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NBR to get Tk 36,500cr more from consumers with new VAT law

Jasim Uddin | Published: 00:00, Jun 20,2019

 
 

A file photo shows a man picking sugar for weighing at a grocery shop in Dhaka. Consumers are set to face additional burden of price hike of many essential and consumer products due to the fallout of implementation of new Value-Added Tax and Supplementary Duty Act-2012 as the National Board of Revenue eyes collecting additional Tk 37,582 crore in VAT and SD in the next fiscal year. — New Age photo

Consumers are set to face additional burden of price hike of many essential and consumer products due to the fallout of implementation of new Value-Added Tax and Supplementary Duty Act-2012 as the National Board of Revenue eyes collecting additional Tk 37,582 crore in VAT and SD in the next fiscal year.
Of the VAT amount estimated, Tk 25,309 crore would come directly from imposition of VAT and SD at different rates on different sectors while another Tk 12,273 crore would come from normal business growth in the country.
The tax authority, however, said that it would get Tk 1,060 crore less due to VAT exemption offered to various sectors including small and medium enterprises.
So, the net collection from the measures would stand at Tk 36,522 crore in the next fiscal year (2019-20).
The NBR prepared the estimation as part of budget exercise and placed it before finance minister AHM Mustafa Kamal for a post-budget press conference. The press conference held on June 14 was later conducted by prime minister Sheikh Hasina as Kamal could not attend it due to illness.
The revenue board has targeted the VAT sector to achieve its huge revenue collection target set at Tk 3.25 lakh crore for FY20.
Of the revenue amount targeted, the NBR has set the target of collecting the highest — Tk 1,17,672 crore — from VAT.
Experts and economists have said that the measures including imposition of VAT and SD on various sectors would cause price rise of many products and services like sugar, edible oil, LPG gas, spices, ice-cream, clothes, purchase of goods online and mobile services, affecting consumers negatively.
A flat 5 per cent VAT has also been imposed on local supply of goods while 5 per cent advance tax on import of goods.
According to the provisional estimation of NBR, it would get additional Tk 8,125 crore in SD at local stages.
The revenue board also estimated that Tk 2,092 crore would come from newly imposed VAT on goods and services and Tk 3,945 crore would come from imposition of VAT at 5 per cent on various goods and services.
It would get Tk 2,736 crore from sectors on which VAT has been proposed at the rate of 7.5 per cent and Tk 11 crore from sectors on which VAT has been proposed at the rate of 10 per cent.
Around Tk 700 crore would come from petroleum products, medicine, and land development organisations on which specific VAT has been imposed.
The NBR also estimated that it would get Tk 5,000 crore from the retail sector due to use of electronic fiscal devices and Tk 1,500 crore from imposition of advance tax on import of all types of goods.
In addition to that, Tk 1,200 crore would be realised from dues and by settling VAT disputes.
The largest amount of SD worth Tk 7,000 crore would come from price hike of cigarettes, Tk 600 crore from price hike of bidi and Tk 50 crore from gul and zarda.
It would get another Tk 300 crore from 10 per cent SD on obtaining and renewal of fitness certificates, route permit of all kinds of private vehicles excluding passenger bus, goods-carrying truck and lorry, ambulance and school bus.
Another Tk 100 crore is estimated to come from increase in SD to 10 per cent from 5 per cent on mobile services including talk time and internet uses.
Officials said that the government set the revised target of VAT collection at Tk 1,04,006 crore in the outgoing fiscal year (FY 2018-19).
But, VAT officials might be able to collect around Tk 82,000 crore in the year, they said.
They will have to collect additional Tk 36,000 crore to achieve the target set for FY20.
As per the estimation, they would be able to achieve the target due to changes to VAT measures under the new law.
Officials said that many measures would create extra inflationary pressure on consumers.
NBR chairman Md Mosharraf Hossain Bhuiyan on Tuesday at a programme in Dhaka admitted that the price of sugar would rise by Tk 5 a kilogram and the price of edible oil would rise by Tk 3-5 a kg due to the imposition of VAT.
He, however, said that the price hike would remain at a tolerable level.
Experts, however, said that the measures would put pressure on inflation that had been rising since January this year and stood at 5.63 per cent in May.

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