The government has brought some major changes in collection of Value Added Tax (VAT) in the proposed budget for fiscal 2008-09.
The proposed fiscal measure in the budget envisages reduction of tax for cottage industry, export of pharmaceuticals, hospitals and clinics.
The range of investment in plant, machinery and equipment has been proposed to rise to Tk 1.5 million from existing Tk 0.7 million for the cottage industry.
Tax exemption limit for exporting sample medicine has been raised to Tk 20,000 from Tk 10,000.
VAT exemption limit on minimum fees for hospitals and clinics has been increased to Tk 50 and Tk 100 from existing Tk 25 and Tk 50 for medical services and daily bed rent respectively.
VAT at production stage and business stage has been exempted for six sectors that include drugs for thalassaemia, bar and rods, chassis fitted with engine for motor vehicles under 87.02 specification in CKD condition, handmade biscuit, handloom (except power loom) artificial fiber and yarn made fabrics, pre-mix nutrition for veterinary feed meal.
The proposed budget has also widened VAT net at import stage for some products and services that include raw silk, children picture, drawing or colouring books, repairing and servicing.
Tax at source will be deducted from three new services including persons or organisation involved in repairing and services, security service and engineering firm.
The government has imposed supplementary duty (SD) in three new sectors. Satellite channel distributors will have to pay 35 per cent SD instead of 15 per cent, which might increase the costs of satellite channel.
The budget has proposed to impose 60 per cent SD on finished diamond to help the local diamond cut sector flourish its business.
Prices of cigarette and bidi will go up in the upcoming fiscal as the government proposed upward adjustment of duty and taxes on it.
On simplification of VAT system, the National Board of Revenue (NBR) introduced payment of arrear principal in installment. Earlier, only penal taxes could be paid by installment.
VAT threshold for SME entrepreneurs has been increased to Tk 2.4 million from 2.0 million of annual turnover in the proposed budget.
The time frame of Electronic Cash Register (ECR) installation has been extended to January 1, 2009 for all city corporation area and July 2009 for all district level. Earlier, the government ordered mandatory installation of ECR in large and medium business houses from July 1, 2008.
There has been a proposal to slash a number of discretionary powers of VAT official to ensure business-friendly environment for taxpayers.
The government has set Tk 183.54 billion as VAT collection target for fiscal 2008-09, up by Tk 32 billion from the outgoing fiscal.
