New VAT system to bring in Tk 11,000cr more
The National Board of Revenue expects to collect about Tk 11,000 crore more for imposition of VAT on various goods and services and increasing rates on many others, said its officials.
It also aims to register Tk 5,000 crore by ensuring use of electronic sales registers -- electronic fiscal device (EFDs), sales data controller (SDC) or point of sales -- by 25 types of businesses, including grocery stores, hotels and restaurants, sweetmeat shops, clothing stores, furniture sellers, jewellers, electronics sellers, and large and medium wholesalers.
The NBR’s collection target from VAT in the incoming fiscal year is Tk 117,672 crore.
This year, it is expecting to collect Tk 81,820 crore, meaning it has to come up with new ways to bring home an additional Tk 35,852 crore in fiscal 2019-20.
Apart from the VAT measures, the hike in supplementary duty on cigarettes and tobacco products and mobile usage will bring in more than Tk 8,000 crore, according to an estimate of the NBR.
“We expect to achieve nearly half of our additional collection target by introducing four main VAT rates and specific tax under the new law,” said a senior official of the NBR.
The government proposed multiple rates of VAT under the VAT and Supplementary Duty Act 2012, diverting much from the spirit of the law when it was formulated in 2011.
After much delays, the new VAT law will take effect from July 1.
Under the new law, the NBR slapped 5 percent VAT on most of the 84 products on which it collected the tax on tariff or assumed value. These include spices, biscuits, paper, LP gas, transformers, buses and water vessels.
It removed exemption benefit on aluminium and plastic kitchen items, tableware and household goods and imposed 5 percent VAT, also known as consumption tax.
Besides, the revenue collector hiked VAT on items such as bricks and rods, from which it collected VAT based on tariff value. Procurement provider, construction firms and furniture makers will also see spike in the VAT rates by as much as 2.5 percentage points.
“We will get a good amount of VAT as a result,” the official said, adding that the imposition of advance tax on imports will also fetch a handsome amount.
The government proposed slapping 5 percent, 7.5 percent and 10 percent VAT on specific goods and services apart from the standard VAT rate of 15 percent, which has been in existence for nearly three decades now.
The NBR estimates that 15 percent growth of economic and business activities will generate an additional Tk 12,273 crore VAT in the new fiscal year.
And an increase in the prices of cigarettes and tobacco products will bring more than Tk 7,500 crore and thus will enable the VAT department to boost its overall receipts from domestic trade.
VAT is the biggest source of revenue for the NBR, followed by income tax and customs tariff. The NBR has been tasked to collect Tk 325,600 crore next fiscal year, up 16.29 percent from this year’s revised budget.