Business

Advertisement

 

MANUFACTURING SECTOR

AIT on capital machinery import to be withdrawn

Jasim Uddin | Published: 00:00, Aug 28,2019

 
 

A file photo shows a man working at a textile mill on the outskirts of Dhaka. — New Age photo

The National Board of Revenue is set to exempt payment of advance income tax on import of all types of capital machinery by manufacturers.

Currently, the exemption benefit from the payment of AIT at the rate of 5 per cent was given only to that capital machinery which was exempted from payment of customs duty or enjoyed concessionary rate of customs duty.

Income tax officials said that the revenue board decided to extend the benefit on import of all types of capital machinery irrespective of applicability of customs duty.

AIT, however, would remain in place on import of capital machinery by commercial importers, they said.

NBR would soon publish a gazette notification amending the relevant provisions of the Income Tax Rules 1984, they added.

Income tax wing of NBR has already asked the IT wing to incorporate the provision of not collecting AIT on import of the items in the customs’ Asycuda World system so that manufacturers could avail the benefit.

A senior NBR official told New Age that imposition of AIT on capital machinery import by manufacturers was against the concept of the tax.

AIT was mainly imposed on commercial import as it was assumed that traders would make profit by selling those products in local market, he said.

NBR does not get income tax if the importers do not file tax returns. So AIT was imposed on import stage.

On the other hand, entrepreneurs use the machinery to produce products and create economic activities and generate taxes.

Capital machinery does not make profit instantly unless it’s imported by commercial importers.

So, there should be no AIT on import of capital machinery for manufacturers, he said.

Generally, manufacturers enjoy duty benefits on import of 662 types of capital machinery as NBR has reduced the duty to 1 per cent from various rates up to 25 per cent.

NBR also offered complete exemption of customs duty or reduced it to 5 per cent on import of the items for some manufacturing industries like compressor, motorcycle and mobile manufacturing issuing statutory regulatory orders. 

Officials said that there were many other manufacturers who could not enjoy the benefit under the SROs.

They used to file application with NBR seeking the duty concession on import of capital machinery and NBR offered the benefit after scrutinising and inspecting their facilities, they said.

Withdrawal of AIT would help these types of importers, they added.

More about:

Want stories like this in your inbox?

Sign up to exclusive daily email

Advertisement

 

Advertisement

images