VAT on LPG for users waived, traders cut

Jasim Uddin | Published: 22:48, Mar 17,2021


The National Board of Revenue has exempted value-added tax on liquefied petroleum gas at the consumer end and reduced the tax at the business stage to keep the price of the product affordable to consumers.

As per an NBR decision, there will be a total of 7 per cent VAT incidence on the product as 5 per cent VAT at the production or supply stage and 2 per cent VAT at the business stage will remain applicable.

Previously, total VAT incidence on LPG gas was 15 per cent, including 5 per cent VAT at the retail stage, 5 per cent VAT at the business stage and another 5 per cent VAT at the production or supply stage.

Officials said that VAT wing of the revenue board on March 5 informed the Bangladesh Energy Regulatory Commission about the decision and requested the commission to set the price of the product, keeping the reduced burden of VAT on consumers in consideration.

The revenue board made the decision following a BERC request as it has taken a move to reset the price of the cooking gas in line with a High Court directive.

The BERC on January 14 held a public hearing to set the price of the product for consumers.

Following a writ petition filed by the Consumers Association of Bangladesh, the High Court on August 25, 2020 ordered the BERC to set LPG price after holding a public hearing on the issue and submit a report in 30 days after complying with the directive.

On November 29, the court issued a contempt of court rule against the BERC chairman for not complying with its directive and the BERC chairman on December 15 offered unconditional apology for the failure.

The BERC has not set any LGP price after 2009.

On March 1, 2021, the BERC requested the NBR to reduce the VAT rate to 2 per cent at the business stage and waive the consumer from payment of 5 per cent VAT to ease the burden on consumers.

BERC secretary (additional charge) Abul Hasan Khan on March 1 wrote the letter to NBR chairman Abu Hena Md Rahmatul Muneem.

It also requested the NBR to allow LGP gas importers and storage and bottling companies to collect the total VAT while supply of the product to distributers and dealers in a bid to ease the collection process.

The commission made the request as other petroleum products have been enjoying the similar facility.

The revenue board in July 2019 offered the VAT rate and collection process for the petroleum products — diesel, kerosene, octane, petrol and furnace oil — to keep the prices of the products stable.

Although the LGP is also a petroleum product, it remained out of the purview of the benefit as the benefit was initially meant for products for which both suppliers and buyers were the state-owned entities, NBR officials said.

They said that now they had included the LPG in the petroleum products’ list as per the BERC request as the commission would set the maximum retail price of the product.

The retail price of LPG, which is now widely used as cooking gas, would come down following the reduction of the VAT, they added.

According to the BERC, the LPG is an environment-friendly and pollution-free energy and produces lower rate of greenhouse gas.

Currently, around 38 lakh consumers use the LPG worth 10 lakh tonnes supplied by 28 companies in the country.

Around 85 per cent of total LGP is used in household cooking purpose, it said, adding that the per capita consumption of LPG in Bangladesh is one of the lowest (4 kilogramme per head) which is 58kg in Japan, 16 kg in India and 13kg in Vietnam.

Around 98 per cent of LGP is supplied by private sector companies.

More about:

Want stories like this in your inbox?

Sign up to exclusive daily email