New VAT, SD measures looking like silver lining
The revenue authority may get an additional Tk 11,000 crore next fiscal year because of the new value-added tax (VAT) and supplementary duty (SD) measures, according to an estimate by the National Board of Revenue (NBR).
"We also expect to get nearly Tk 8,000 crore from normal growth of businesses," said a senior official of the NBR.
The disclosure came as the VAT department has been assigned to collect 38 per cent of the NBR's target of Tk 330,000 crore for the next fiscal year.
Analysts and taxmen said achieving the target would be impossible as the lockdown and wreckage in the economy already caused a drop in revenue collection.
And the new VAT target is 14 per cent higher than the revised goal of Tk 109,800 crore set by the government for the outgoing fiscal year when overall VAT collection is unlikely to cross Tk 100,000 crore.
Yet, the responsibility on the shoulders of VAT officials has increased further in the next fiscal year.
Together with collecting a portion of SD from the domestic trade, the NBR will have to log in 55 per cent of the total revenue goal from the two sources.
To increase the collection of VAT receipts, the NBR hiked the prices of health-hazardous cigarettes by up to 5 per cent for each 10-stick pack in the low, high and premium segment, except the medium price segment.
However, except for the low-price segment of cigarettes, the SD rates have been kept unchanged for the next fiscal year.
Depending on price slabs, smokers will have to pay from 57 per cent to 65 per cent of SD for every 10-stick next fiscal year, up from 55 to 65 per cent in the outgoing fiscal year, according to the NBR.
The official said the additional Tk 8,000 crore VAT and SD might come owing to the spike in prices of the tobacco products, including cigarettes and biri, a kind of handmade cigarettes used by the low-income groups.
Cigarette is the biggest sources of VAT and SD and the revenue authority collected Tk 25,500 crore in fiscal 2018-19, up 16 per cent year-on-year.
The collection was 30 per cent of the total VAT generated in fiscal 2018-19, according to NBR data.
The increased SD on mobile phone usage from this fiscal year's 10 per cent to 15 per cent in fiscal 2020-21 is likely to bring in an extra Tk 1,500 crore revenue, according to the estimate.
Mobile phones and SIM cards were the third biggest sources of VAT and SD after cigarette and construction firms. It brought Tk 5,000 crore in revenue in fiscal 2018-19, up 4 per cent from the previous year, NBR data showed.
"As VAT benefit on motorcycles ends from this fiscal year, we are also expecting a good amount from the two-wheeler sales," said the official, adding that Tk 800 crore would come from the sector.
Besides, the increased excise duty on bank accounts with over Tk 10 lakh debit or credit balance is also likely to bring nearly Tk 300 in extra tax.
The government has raised the excise duty by up to 60 per cent for fiscal 2020-21 and account-holders with more than Tk 5 crore balance in their accounts at any time of the year will face Tk 40,000.
The government logged in Tk 2,339 crore in fiscal 2018-19 through excise duty and the collection from bank balances accounted for most of it, according to the finance ministry and NBR data.