Value-added tax at the rate of 15 per cent will be applicable to newly imposed security and development fees on departing air passengers, according to the National Board of Revenue.
The overall cost of an air passenger travelling to the SAARC countries will increase by Tk 1,073 and to the other countries by around Tk 2,000 per trip due to the two steps taken by the Civil Aviation Authority of Bangladesh and NBR.
The NBR on Tuesday issued an order, asking its field-level VAT offices to collect the VAT on the fees that come into force on August 1.
Earlier on July 22, the Civil Aviation Authority of Bangladesh in an order imposed passenger security fee and airport development fee at various rates on air tickets of departing passengers after getting approval from the Finance Division of the finance ministry.
According to the CAAB order, an outbound passenger will have to pay a total of $11 or Tk 933 ($5 as airport development fee and $6 as security fee) for SAARC countries, $20 or Tk 1,696 ($10 as airport development fee and $10 as passenger security fee) for outside SAARC countries.
The rates of airport development fee and passenger security fee for domestic passengers are set at Tk 100 and Tk 70 a passenger respectively.
The VAT will be added on the fees, according to the NBR order.
Officials said that the NBR would get Tk 140 in VAT on the fees from a passenger for the SAARC countries, Tk 254 from a passenger for the other countries, and Tk 25 from a domestic passenger.
The tax authorities will get a significant amount of revenue from the newly introduced fees, they said.
The CAAB said that the fees were imposed to improve passenger security, service standards as well as infrastructural development of the country’s airports.
The two fees will be effective for the air tickets to be purchased on August 1 and later by the departing passengers and all airlines will collect the fees.
As per the VAT and Supplementary Duty Act-2012, the CAAB is a VAT deducting authority and it will have to deduct the VAT as per VAT Deduction at Source and Collection Rules-2020, according to the NBR order.
As per the rules, 15 per cent VAT is applicable to fees and charges the government agencies, semi-government agencies, autonomous bodies and local authorities receive for creating any facilities, providing licences and renewal of those services, it said.
The order signed by NBR second secretary (VAT policy) Kazi Rezaul Hassan instructed its VAT and customs commissioners to take steps to realise the VAT from the sector.
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