July 17, 2024, 3:14 pm

FT Online

2019-06-22 20:57:28 BdST

New VAT law to help fetch an addl Tk 365b

The government projects an additional tax revenue of Tk 365.22 billion in the next fiscal year (FY), following the enforcement of the new VAT and Supplementary Duty Act-2012.

The highest amount of Tk 70 billion in taxes will be mobilised from tobacco sector, said an internal analysis of the VAT wing under the National Board of Revenue (NBR).

The VAT wing also expects to earn Tk 50 billion worth of extra revenue from the introduction of electronic fiscal device.

Two new VAT rates -- 5.0 per cent and 7.5 per cent -- on different products would generate an additional Tk 39.45 billion and Tk 27.36 billion in revenues respectively, the analysis said.

Advance tax (AT) at a rate of 5.0 per cent on all importables is expected to generate Tk 15 billion in additional revenue in the upcoming fiscal, it added.

Increasing specific tax on sugar, MS rod and some other products might bring an extra Tk 7.0 billion.

However, the NBR estimates losses worth Tk 10.60 billion for offering VAT exemptions to businesses having annual turnover up to Tk 5.0 million.

It has increased the ceiling of turnover tax to Tk 30 million from Tk 8.0 million and waived VAT from various sectors.

The VAT wing has estimated Tk 122.73 billion in additional revenue due to the natural growth of businesses at a 15-per cent rate.

With the impositions of VAT on some new products and services, the NBR might receive an additional Tk 20.92 billion in FY '20.

For the next fiscal, the VAT wing included new services like astrologer, marriage media, supplier of programmes in television and online media, and Bangladesh Road Transport Authority (BRTA) services.

The NBR expected to receive Tk 12 billion through realising arrears and the amount pending with court cases.

According to officials, tobacco sector would generate the highest amount of additional revenue like the previous years as prices of all tobacco products and taxes on those have gone up.

The VAT wing expects to receive Tk 6.0 billion more revenue from bidi and Tk 500 million from gul and jarda.

The NBR estimated Tk 3.0-billion supplementary duty (SD) from car owners on registration and fitness renewal with Bangladesh Road Transport Authority.

Through an upward revision of SD on mobile phone users, the NBR expected to receive an additional Tk 1.0-billion revenue.

The government in the proposed budget has set a Tk 1.17-trillion target for VAT collection in the upcoming fiscal, expecting 13.13 per cent growth over the current fiscal's revised target of Tk 1.04 trillion.

Until April, the VAT wing collected Tk 681.83-billion revenue against its target for Tk 818.20 billion.

To achieve the target for FY '20, it will have to collect an additional Tk 358.52-billion revenue through enforcing the new fiscal measures.

Experts and economists said the new measures might push up the cost of living by fuelling prices of many products.

The imposition of AT on all import products may also lead to a rise in the cost of doing business.

As VAT evasion is high here, officials said, there is no alternative but to collect AT to compel businesses to submit VAT returns to get refund of the AT.

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