All products are subject to 15 percent VAT, as applicable

Patrick D Costa

The National Board of Revenue (NBR) has proposed 15 percent VAT on all goods and services.

The National Board of Revenue (NBR) has proposed 15 percent VAT on all goods and services. But for the time being, the Prime Minister has given instructions to implement it step by step.

Currently, NBR collects VAT at the rate of 2, 3, 5, 7.5, 10 and 15 percent on various products and services. On the other hand, VAT exemptions in some sectors like uniform rate of VAT are planned to be phased out.

Prime Minister Sheikh Hasina gave instructions on various issues in a budget meeting with concerned people at Ganobhaban on Tuesday.

In the meeting, NBR Chairman presented various proposals regarding the budget of Income Tax, VAT and Customs Department. Apart from the NBR chairman, the members of the policy wing of the three divisions, the first secretary, the second secretary and the members of the budget coordinating team were present. Finance Secretary was also present. Khairuzzaman Majumdar.

The cost of talking on mobile is increasing
The Prime Minister has given positive nod to the proposal to levy additional duty on mobile phone calls to increase the scope of revenue collection. As a result, the consumer will have to pay more to talk on the mobile phone. At present, a consumer can talk about 73 taka if he recharges his mobile by 100 taka. The mobile operators deduct the remaining 27 taka as VAT and supplementary duties. If the 5 percent supplementary duty on mobile services is increased in the proposed budget, the consumer will be able to talk about 69.35 rupees. In order to increase VAT collection, the 2015-16 budget introduced supplementary duty on mobile phone calls for the first time. Initially 5 percent supplementary duty was imposed, but it was later reduced to 3 percent in view of the demands of various quarters. After 2 years the supplementary duty was increased from 3 to 5 percent earlier. It was later increased to 10 percent in 2019 and 15 percent in 2020. Currently, mobile phone calls are subject to 15 percent VAT in addition to 15 percent supplementary duty. On the other hand there is 15 percent supplementary duty along with 5 percent VAT on internet usage. Along with this, consumers have to pay one percent surcharge.

Duty free facility of MPs on car import cancelled
Currently MPs can import cars at duty-free facilities. The Prime Minister has agreed to cancel this benefit in the budget to reduce inequality.

In the proposed budget for the fiscal year 2024-25, MPs are proposing to impose 25 percent supplementary duty and 15 percent VAT on imports of cars. Besides, the Prime Minister has given instructions to impose duty in the next budget, even though the cars imported for the Hi-Tech Park will get duty-free benefits.

Unchanged baggage rules
As per current rules, a passenger can bring 117 grams of gold. In this case, a duty of four thousand rupees has to be paid. A passenger can bring gold in this way as often as he likes.

NBR proposed that a passenger can bring gold under this rule once a year. However, the Prime Minister vetoed it and said that if a passenger brings gold even once a year, the tax should be collected. Tax must be paid even if brought more than once.

Declining corporate tax rates
NBR decided to reduce corporate tax conditionally. The Prime Minister agreed. However, taxes are being reduced in non-listed industries in the capital market associated with the productive sector as before, not in all sectors. It is proposed to reduce the tax of such companies from 27.5 percent to 25 percent. Taxes of all other sectors remain unchanged.

Tariff benefits on import of agricultural inputs and fertilizers
The Prime Minister advised not to increase the duty on the import of agricultural inputs and fertilizers. As a result, it is reported that the cost of import of fertilizers and agricultural materials is not increasing.

Cancellation of return assessment
In order to reduce the harassment of taxpayers along with increasing revenue collection, in the next budget, individuals and companies of all categories of taxpayers will have to submit returns through self-determination method. Return assessment is not done in this method. Currently, individual taxpayers have to file returns through self-assessment mode.

On the other hand, company taxpayers can file returns under both self-assessment and general rules. Final tax is generally assessed through the return submitted. And self-determination system returns are audited. For this reason, it is known that NBR is going to make major changes in the income tax law in the next budget.

Tax-free life expectancy is not increasing
Despite rising inflation, the tax-free income limit of individuals is not increasing in the next fiscal year’s budget. In the latest budget of the current financial year, the tax-free income limit has been increased from Tk 3 lakh to Tk 3.5 lakh. However, NBR is planning to collect additional tax from the rich to increase the revenue. Currently, the top tax rate for individual taxpayers is 25 percent. Income tax at the rate of 25 percent is payable if the annual income is more than 16.5 lakh rupees. It is being increased to 30 percent.

Sources of the meeting said that the Prime Minister agreed to this proposal.

Besides, it is known that the directives have come to reduce tax exemptions in various sectors, to cancel tax exemptions on capital income in stock market investments.

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