Jute goods makers to enjoy reduced tax benefit until FY '23

FT ONLINE

The National Board of Revenue (NBR) has extended reduced tax benefit for jute product manufacturing companies and individuals until fiscal year (FY) 2022-23.

Both the corporate and individual taxpayers will enjoy the reduced tax rate of 10 percent on their income, generated from the production of jute products, for FY 2020-21, FY 2021-22 and FY 2022-23 consecutively.

The NBR's Income Tax Wing issued a Statutory Regulatory Order (SRO), dated October 3, in this regard.

The reduced tax benefit for the jute product producing companies were scheduled to expire on June 30, 2020.

Officials said the NBR extended the tax benefit following proposals of the Bangladesh Jute Mills Corporation (BJMC)

The producers of jute goods have been enjoying a reduced rate of 10 percent since FY 2016-17.

The BJMC, in a letter in July, requested the NBR to issue an SRO extending the tenure of corporate income tax for four more years, up to FY 2023-24.

In the letter, the BJMC said some 22 jute-mills under the organisation purchase raw jute. They produce diversified jute goods, including a sack, hessian, carpet backing cloth, and jute yarn etc, for domestic and export markets.

It also said the corporation incurs notable losses every year due to 'higher production cost' compared with selling prices of these products.

However, the BJMC gives wages and allowances to its workers as per the government wage structure.

A number of government agencies, including the Directorate General of Food and the Bangladesh Agricultural Development Corporation, deduct withholding tax on payment for purchasing jute bags from the BJMC.

Such deduction of withholding tax, known as Advance Income Tax (AIT), creates financial pressure on the jute mills, it added.

Secretary-General of the Bangladesh Jute Mills Association (BJMA) Abdul Barik Khan said they hail the NBR's SRO on extending the reduced tax benefit for three consecutive years.

He said the BJMC sought to bring down the tax rate for jute product producers to a single-digit one from 10 percent to ease the financial burden on the sector.

Mr. Khan also urged the NBR to expedite its move to reduce the source tax on export proceeds of jute products to 0.25 percent from the existing 1.0 percent.

In the current FY budget, the source tax on all exporters was raised to 1.0 percent from the previous 0.25 percent.