AIT for contractors, suppliers hiked

Staff Correspondent | Published: 23:55, Jul 03,2017

 
 

The National Board of Revenue has increased the rates of advance income tax (AIT) on the income of contractors and suppliers earned through execution of contracts and supply of goods in the new fiscal year 2017-18 that began on Saturday.
The revenue board has also withdrawn the exemption facility on income below Tk 2 lakh for the contractors and merged the two separate tax rates into one for contractors and suppliers.
According to an NBR notification containing the rates of withholding tax, commonly known as advance income tax, contractors and suppliers will have to pay 2 per cent AIT on base amount of contracts upto Tk 15 lakh.
Until last FY 2016-17, contractors enjoyed tax exemption on contracts valued below Tk 2 lakh.
People and organisations responsible for making payment to the groups will deduct the tax while making payment.
The rate of AIT will be 3 per cent for the base amount exceeding Tk 15 lakh but below Tk 25 lakh and 4 per cent for Tk 25 lakh to Tk 1 crore.
The tax will be 5 per cent where base amount will exceed Tk 1 crore but will not exceed Tk 5 crore.
Contractors and suppliers will have to pay 6 per cent AIT on contract value ranging from Tk 5 crore to Tk 10 crore and 7 per cent on the rest of the amount, the notification said.
Until last fiscal year, withholding tax rates for contractors for execution of contracts like physical works, construction, machinery set up, and repairing and maintenance activities were 1 per cent for contract value from Tk 2 lakh to Tk 5 lakh, 2 per cent for Tk 5 lakh to Tk 10 lakh, 3 per cent for Tk 10 lakh to Tk 25 lakh, 4 per cent for Tk 25 lakh to Tk 1 crore, 5 per cent for Tk 1 crore to Tk 5 crore, 6 per cent for Tk 5 crore to Tk 10 crore and 7 per cent for rest of the contract amount.
On the other hand, withholding tax rates were 3 per cent for the amount upto Tk 20 lakh, 4 per cent for the amount above 20 lakh but upto Tk 1 crore and 5 per cent for amount above Tk 1 core.
According to the NBR notification, the rate of tax will be 50 per cent higher if the payee does not have 12-digit electronic taxpayers’ identification number at the time of making the payment.  

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