VAT-free turnover limit likely to be Tk 36 lakh
The government may increase the VAT-free turnover ceiling to Tk 36 lakh from Tk 30 lakh as it looks to appease small and medium firms anxious about the impact the new VAT law would have on their profitability.
Currently under the VAT Act 1991, many small and medium businesses pay a fixed amount of VAT, known as package VAT, and they usually do not submit returns regularly, even though a section of them generate enough sales to be able to pay the turnover tax.
The implementation of the new law, which envisages a uniform 15 percent VAT, will put an end to the practice of paying package VAT along with the other reduced rates now in effect.
The new VAT law, which will take effect from July 1, will force a large number of retail and wholesale stores to maintain records and pay VAT based on actual sales, said revenue officials.
Now, a joint panel of the National Board of Revenue and the Federation of Bangladesh Chambers of Commerce and Industry upon reviewing the new VAT law suggested an increase in ceiling to support the small and medium firms.
The reason being, many smaller firms do not have the capacity yet to maintain records precisely, as demanded by the new VAT law.
The highest ceiling of turnover tax is also expected to be raised to Tk 1.50 crore a year from Tk 80 lakh, as prescribed in the new VAT law framed in 2012.
Raising the VAT-free turnover limit and the turnover ceiling will give respite to more firms, said revenue officials.
Last year, many shop owners demonstrated demanding continuation of package VAT under the new law, which the NBR aims to implement by automating the VAT system.