100 more goods, services to be on VAT waiver list

Jasim Uddin | Published: 22:59, May 24,2017

 
 

The government is set to allow value-added tax exemption to another 100 essential goods and services in the coming national budget, widening the VAT-free areas for consumers from the existing benefit.
Currently, around 1,400 goods and services enjoy VAT waiver facility.
Officials of the finance ministry said that the National Board of Revenue had almost finalised the exemption list under the new VAT and Supplementary Duty Act-2012 to minimise the pressure of price hike on consumers following apprehension of inflation after implementation of the law.
The new law is scheduled to come into force from July 1 this year.
The government is also working to lower the VAT rate as part of making the law more comfortable to 12 per cent or 13 per cent from the stipulated 15 per cent in the law amid strong opposition from business community.
They said that more essential goods and services including MS rod, edible oil, sugar, purchase of land and apartments, training activities and products under agriculture and life-saving drugs categories would come under the VAT exemption benefit.
All types of basic food, agricultural products, medical services, life-saving medicines, education (except English medium schools) will enjoy VAT exemption.
Purchase of all types of residential and commercial apartments below 750 square feet will be VAT exempted in the new law which is now subject to minimum 1.5 per cent VAT on total sales value, they said.
Currently, there is 2.5 per cent VAT on transfer price of land in the existing VAT law but in the new law it will be totally VAT exempted.
More than 20 types of life-saving drugs including kidney dialysis solution, equipments for heart operation, blood bags will be added in the exemption list.
All types of agricultural products like rice, wheat, atta, vegetables, spices, fruits, milk, salt, fish, meat, and domestic animals will come under VAT exemption list.
Processed agricultural products, packaged or unpackaged, unless those are cooked, will also be VAT exempted.
Currently, only unprocessed agri products are VAT free.
Transportation of agricultural goods will be VAT-free.
There will be no VAT on public transport fare including taxicab service, except inter-city air-conditioned services.
All types of medical services will be VAT exempted in the new law.
IT sector and export-oriented industries will enjoy VAT waiver on rent for office and factory in the new law. Currently, only factory rent is VAT free.
All types of procurement for development projects under public-private partnership scheme, foreign assistance and fast-track projects will be VAT exempted.
Local information technology sector will not need to pay VAT on supply of information technology enabled services to government and other entities authorised for VAT deduction at source which is now subject to 4.5 per cent VAT.
Training activities offered for skill development, except coaching centres, will come under VAT exempted facility.
The government will also keep the number of products having supplementary duty at import stage unchanged in the new law for ensuring protection to domestic industry.
Currently, importers have to pay supplementary duty on import of 1,420 products.
Initially, the number of products was lowered to only 170 which sparked severe criticism from local manufacturers. 

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