin allowance are 100% tax-free.
Govt employees do not get the general private 1/3rd deduction (Clause 27) because all their allowances are directly exempt.
GPF contributions qualify for investment tax rebate under Section 78.

Under SRO No. 225-Law/Income Tax-07/2023 issued by the National Board of Revenue, public servants receiving remuneration under the National Pay Scale benefit from an explicit tax treatment where most allowances are completely tax-exempt.

1. Taxable Components for Government Employees

For government employees under the National Pay Scale, the following items comprise total taxable salary:

•Annual Basic Salary (12 months of basic pay received)
•Festival Bonuses (Two Eid / festival bonuses received during the income year)

Important: Honorariums received from government boards or examination committees are also taxable under 'Other Sources' unless explicitly exempted by a separate statutory order.

2. Fully Exempt Allowances

The following allowances are completely excluded from taxable income:

•House rent allowance received in cash
•Medical allowance
•Conveyance allowance
•Boishakhi (Bengali New Year) festival allowance
•Education allowance for children
•Tiffin allowance and washing allowance

Frequently Asked Questions (FAQ)

Q: Does GPF contribution reduce taxable income?

A: GPF contribution does not reduce taxable income directly, but qualifies for investment tax rebate under Section 78, reducing the final payable tax.

Conclusion & Tax Tips

Government employees should ensure accurate reporting of basic pay and festival bonuses while claiming legitimate GPF rebates on their e-Return.

Official Statutory References & Sources

Reviewed by Talukdar Academy Research Cell

All data, tax brackets, thresholds, and statutory interpretations in this article are compiled directly from the Bangladesh Income Tax Act 2023, Finance Ordinance 2026, and official NBR circulars.

NBR Official Portal

Official e-Return Portal

Income Tax Act 2023 Gazette