VAT on medicine sales unchanged at 2.4pc: NBR

The tax administrator yesterday said the value added tax on medicine sales has been kept unchanged at 2.4 percent under the new VAT law that became effective on July 1.

The National Board of Revenue (NBR) issued a notification in this regard to dispel ambiguity and prevent traders from charging consumers higher prices for drugs.

The NBR also gave a guideline on how to calculate the indirect tax on drugs and petroleum at the manufacturing and trading stages. Officials said the government did not increase the VAT rates of the two essential items at the trading stage under the VAT and Supplementary Duty Act 2012.

The VAT rates of 2.4 percent and 2 percent had been in place respectively under the 1991 VAT law.

So medicine prices should not increase on excuse of the new VAT law, said an official of the NBR. Pharmaceuticals and petroleum are two major sources of VAT, also known as consumption tax, for the revenue collector.

Latest VAT collection figures are not available as the NBR is yet to publish its annual report for fiscal 2017-18 and 2018-19.

The NBR’s annual report for 2016-17 showed that revenue collection from pharmaceuticals amounted to 5.42 percent or Tk 2,655 crore of the total collection of Tk 63,562 crore.

Petroleum accounted for 1 percent of the total revenue logged by revenue officials that year.

Receipts from drugs rose 8.9 percent year-on-year in fiscal 2016-17 when collection from petroleum slumped 40 percent, according to the NBR data.