Salim Reza, Dhaka: The Bangladesh National Board of Revenue (NBR) has planned to increase the duty-VAT on various products including cigarettes, alcohol, clothing showrooms, domestic and international route air tickets, hotels, restaurants and drinks to collect about 12 thousand crores of additional revenue in Bangladesh. As a result, those products or services will have to pay extra money. VAT is being increased and rationalized on certain goods and services mainly to comply with International Monetary Fund (IMF) conditions. Meanwhile, the report given by the National Board of Revenue has been presented in the meeting of the advisers of the Interim Government of Bangladesh, which has been approved. If all goes well, the order may be issued on January 5 with the approval of the President of Bangladesh, a senior source of the National Board of Revenue of Bangladesh confirmed to G24H Bangladesh representative.
In this regard, a member of the National Board of Revenue of Bangladesh, who did not disclose his name, told G24h that major changes in the VAT sector have been planned in the middle of the fiscal year to meet the conditions of the IMF. Basically the IMF has conditioned the finance department. The National Board of Revenue of Bangladesh will implement the plan. As per the IMF’s terms, the VAT sector will have to levy an additional 0.2 percent. That is, an additional 12 thousand crores of VAT will have to be collected. We have prepared a report proposing a plan to increase VAT in some sectors, reduce it in some and rationalize it in some. The proposal report has been submitted in the Finance Advisers meeting. From there, the order can be issued on January 5 if the approval of the President of Bangladesh is received.
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He said, ‘There is no proposal to increase VAT or supplementary duty on any product of daily necessity or on any product or service that affects the common man. Rather, VAT and duty have been reduced several times after the budget on several daily essential products. According to the proposal of the National Board of Revenue of Bangladesh, the cigarette sector is planning to collect the highest additional Tk 4000 crore. Because cigarettes are the biggest revenue generating sector in Bangladesh.
In the current financial year, the price and duty of cigarettes have been increased. However, in the remaining six months of the fiscal year, prices and duties are being increased. According to the National Board of Revenue of Bangladesh, the price and supplementary duty on cigarettes are being increased to increase revenue collection and WHO guidelines.
According to the calculations of the National Board of Revenue of Bangladesh, it will be possible to collect an additional revenue of about 4000 crore rupees from the cigarette sector in the next six months. On the other hand, the excise duty in the banking sector has been increased this year. But the excise duty on air tickets has not been increased for the past few years. People keep money in the banking sector due to financial security and compulsion. Almost all account holders have to pay excise duty on it. But traveling abroad is often not forced—sometimes for work, sometimes for sightseeing. In view of these, it has been proposed to increase the excise duty on air tickets and rationalize them in some cases. For that, in the report of the National Board of Revenue of Bangladesh, it has been proposed to amend ‘The Excise and Salt Act, 1944’.
According to the report, excise duty at the rate of Tk 500 has to be paid on domestic routes and air tickets of SAARC countries. It needs to be rationalized. That is why the domestic route is being increased by 200 taka to 700 taka and in SAARC countries it is doubled to 1000 taka. Apart from this, in Asian countries it is being increased from 2 thousand taka to 2.5 thousand taka and in European countries from 3 thousand taka to 4 thousand taka. Increase in excise duty may increase ticket prices. According to the sources of the National Board of Revenue of Bangladesh, there are exemptions for several products in addition to daily necessities.
VAT rate is being increased to 15 percent on 42 products and services in Bangladesh. For example, hotels, restaurants, confectioneries and showrooms of clothing brands have VAT of 5 and 7 percent. It is also proposed to double the VAT of non-AC hotels from 7.5% to 15%. And the local brand clothing is currently being increased from seven and a half percent to 15 percent. Buyers may have to pay VAT at the same rate if they buy any garment of ordinary quality, not just branded. There is also a possibility of VAT increase in the medicine business. Supplementary duty on artificial drinks like juices is being increased. VAT is being increased from 5 percent to 15 percent on HR to CR coils. Besides, the existing 5 percent trade VAT is being increased to 7.5 percent on the purchase of business establishments.
Supplementary duty is being increased not only on local products but also on seven imported products. Which includes—betel nut, soap, detergent, paint, artificial tobacco. Besides, the supplementary duty on liquor bars is being increased from 20 percent to 30 percent. The National Board of Revenue of Bangladesh says that about 12 thousand crore rupees will be collected from these products.
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