The National Board of Revenue has waived advance income tax (AIT) on the import of common wheat to rectify a decade-long inconsistency in the country’s taxation system following the detection of serious misuse of the tax measure in customs assessment by importers.
The AIT at the rate of 5 per cent had been applicable to the import of common wheat, the variety people generally consume in Bangladesh, while there is no AIT on import of durum wheat, an upgraded variety of the grain used for preparing high-quality food items like pasta.
Officials of the revenue board said that the import of common wheat was also supposed to be AIT-free as there were no other taxes, including customs duty, on the import of the item, the second highest essential crop.
But the AIT had mistakenly remained in place for years, they said.
Income tax wing of the revenue board on December 9 published a gazette notification containing a proposal to amend the Income Tax Rules-1984 by waiving the AIT on the import of common wheat and sought opinions from stakeholders within 15 days on the proposal.
The proposal will be considered as final if no objection or recommendation is found, it said.
With this, there will be no taxes, including AIT, on wheat imported in bulk.
According to the NBR data, traders imported 67.60 lakh tonnes of wheat at a cost of Tk 14,288 crore in the fiscal year of 2019-2020.
The import of wheat stood at 18.34 lakh tonnes in July-September of the current fiscal year (FY 2020-2021).
‘But surprisingly, no common wheat has so far been imported this year while the quantity was only five kilograms in FY20,’ NBR officials said.
In the FY 2018-2019, the 55.23 lakh tonnes of wheat imported were also declared as durum variety.
According to a forecast made by the International Grain Council (IGC), global durum wheat production will stand at 3.40 crore tonnes in FY21.
Customs Intelligence and Investigation Directorate and Customs House, Chattogram of the revenue board found that traders usually imported common wheat but declared those as durum wheat to avoid the AIT.
The CHC sent a sample of wheat imported under six consignments in August to the Bangladesh Wheat and Maize Research Institute in Dinajpur for testing the quality and types.
The BWMRI on October 7 said that the imported wheat was common wheat, not of durum variety.
‘The fact is that traders imported common wheat but declared those as durum wheat to avoid the AIT,’ a senior NBR official told New Age.
Traders resorted to the practice of misdeclaration as there were no duties and taxes on the import of durum wheat, he said.
Income tax officials said that the AIT would be applicable to the consignments detected for misdeclartion as the NBR did not give retrospective effect of the AIT exemption.
CHC commissioner Md Fakhrul Alam on Monday told New Age that they would take the next course of actions regarding the AIT on wheat imported under the consignments as per NBR instruction.
‘We will seek instructions from the NBR on applicability of the AIT to the detected consignments,’ he said.
The CHC would demand AIT from the importers concerned if the NBR does not give retrospective effect to the AIT waiver, he said.
According to the food ministry data, Bangladesh’s total wheat import was 64.34 lakh tonnes in FY20.
Of which, the government imported only 3.68 lakh tonnes and the remaining 59.98 lakh tonnes of wheat were imported by private traders.
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