Parliament is set to pass the Finance Bill 2023 today (Sunday) with the much-debated provision for Tk 2000 proposed as blanket individual income tax finally forsaken, officials said.
A specific duty on import of fuel oils may also be scrapped by reinstating the previous ad-valorem taxes (tax on value) as concerns grew over a significant hike in prices of petroleum products under the new tax measures.
The specific duty on oil import came into effect on June 1, 2023 under the ‘Provisional Collection of Taxes Act 1931 (Act No. XVI of 1931) in the Finance Bill placed before parliament on the day.
Customs Duty, VAT and Advance Tax on import of fuels are set to be reinstated in the Finance Act 2023 as those were scrapped in the bill, the officials said.
The proposed value-added tax (VAT) on manufacturing of ballpoint pens might be cut to 5.0 per cent from 15 per cent.
In the Finance Bill, the Finance Minister had proposed Tk 2000 as minimum tax on those who even have no taxable income but need to submit tax returns for securing different government services.
Cross-sections of people expressed anguish over the taxing of the marginal-income group of people below the taxable limit, which tax experts termed ‘against the principle’ of direct taxation.
Sources concerned said the government high-ups finally decided to backtrack on the move honoring concerns of common people.
“Withdrawal of the proposed provision of minimum tax might be announced today in parliament,” said one source.
The government would cease imposing specific duty on fuel oils as import cost would go up in spite of decline in fuel prices in the international market.
Revenue-board sources said the specific duty could secure the government pace of revenue mobilization from the petroleum sector, one of the largest revenue- contributing sectors.
The government has withdrawn CD, VAT and Advance Tax (AT) on import of fuel oils by imposing specific duty but 2.0-percent Advance Income tax (AIT) is still there which would escalate the import cost, they said.
Increase in fuel prices would affect the manufacturing industries, hike cost of transportation and other expenditures, they added.
Prices of fuel oils have declined 18 per cent globally since last August after the government had adjusted the fuel prices.
Usually, increase in international prices of petroleum products boosts government revenue collection as tax is collected on the import value of the product. In case of international price fall, import-tax collection declines.
Total tax incidence (TTI) on import of petroleum products was 34 per cent which would be reinstated by amending the Finance Bill 2023.
According to the proposed measure, import of furnace oil may require paying specific duty at Tk 9108 per tonne. High Speed Diesel, light diesel, naptha, J.P.4 kerosene-type jet fuels, J.P.4 kerosene-type jet fuels, other kerosene oils may be pegged to payment of Tk 13.75 per litre.
Import of petroleum oils and oils obtained from bituminous minerals, crude may have to pay Tk 1117 per barrel.
Motor spirit of H.B.O.C type, other motor spirits, including aviation spirit, spirit-type jet fuel and white spirit may be required to pay Tk 13.75 per litre.
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