The National Board of Revenue has exempted importers of LPG cylinder made of iron and steel from paying value-added tax following a plea made by two local importers for the waiver to meet the growing demand for the item on the domestic market.
Officials of the VAT wing of the revenue board said a gazette notification was issued on September 12 waving 15 per cent VAT on import of liquefied petroleum gas cylinder made of iron and steel.
The exemption will be applicable for the cylinder with capacity below 5,000 litres.
The officials said that the NBR initially opined against the proposal of waiving from payment of VAT on import of iron and steel cylinders as production of the item on the domestic market has been increasing over the years.
In addition, some large companies are also making investment to enter the LGP cylinder manufacturing market.
The NBR also in January this year gave VAT exemption on import of composite LPG cylinder as a substitute of traditional iron and steel made LPG cylinders. Composite cylinder is considered as environment friendly and safer from leakage and explosion than traditional iron and steel made ones.
The waiver, however, was given following a proposal of the BEXIMCO Group.
The NBR officials said that later they entertained the application of Orion Gas Ltd in line with directives of finance minister AMA Muhith as well as considering the production capacity of domestic manufacturers.
Currently, domestic manufacturers can supply some 20-25 per cent of total demand and rest of the required cylinders is imported.
The price of iron and steel cylinders which are widely used in the country both for household and commercial levels is likely to come down at the consumer end due to waiver in import VAT, they hoped.
They, however, said that local producers of the traditional LPG cylinder might face adverse competition from imported one due to the decision.
Local producers enjoy VAT exemption on import of raw materials and different components of the product. They also enjoy VAT exemption at production stage.
Bashundhara Group, Omera, TK Group, among others, produce LPG cylinders in the country.
The government is encouraging household consumers to use bottled LP gas instead of piped natural gas following speedy depletion of the natural resource.
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